|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||34.00 - 35.50|
|52 Week Range||9.05 - 36.00|
|Beta (5Y Monthly)||1.85|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||N/A|
(Bloomberg) -- Alibaba Group Holding Ltd. will invest about $3.6 billion to double its stake in Sun Art Retail Group Ltd., taking control of China’s largest chain of hypermarts to try and fend off rivals like JD.com Inc. in e-commerce’s hottest growth arena.Alibaba will raise its direct and indirect stake in the grocery chain to about 72% by acquiring equity from Auchan Retail International SA, then make a general offer to shareholders to buy out the rest of Sun Art. The latter’s Hong Kong-listed stock leapt as much as 30% Monday, its biggest intraday gain since 2011. Alibaba gained as much as 1.8% to touch an intraday record.The deal signals the intention of Asia’s most valuable corporation to accelerate an effort to dominate one of Chinese e-commerce’s largest untapped frontiers. Alibaba Chief Executive Officer Daniel Zhang has made expansion into physical retail and the grocery business in particular a cornerstone of his growth strategy, an effort that paid off during the coronavirus pandemic. Sun Art already operates hundreds of hypermarkets across China under the Auchan and RT-Mart brands, a massive distribution and storage network that can supplement Alibaba’s own efforts in fresh produce.The Chinese e-commerce giant is now grappling with intensifying competition from the likes of JD, food delivery giant Meituan Dianping and startups such as Tencent Holdings Ltd.-backed Missfresh, all chasing a market for groceries and fresh produce that HSBC expects to grow 2.5 times to 690 billion yuan ($103 billion) by 2022 from 2019. Alibaba was among the pioneers in that arena, announcing in 2017 it would spend about $2.9 billion for a 36% stake of Sun Art.The deal “suggests that the tech giant seeks to further expand its one-hour home grocery delivery services such as Taoxianda, leveraging the grocer’s extensive offline hypermarts across China,” Bloomberg Intelligence analyst Kevin Kim said. “This could capture consumers flocking to online platforms, further induced by Covid-19 early this year, yet may hurt foot-traffic to the grocer’s physical stores.”Read more: Alibaba Touts Post-Virus Rebound While Watching ‘Fluid’ U.S.Read more: New Alibaba Chief Explains Why He Wants to Kill His Own BusinessZhang has been directly involved in the expansion into what the company calls its “new retail” strategy, combining e-commerce with physical stores. He helped launch a startup called Freshippo within Alibaba that aimed to combine a grocery store, a restaurant and a delivery app, a business that’s underpinned an overall new retail division that’s grown into a $12 billion operation, contributing a fifth of total revenue in the June quarter.As Alibaba increases its stake to a majority, Sun Art’s financial statements will be consolidated into the larger company’s. Peter Huang, Sun Art’s CEO, will add the title of chairman for the business.What Bloomberg Intelligence SaysAlibaba’s $3.6 billion investment to raise its stake in Sun Art to 72% from the 36% acquired in 2017 signals the company’s intention to strategically ramp up its supermarket retail services. The acquisition should boost its Taoxianda and Tmall Supermarket and help compete against JD.com, Meituan and Pinduoduo, which are also aggressively trying to push into fresh produce e-commerce.\- Vey-Sern Ling and Tiffany Tam, analystsClick here for the research.The online groceries segment has leapt to the forefront during Covid-19 when shoppers shunned restaurants and physical stores, though the industry -- which requires more complex logistical structures such as so-called cold chain storage -- has proven difficult to crack in years past.Alibaba’s initial moves into physical retail were closely followed by WeChat-operator Tencent, which has itself invested in brick-and-mortar chains such as Yonghui Superstores Co. JD now also operates its own thriving groceries business, while Meituan and up-and-comer Pinduoduo Inc. in recent years began investing aggressively in the arena.Sun Art is the industry leader in China’s hypermarkets, operating giant Costco- and Walmart-style stores that sell everything from seafood to wine and furniture under one roof. It held 14% of the market share in 2019, according to global intelligence firm Euromonitor International. Alibaba has also invested in many other brick-and-mortar retailers including Shanghai-listed Sanjiang Shopping Club Co., Shenzhen-listed New Huadu Supercenter Co., and Hong Kong-listed Lianhua Supermarket Holdings Co.Meanwhile, France’s Auchan has become the latest in a slew of foreign retailers to step back from China after struggling in the market. Last year, Carrefour SA sold an 80% stake in its China unit at a discount while German wholesaler Metro AG sold a majority stake in its operations there.Big box offerings are faring better. Costco Wholesale Corp. opened its first outlet in China last year to frenzied crowds and is planning its third store. Walmart Inc. plans to quadruple the number of its members-only warehouse chain Sam’s Club in China to 100 stores over the next eight years, as growth outpaces the company’s separate network of over 400 Walmart stores selling basic groceries.(Updates with Sun Art’s market share in 10th paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Alibaba Group Holding Ltd. foresees its cloud services arm turning profitable for the first time this year, a milestone for the decade-old business that underscores how Asia’s largest corporation expects a return to pre-pandemic levels as China’s economy rebounds.Alibaba’s shares rose 3.8% on Wednesday in Hong Kong, their biggest gain in over a month. Its internet computing business is growing roughly 60% at an annual revenue run rate of about $7 billion, Chief Financial Officer Maggie Wu told investors at an annual company conference. The unit should turn profitable in the year ending March, she said.Cainiao, the logistics service Alibaba folded fully into its broader empire in 2017, should generate positive cash-flow on an operating basis over the same period, she added.China’s most valuable corporation has invested billions in hosting computing for corporations over the cloud, while building a nationwide logistics network that can handle the billions of parcels its e-commerce business throws out. Achieving profitability will boost Alibaba as it tries to revitalize growth alongside a recovery in the broader Chinese economy. The e-commerce giant is riding a pick-up in consumer spending -- particularly online -- in a country among the first to recover from Covid-19.“We typically spend 8 to 10 years incubating, nurturing and growing a new business,” Chief Executive Officer Daniel Zhang told investors. “We still regard ourselves to be in the nascent stage of the global cloud era.”Like Amazon.com Inc.’s, Alibaba’s cloud service emerged from the computational power needed to handle billions of online shopping transactions to become one of its fastest-growing initiatives. The Chinese company today relies on the service, which competes globally with Amazon Web Services, Microsoft Corp. and Google, to underpin both its global expansion and forays into newer arenas such as live-streaming.Read more: Alibaba Touts Post-Virus Rebound While Watching ‘Fluid’ U.S.What Bloomberg Intelligence SaysAlibaba’s announcement at its 2020 Investor Day that its cloud computing business is targeting positive profits in fiscal 2021 could come as a surprise to the market and lift consensus estimates. Alibaba has intentionally kept its cloud segment operating at a small loss in past years in order to gain market share, so the announcement marks a shift in messaging for the segment.\- Vey-Sern Ling and Tiffany Tam, analystsClick here for the research.Alibaba’s cloud business continued to grow during the global Covid-19 shutdowns this year. It held a leading 40.1% share of China’s total cloud infrastructure services spending in the June quarter, more than double its closest competitors, according to industry researcher Canalys. Even as economies start to recover, the company is aiming to take advantage of the shift to upgrade more corporate IT infrastructures to the cloud and boost cloud-based collaboration at work, Zhang told investors Wednesday.Retail sales in the world’s No. 2 economy rose for the first time this year in August, after virus restrictions eased. The comeback in consumer spending has allowed Alibaba to further expand a $700 billion empire that already spans online retail, food delivery and internet computing. It owns a third of Ant Group, the Chinese financial titan pursuing potentially the world’s largest initial public offering, and most recently outlined plans to create a new line of business by modernizing factories.Excluding its stake in Ant, Alibaba’s strategic investments are currently valued at $45 billion, Wu told investors on Wednesday, adding that the company will continue to invest in technology and research. Alibaba last year reported an $83 billion stake in its global portfolio of investments, which included its 33% stake in the fintech behemoth.Zhang -- credited with orchestrating Alibaba’s last big foray into a new arena, with a move into brick-and-mortar retail -- is responding in part to intensifying competition on multiple fronts. Pinduoduo Inc. has lured small-town buyers away with cheaper bargains, while traditional foe JD.com Inc. has ventured beyond its traditional strength in consumer electronics into groceries, a category that leapt to the fore during nationwide lockdowns.Even social media companies like ByteDance Ltd. and Tencent Holdings Ltd. are increasingly reaching out to shoppers through live-streaming -- a route Alibaba pioneered with Taobao Live -- after Covid-19 fueled online entertainment. While rival video apps like Tencent-backed Kuaishou and ByteDance’s Douyin typically directed traffic to Alibaba platforms, they’re now seeking to handle the transactions by themselves.Then there’s sustained competition in food delivery. Alibaba’s Ele.me now directs flowers, housekeepers and masseurs to doorsteps in addition to lunchboxes, while Tencent-backed Meituan Dianping tries its hand on beauty products and smartphones.With more than 1 billion annual active consumers, Alibaba generated over $1 trillion in gross merchandise value in the 12 months ended June, Wu said. Spending on its platforms accounted for about 18% of China’s total retail sales, up from about 10% in 2015.“Domestic consumption, cloud computing and data intelligence, and globalization -- these are the three growth engines for Alibaba’s future,” Zhang said. “Digitalization is the biggest opportunity of our time.”Read more: Chinese Consumers Join Industrial Recovery From Covid-19(Updates share price in second paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- More than 70% of Americans hold unfavorable views of China, a historical high, as many find fault in its handling of Covid-19. Yet that hasn’t stopped Americans from staking their retirements on the nation through their mutual funds. U.S. residents have amassed roughly $700 billion worth of mainland stock over the years, mostly in the technology sector. Government data may tell you there’s little at risk — Americans held only $154 billion of Chinese shares in 2017, according to the Treasury Department. This is a gross underestimation, Harvard University’s Antonio Coppola and his colleagues conclude. In a recent paper, the academics put exposure at $695 billion by 2017, or 4.5 times the official figure. The current level could be even larger, as the benchmark MSCI China Index has rallied more than 10% since then. The $541 billion discrepancy comes from the fact that many Chinese companies seeking listings in New York or Hong Kong issue shares via shell companies in tax havens such as the Cayman Islands. Beijing forbids foreign investment in strategic fields such as technology. As a workaround, the listing entities of “ATM” stocks — Alibaba Group Holding Ltd., Tencent Holdings Ltd. and Meituan Dianping, the Chinese equivalent of FAANG stocks — are all Cayman-incorporated units that don't directly own any key operating assets. While U.S. investors held $547 billion of stock issued by Cayman companies, according to Treasury data, close to 90% ultimately went to China Inc. instead, the authors find.According to their estimates, China is the third-largest foreign destination for U.S. money in the equity space, trailing the U.K. and Japan. Going by the Treasury data, however, the country doesn’t even enter the top 10.Why hasn’t President Donald Trump’s trade war and China Inc.’s poor corporate governance stoppedfund managers from accruing equities? In May, the Senate passed a bill that could force mainland firms to delist from U.S. exchanges, after Luckin Coffee Inc.’s spectacular accounting blowup earlier this year. Yet startups are still going public in New York at a brisk pace. Investors clamored for newly minted shares from electric-vehicle makers such as XPeng Inc. and Li Auto Inc., as well as online real-estate broker KE Holdings Inc. One explanation is that corporate China’s rise coincided with the death of value investing. The last decade has been marked by the absence of growth. Investors crowded into a few promising firms, buying them at sky-high valuations, or even turning a blind eye to management lapses. Meanwhile, they dumped cyclical sectors such as financials and energy, which made them cheaper by the day. Chinese firms play right into that narrative. Over half of the MSCI China Index belongs to fast-growing consumer-discretionary and communication-services sectors. MSCI Japan, by comparison, is more value-oriented, in that cyclical industrials remains its largest component sector. Recent initial public offerings have only reinforced the mainland’s growth image. From an AI chip designer whose founders worked at the Chinese Academy of Sciences, to Jack Ma’s fast-growing and highly lucrative fintech unicorn Ant Group and cash cow mineral-water bottler Nongfu Spring Co., President Xi Jinping’s China has plenty to offer global investors.Even the macro data are encouraging. Exports are growing at double digits again, as the nation’s manufacturing hub kicks back into gear, selling face masks, medical equipment and computers to the world. Even retail sales, which have lagged, are back to pre-Covid levels. The U.S., meanwhile, is still struggling to contain the virus. In a stock world dominated by a handful of big U.S. tech names, fund managers who want to beat their benchmark indexes and justify their fees have to hold their nose and take their pick from smaller Chinese growth companies. The MSCI China Index is up 14.9% this year, outperforming the S&P 500 Index. National security hawks don’t want U.S. money to fund China’s rise, but they are swimming against a strong current. Perhaps all the Trump administration can do right now is pretend not to see the problem. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. She previously wrote on markets for Barron's, following a career as an investment banker, and is a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.