Alibaba (BABA)/ 9988 HK; Jack Ma 02 (May 16 - Apr 21)

[winston]

not vested

Valuation

Our TP of HK$306 (US$315) is based on SOTP:-
(1) 24x FY3/21F normalised net profit from e-commerce (HK$274 per share); and
(2) market value for other investments (HK$32).

Source: DBS

https://www.dbs.com.sg/treasures/aics/s ... 988_HK.xml

[winston]

not vested

Brokers' Latest TPs, Views on BABA-SW (09988.HK) Post Penalty, Rectification Order (Table) (Update)

Brokers│Ratings│TPs (HK$)
Goldman Sachs│Buy (CL Buy List)│340
CSC│Buy│333
Jefferies│Buy│328
Guotai Junan│Buy│350->310
ICBCI│Outperform│309
Credit Suisse│Outperform│304
CICC│Outperform│304
Guosheng Securities│Buy│303
Daiwa│Buy│300
GF Sec│Buy│298.89

Brokers│Views
Goldman Sachs│Penalty unlikely to scrapped; outcome in-line
CSC│Penalty poses limited long-term operation impacts
Jefferies│Penalty clears antitrust uncertainties, brings fresh start
Guotai Junan│Antitrust probe ends, may boost investment, expense
Nomura│Market may focus on healthy e-commerce business growth next 2-3 quarters
ICBCI│Regulatory risk settled; e-commence biz growth sustainable
JPMorgan│May impact 2022E total turnover and net profit by 2%/ 4%
Guosheng Securities│Faces issue directly, to start afresh after adjustment
Daiwa│Fine affordable, well-expected by mkt
Credit Suisse│Clears antitrust uncertainties, anticipates revenue breakthrough
CICC│Investment efforts may ramped up on regulatory penalty rollout
Morgan Stanley│Penalty may clear uncertainties; focus back onto fundamentals
CITIC Sec│Initially clears business uncertainties
GF Sec│Goes on stepping up investments in underlying businesses

Source: AAStocks Financial News

[winston]

not vested

Alibaba Group (BABA US / 9988 HK) - Here’s to a new beginning

On 10 Apr 2021 (Saturday), the State Administration for Market Regulation (SAMR) of the PRC issued an administrative penalty decision on Alibaba related to the anti-monopoly investigation that began back in December 2020.

The probe has concluded that Alibaba has abused its market dominance, such as via forced exclusivity arrangements.

As a result of this, Alibaba will be subject to a penalty of ~RMB18.2b (~4% of domestic revenue in 2019). Alibaba will also be required to submit self-assessment reports over the next 3 years to the SAMR and strengthen operations so as to protect the interests of merchants and users.

Alibaba will not be appealing the SAMR’s decision, and will be looking to pay the fine through its own liquidity, given its ~RMB456.3b of cash and cash equivalents and short-term investments, as of 31 Dec 2020.

Alibaba is looking to book the fine in its March fiscal quarter and this is likely to be reflected in its GAAP net income, but excluded on a non-GAAP basis.

While the headline amount is indeed eyeball-catching, this is actually lower than what we were expecting, given that monetary penalties of up to 10% of revenue can be imposed by the regulator under the AML.

We continue to remain positive on Alibaba and keep our FV unchanged. BUY.

Source: OCBC

[winston]

not vested

Valuation
We lowered FY21/22F core earnings by 3%/7% and revised our TP from HK$354 to HK$348 based on our unchanged SOTP methodology. Maintain BUY.

Source: DBS

https://www.dbs.com.sg/treasures/aics/s ... 988_HK.xml

[winston]

not vested

Chinese Stocks: Alibaba (BABA)

Alibaba has been facing pressure on several fronts for some time now. Late last year the Chinese Communist party began a crackdown on Alibaba’s financial affiliate, Ant Group.

The company extended that pressure to Alibaba, which was not long ago the ecommerce darling of the country and party.

The CCP alleges that Alibaba engaged in anti-competitive behavior that gave it unfair advantages. One such example relates to its business practices. Alibaba gave merchants on its platform an ultimatum in an effort to quash the rise of a certain competitor. Alibaba forced merchants who were selling on its platform and JD.com to choose one or the other. As a result, Alibaba was facing increased scrutiny by the Chinese government and a potential fine in excess of $975 million based on previous estimates.

On April 10, the actual fine that was levied came to $2.8 billion, 4% of the company’s annual domestic sales.

Renewed stock exchange delisting threats are also serving to pull BABA stock down as well. American exchanges including the New York Stock Exchange and the Nasdaq may delist Chinese stocks from their respective platforms should Chinese companies continue to refuse audits by the U.S. Public Company Oversight Accounting Board.

All in all, Alibaba currently has too many headwinds exerting downward price pressure. Investors should tread carefully.

Source: Investor Place

[winston]

This Discount on Alibaba Stock Won’t Last Forever

Investors are focusing on the risks around BABA stock, but ignoring the rewards

By Matt McCall

BABA stock trades at 22x earnings. Look out a year, after projected earnings per share growth of 15%, and the multiple drops to 19x.

Back out Alibaba’s cash hoard of over $100 billion even net of debt, and forward price-to-earnings is just 16x.

It’s growing the top line at nearly 40% clip this fiscal year. The cloud business has massive standalone value.

Source: InvestorPlace

https://investorplace.com/2021/04/this- ... 6OJc9o/h4=

[winston]

not vested

Even with its massive scale, Alibaba has been able to keep up a strong growth rate. During the latest quarter, the revenues jumped by 37% to $33.9 billion.

However, things may get tougher in the quarters ahead. The main reason is the increasing regulatory scrutiny. One part of this has been a crackdown on Alibaba’s fintech arm, Ant Group. The Chinese government is concerned about the growing power of the business as well as the potential credit risks. As a result, there have been various restrictions imposed – and there could easily be more.

The Chinese government has also fined Alibaba $2.8 billion for anticompetitive practices. True, this is not necessarily a big amount for the company. But the real problem is that there will be ongoing pressure from regulatory authorities – which will likely mean fewer opportunities to boost the growth.

Investors should be worried about U.S. regulators too. In the waning days of the Trump Administration, a policy was enacted to require delisting of Chinese stocks if the companies do not meet certain audit and disclosure requirements.

And yes, this could be a problem for Alibaba and it may be hard to remain as a growth stock. After all, President Joe Biden’s Administration has taken a tough stance on China.

Source: Investor Place