not vested
Alibaba Group (BABA US / 9988 HK)
While the past two decades have been characterised by the rapid development of e-commerce, Alibaba’s earnings growth in the next decade will be driven by monetising user engagement across its ecosystem, which covers almost the entire consumption journey – from the online marketplace to logistics, payments and cloud services.
With its leadership in e-commerce and cloud services, Alibaba is well positioned to benefit from the accelerated digitalisation post COVID-19.
With Alibaba’s efforts to incubate more live-streamers and the emergence of 5G and consumer data analysis, Taobao Live could serve as new driver for both commission and service revenues .
Its management is targeting to grow the annual active user base to 1bn and gross merchandise value (GMW) to CNY10trn by end of FY3/24.
Despite the robust earnings growth momentum, share prices could be weighed by the heightened China-US tensions in near term. That said, Alibaba should fare better than other ADRs as its secondary listing has already been completed, with fully fungible shares in Hong Kong and ADRs in the US.
Its less demanding valuation compared to other leading tech names in Hong Kong also leaves room for re-rating.
The potential for inclusion in stock connects and Hang Seng Indices will be the next movers to watch for.
Source: OCBC