Greater China Equity Long/Short Analyst

Eric Chen

Equity Bottom-Up

Alibaba Group Holding  / Equity Bottom-Up

<ul>
<li>In-Line results were overshadowed by company's pullback from March restructuring plan and Jack ma's family trust selling shares.</li>
<li>Worst sell-off in a year was over-reaction as abrupt changes unnerved investors who tended to interpret the events  with excessive negative sentiments.</li>
<li>Valuation almost priced in a scenario where company is overtaken by PDD in faltering Chinese economy. Selling amidst this extreme pessimism is the last thing investors want in our view. </li>
</ul>


In-Line results were overshadowed by company's pullback from March restructuring plan and Jack ma's family trust selling shares.
Worst sell-off in a year was over-reaction as abrupt changes unnerved investors who tended to interpret the events  with excessive negative sentiments.
Valuation almost priced in a scenario where company is overtaken by PDD in faltering Chinese economy. Selling amidst this extreme pessimism is the last thing investors want in our view. 


Alibaba (BABA US): Selling at This Valuation Is Last Thing You Want

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>The HSCEI Review for December 2023 was announced on Friday 17 November. </li>
<li>There were no ADDs and no DELETEs, which was a bit of a surprise.</li>
<li>There is about 2.8% one-way to trade. Alibaba (ADR) (BABA US) is a sell across all three major indices.</li>
</ul>


The HSCEI Review for December 2023 was announced on Friday 17 November. 
There were no ADDs and no DELETEs, which was a bit of a surprise.
There is about 2.8% one-way to trade. Alibaba (ADR) (BABA US) is a sell across all three major indices.


HSCEI Dec23 Index Review/​Flows - NO ADDs, No DELETEs; ~2.5% One Way

Blue Lotus Non US Internet research, Blue Lotus Research Institute

Ying Pan

Blue Lotus Non US Internet research

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

<ul>
<li>BABA reported C3Q23 revenue, non-GAAP operating profit and GAAP net income in-line, 6% and (7%) vs. our est., and in-line, in-line and (14%);</li>
<li>Instead of appointing capable management to oversee key subsidiaries, BABA backpedalled to call off its spin-off plans;</li>
<li>We cut TP from US$ 127 to US$ 72, and downgrade to SELL.</li>
</ul>


BABA reported C3Q23 revenue, non-GAAP operating profit and GAAP net income in-line, 6% and (7%) vs. our est., and in-line, in-line and (14%);
Instead of appointing capable management to oversee key subsidiaries, BABA backpedalled to call off its spin-off plans;
We cut TP from US$ 127 to US$ 72, and downgrade to SELL.


[Alibaba (BABA US, SELL, TP US$72) Rating Change]: The Casualty of Era…Downgrade to SELL

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>Alibaba delivered inline 2QFY24 (March year-end) results: total revenue was RMB224.8bn, up 8.5% YoY, and non-GAAP net income for the quarter was RMB40.2bn, up 16.8% YoY.</li><li>Both revenue and non-GAAP net income in 2QFY24 were in line with Bloomberg consensus estimates.</li><li>Alibaba decided not to proceed with a full spin-off for Cloud Intelligence Group (CIG), and will focus on developing a sustainable growth model for CIG under current circumstances, but stressed that it remained committed to drive shareholder returns. </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Alibaba delivered inline 2QFY24 (March year-end) results: total revenue was RMB224.8bn, up 8.5% YoY, and non-GAAP net income for the quarter was RMB40.2bn, up 16.8% YoY.Both revenue and non-GAAP net income in 2QFY24 were in line with Bloomberg consensus estimates.Alibaba decided not to proceed with a full spin-off for Cloud Intelligence Group (CIG), and will focus on developing a sustainable growth model for CIG under current circumstances, but stressed that it remained committed to drive shareholder returns. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Alibaba (BABA US) – Remain Committed to Enhance Shareholder Returns

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<ul>
<li>While <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba (ADR) (BABA US)</a>'s 2Q24 revenue and OP closely matched consensus expectations, the company experienced a significant sell-off, resulting in shares plummeting by over 9% yesterday.</li>
<li>Yesterday's weak performance may be linked to a 10% pre-earnings price surge, anticipating robust results. The postponement of the Cloud Spin-off could also have contributed to the decline.</li>
<li>We maintain a bearish stance on <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd-d7b798e2-202d-4e01-9a1e-799e2ae8f0c7" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group Holding (9988 HK)</a> as we identify other fundamental and structural downside catalysts might become increasingly important and price-sensitive as time progresses.</li>
</ul>


While Alibaba (ADR) (BABA US)'s 2Q24 revenue and OP closely matched consensus expectations, the company experienced a significant sell-off, resulting in shares plummeting by over 9% yesterday.
Yesterday's weak performance may be linked to a 10% pre-earnings price surge, anticipating robust results. The postponement of the Cloud Spin-off could also have contributed to the decline.
We maintain a bearish stance on Alibaba Group Holding (9988 HK) as we identify other fundamental and structural downside catalysts might become increasingly important and price-sensitive as time progresses.


China

Alibaba Group Holding Limited provides online sales services. The Company provides internet infrastructure, electronic commerce, online financial, and internet content services through its subsidiaries. Alibaba Group Holding offers its products and services worldwide.

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Alibaba Group Holding (BABA US)

Alibaba (BABA US): Selling at This Valuation Is Last Thing You Want

Sell-off post results was over-reaction, as cloud IPO pullback and founder selling shares drove negative sentiments to extremely bearish end....

Eric Chen

HSCEI Dec23 Index Review/Flows - NO ADDs, No DELETEs; ~2.5% One Way

Hang Seng Indices announced the Dec 2023 review for the HSCEI on Friday 17 November after the close. No name changes, which is a surprise....

Travis Lundy

[Alibaba (BABA US, SELL, TP US$72) Rating Change]: The Casualty of Era…Downgrade to SELL

Alibaba's Q3 revenue and profit were in line with expectations, but the company cancelled its spin-off plans and we have downgraded our rating to...

Blue Lotus Research Institute

Alibaba (BABA US) – Remain Committed to Enhance Shareholder Returns

Alibaba delivered inline 2QFY24 (March year-end) results: total revenue was RMB224.8bn, up 8.5% YoY, and non-GAAP net income for the quarter was...

CMB International

Alibaba: Our Take on 2QFY24

While Alibaba's 2Q24 revenue and OP closely matched consensus expectations, the company experienced a significant sell-off, resulting in shares...

Oshadhi Kumarasiri

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Alibaba (BABA US): Selling at This Valuation Is Last Thing You Want

Sell-off post results was over-reaction, as cloud IPO pullback and founder selling shares drove negative sentiments to extremely bearish end....

Eric Chen

HSCEI Dec23 Index Review/​Flows - NO ADDs, No DELETEs; ~2.5% One Way

Hang Seng Indices announced the Dec 2023 review for the HSCEI on Friday 17 November after the close. No name changes, which is a surprise....

Travis Lundy

[Alibaba (BABA US, SELL, TP US$72) Rating Change]: The Casualty of Era…Downgrade to SELL

​Alibaba's Q3 revenue and profit were in line with expectations, but the company cancelled its spin-off plans and we have downgraded our rating to...

Blue Lotus Research Institute

Alibaba (BABA US) – Remain Committed to Enhance Shareholder Returns

Alibaba delivered inline 2QFY24 (March year-end) results: total revenue was RMB224.8bn, up 8.5% YoY, and non-GAAP net income for the quarter was...

CMB International

Alibaba: Our Take on 2QFY24

While Alibaba's 2Q24 revenue and OP closely matched consensus expectations, the company experienced a significant sell-off, resulting in shares...

Oshadhi Kumarasiri

HSCEI Dec23 Index Review/Flows - NO ADDs, No DELETEs; ~2.5% One Way

Alibaba's Q3 revenue and profit were in line with expectations, but the company cancelled its spin-off plans and we have downgraded our rating to...