China/Asia TMT

Shawn Yang

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

Equity Bottom-Up

Alibaba Group Holding  / Equity Bottom-Up

<ul>
<li>Taobao and Tmall have implemented two major reforms: 1) The launch of the Wanxiangtai Platform Unlimited Edition; 2) Changing the rules for displaying merchant sales volume from monthly to annual.</li>
<li>Although the new Wanxiangtai differs from PDD’s "Fangxintui" and "Quanzhantui" , the idea is to simplify and automate merchant promotion. We anticipate that this change will boost the take rate.</li>
<li>We increased our core e-commerce take rate estimate for BABA in FY24/FY25 to 3.85%/4.0%, respectively, and raised our TP to US$ 127.</li>
</ul>


Taobao and Tmall have implemented two major reforms: 1) The launch of the Wanxiangtai Platform Unlimited Edition; 2) Changing the rules for displaying merchant sales volume from monthly to annual.
Although the new Wanxiangtai differs from PDD’s "Fangxintui" and "Quanzhantui" , the idea is to simplify and automate merchant promotion. We anticipate that this change will boost the take rate.
We increased our core e-commerce take rate estimate for BABA in FY24/FY25 to 3.85%/4.0%, respectively, and raised our TP to US$ 127.


[Alibaba (BABA US, BUY, TP US$127) TP Change]: The New Wanxiangtai Will Enhance the Take Rate

Articles from Caixin Global, Caixin Global

Caixin Global

Articles from Caixin Global

Caixin is a media group dedicated to providing financial and business news through periodicals, online content, mobile apps, conferences, books and TV/video programs. Caixin aims to blaze a trail that helps traditional media prosper in the new media age through integrated multimedia platforms.

News from Caixin

<ul><li>Alibaba Group Holding Ltd.’s workplace collaboration platform DingTalk will split from the company’s cloud division and pursue its own IPO, a source familiar with the matter told Caixin, as the tech giant ramps up efforts to unlock growth following its major restructuring.</li><li>DingTalk’s separation is expected to be completed before the Alibaba cloud unit’s own IPO, the source close to the e-commerce firm said.</li><li>Alibaba announced in May that it would <a href="https://www.caixinglobal.com/2023-05-19/alibaba-kicks-off-overhaul-with-spinoff-and-share-sale-targets-102056974.html" target="_blank" rel="noopener">spin off its Cloud Intelligence Group </a>via a stock dividend distribution to its shareholders over the next year with an eventual listing.</li></ul>

Alibaba Group Holding Ltd.’s workplace collaboration platform DingTalk will split from the company’s cloud division and pursue its own IPO, a source familiar with the matter told Caixin, as the tech giant ramps up efforts to unlock growth following its major restructuring.DingTalk’s separation is expected to be completed before the Alibaba cloud unit’s own IPO, the source close to the e-commerce firm said.Alibaba announced in May that it would spin off its Cloud Intelligence Group via a stock dividend distribution to its shareholders over the next year with an eventual listing.

Alibaba’s DingTalk to Split From Cloud Division and Seek Own IPO, Source Says

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’s adjustment on Taobao and Tmall strategies is delivering early-stage results.</li><li>The strategic move drives user engagement improvement through enhancing supply of value for money products and brands to reach targeted consumers, which in turn improves merchants’ willingness to invest in advertising, securing long-term revenue and earnings growth prospects to be in line with industry trend.</li><li>International expansion and technology enhancement are still on track to drive long-term revenue and earnings growth. </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’s adjustment on Taobao and Tmall strategies is delivering early-stage results.The strategic move drives user engagement improvement through enhancing supply of value for money products and brands to reach targeted consumers, which in turn improves merchants’ willingness to invest in advertising, securing long-term revenue and earnings growth prospects to be in line with industry trend.International expansion and technology enhancement are still on track to drive long-term revenue and earnings growth. 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) – In-Depth Analysis into Segment Value

<ul>
<li>BABA reported CY2Q23 top-line and non-GAAP net profit 10% and in-line vs. our estimate, and 12% and 20% vs. consensus, respectively. Taobao/T-mall 3P, international retail, and DME beat our estimate.</li>
<li>We suspect WeChat cooperation has been a main driver for increasing DAU of a cohort of previously untapped users. This also drove merchants to return to the platform.</li>
<li>We maintain BUY and raise TP to US$ 120 to reflect (1) higher growth of Taobao/Tmall, and (2) improved profitability of most business groups.</li>
</ul>


BABA reported CY2Q23 top-line and non-GAAP net profit 10% and in-line vs. our estimate, and 12% and 20% vs. consensus, respectively. Taobao/T-mall 3P, international retail, and DME beat our estimate.
We suspect WeChat cooperation has been a main driver for increasing DAU of a cohort of previously untapped users. This also drove merchants to return to the platform.
We maintain BUY and raise TP to US$ 120 to reflect (1) higher growth of Taobao/Tmall, and (2) improved profitability of most business groups.


[Alibaba (BABA US, BUY, TP US$120) Target Price Change]: Return of Users and Merchants Will Continue

Greater China Equity Long/Short Analyst

Eric Chen

<ul>
<li>Alibaba delivered a strong June quarter that beat consensus by a wide margin and across the board, showcasing an acceleration of recovery.</li>
<li>The strong results were however clouded by China’s weak macro signals and investors’ lingering concern about China consumption of which Alibaba is commonly seen as a proxy.</li>
<li>Alibaba trades at 9x our revised-up FY24 earnings. The most certain thing about Alibaba amidst all the uncertainties is it is getting cheaper and it is not a value trap.</li>
</ul>


Alibaba delivered a strong June quarter that beat consensus by a wide margin and across the board, showcasing an acceleration of recovery.
The strong results were however clouded by China’s weak macro signals and investors’ lingering concern about China consumption of which Alibaba is commonly seen as a proxy.
Alibaba trades at 9x our revised-up FY24 earnings. The most certain thing about Alibaba amidst all the uncertainties is it is getting cheaper and it is not a value trap.


Alibaba (BABA US): Stronger Results, Higher Conviction and Cheaper Valuation

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, BUY, TP US$127) TP Change]: The New Wanxiangtai Will Enhance the Take Rate

Taobao and Tmall have implemented two major reforms: 1) The launch of the Wanxiangtai Platform Unlimited Edition; 2) Changing the rules for...

Blue Lotus Research Institute

Alibaba’s DingTalk to Split From Cloud Division and Seek Own IPO, Source Says

Alibaba Group Holding Ltd.’s workplace collaboration platform DingTalk will split from the company’s cloud division and pursue its own IPO, a...

Caixin Global

Alibaba (BABA US) – In-Depth Analysis into Segment Value

The strategic move drives user engagement improvement through enhancing supply of value for money products and brands to reach targeted consumers

CMB International

[Alibaba (BABA US, BUY, TP US$120) Target Price Change]: Return of Users and Merchants Will Continue

We maintain BUY and raise TP to US$ 120 to reflect (1) higher growth of Taobao/Tmall, and (2) improved profitability of most business groups.

Blue Lotus Research Institute

Alibaba (BABA US): Stronger Results, Higher Conviction and Cheaper Valuation

Alibaba's stronger June quarter results make us more convinced of our bullish stance and FY24 earnings estimate off which the stock trades at 9xPE.

Eric Chen

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