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.

Equity Bottom-Up

Alibaba Group Holding  / Equity Bottom-Up

<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.


Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<ul>
<li>Alibaba’s operating margin rose to 15% in 2Q24 versus 12% in 2Q23.</li>
<li>Every expense as percentage of total revenue decreased and EBITDA of every business line increased.</li>
<li>We believe the reorganization is going smoothly and the stock has an upside of 82%. Buy.</li>
</ul>


Alibaba’s operating margin rose to 15% in 2Q24 versus 12% in 2Q23.
Every expense as percentage of total revenue decreased and EBITDA of every business line increased.
We believe the reorganization is going smoothly and the stock has an upside of 82%. Buy.


Alibaba (9988 HK): 2Q24, Higher Margin Means Smooth Reorganization, Buy

<ul>
<li>We believe the financial recovery from 1Q24 will continue in 2Q24.</li>
<li>We expect the operating margin will improve to 15% in 2Q24 versus 12% in 2Q23.</li>
<li>Alibaba has an upside of 69% and the target will be HK$143 for the year end 2024. Buy.</li>
</ul>


We believe the financial recovery from 1Q24 will continue in 2Q24.
We expect the operating margin will improve to 15% in 2Q24 versus 12% in 2Q23.
Alibaba has an upside of 69% and the target will be HK$143 for the year end 2024. Buy.


Alibaba (9988 HK) 3Q24 Earnings Preview: Recovery to Continue, 67% Upside

<ul>
<li>JD is in fact competing with a broadcaster on Alibaba’s app, but not Alibaba itself.</li>
<li>Trip.com’s domestic orders during National Holidays were double last year.</li>
<li>New Oriental’s revenue increased strongly with new learning centers in 1Q24.</li>
</ul>


JD is in fact competing with a broadcaster on Alibaba’s app, but not Alibaba itself.
Trip.com’s domestic orders during National Holidays were double last year.
New Oriental’s revenue increased strongly with new learning centers in 1Q24.


China Consumption Weekly (30 Oct 2023): Alibaba, Trip.com, New Oriental, Weibo

Greater China Equity Long/Short Analyst

Eric Chen

<ul>
<li>The increasing dominance of retailers (off/online) in the US consumer sector measured by market cap over last three decades tellingly illustrates the long term potential of Alibaba in China.</li>
<li>While we believe consensus underestimates bottom line for 2QFY24, investors will likely focus on the outlook for 2024, with growth of Taobao/Tmall group remaining key share price driver.</li>
<li>Investors pulling out of Alibaba due to geopolitical risks remind me of how ESG drove investments away from oil &amp; gas years ago and eventually led to the latter’s outperformance.  </li>
</ul>


The increasing dominance of retailers (off/online) in the US consumer sector measured by market cap over last three decades tellingly illustrates the long term potential of Alibaba in China.
While we believe consensus underestimates bottom line for 2QFY24, investors will likely focus on the outlook for 2024, with growth of Taobao/Tmall group remaining key share price driver.
Investors pulling out of Alibaba due to geopolitical risks remind me of how ESG drove investments away from oil &amp; gas years ago and eventually led to the latter’s outperformance.  


Alibaba (BABA US): Still One of if Not the Best China Consumer Play

China

JD.com Inc is an online direct sales company in China.  The Company offers a wide selection of products through its website and mobile applications.  JD.com sells appliances, computers, digital products, communication products, garments, books, and household items to consumers and vendors.

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.

PDD Holdings Inc. is a multinational commerce group that owns and operates a portfolio of businesses. The Company focuses on digital economy so that local communities and small businesses can benefit from the increased productivity and new opportunities. PDD Holdings has built a network of sourcing, logistics, and fulfillment capabilities for its underlying businesses.

Prosus N.V. provides internet based services. The Company focuses on investments in internet, digital media, e-commerce retailing, and consumer internet companies. Prosus serves customers worldwide.

Hainan Island Construction Co Ltd.  is a property development company. The Company also operates regional malls and hotels.

Guangzhou Friendship Group Co., Ltd operates supermarkets and department stores in Guangzhou, China.  The Company sells a variety of consumer products, including apparel, food and beverages, electronics, jewelry, cosmetics, and electric appliances.  Guangzhou Friendship also leases real estate properties.

Guangzhou Friendship Group Co, Ltd. (000987 CH)

Golden Eagle Retail Group Limited operates department stores in China. The Company's stores target mid-range and high-end market segments in China, and contain various functions and amenities such as dining, entertainment, beauty and personal care, cinemas, and preschool education in addition to their core function as an international department store.

Tianjin Quanye Bazaar (Group) Co., Ltd. owns and operates department stores and supermarkets, as well as sells general merchandise on a wholesale basis. Tianjin Quanye also provides storage and cargo delivery services, and invests in real estate and interior decoration businesses.

Xian International Medical Investment Co Ltd is principally engaged in the medical services industry.

Xian International Medical Invest (000516 CH)

Dollar General Corporation operates a chain of discount retail stores located primarily in the southern, southwestern, midwestern, and eastern United States. The Company offer a broad selection of merchandise, including consumable products such as food, paper and cleaning products, health, beauty, pet supplies, and non-consumables such as seasonal merchandise.

Trent Limited operates a chain of retail stores that sell fashion apparel, cosmetics, perfumery products and toiletry items. The Company sells apparel for men, women and children. Trent sells its cosmetics products under the "Westside" and "Trent" brand names.

Dollar Tree, Inc. operates a discount variety store chain in the United States. The Company sells an assortment of everyday general merchandise at the $1.00 price point.

Pan Pacific International Holdings Corporation operates discount stores which sell consumer electronics, daily necessities, groceries, watches, and sporting goods. The Company mostly operates small scale stores based in Tokyo.

Pan Pacific International Holdings (7532 JP)

Target Corporation operates general merchandise discount stores. The Company focuses on merchandising operations which includes general merchandise and food discount stores and a fully integrated online business. Target also offers credit to qualified applicants through its branded proprietary credit cards.

Naspers Limited operates in the technology industry. The Company invests in global internet companies across the world.

Next Plc conducts retailing, home shopping, and customer services management operations.  The Company's retail stores sell ladies wear, mens wear, childrens wear, and housewares.

Avenue Supermarts Ltd. (ASL) owns and operates hypermarkets and supermarkets. The Company offers products such as garments, footwears, toys and games, bed and bath linen, stationery, grocery, household, and electronic products. ASL operates throughout India.

Dollarama Inc. operates as an online marketplace. The Company offers cleaning, school, office, home, kitchen, food, health, beauty, hardware, electronics, toys, and pets products, as well as provides delivery services. Dollarama serves customers in Canada.

MercadoLibre, Inc. operates an online trading site for the Latin American markets. The Company's website allows businesses and individuals to list items, conduct sales, and purchases online in either a fixed-price and auction format. MercadoLibre offers classified advertisements for motor vehicles, vessels, aircraft, and real estate, as well as online payment services.

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Alibaba Group Holding (9988 HK)

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

Alibaba (9988 HK): 2Q24, Higher Margin Means Smooth Reorganization, Buy

Alibaba’s operating margin rose to 15% in 2Q24 versus 12% in 2Q23. Every expense as percentage of total revenue decreased and EBITDA of every...

Ming Lu

Alibaba (9988 HK) 3Q24 Earnings Preview: Recovery to Continue, 67% Upside

The financial recovery from 1Q24 will continue in 2Q24. Op margin will improve to 15% in 2Q24 versus 12% in 2Q23. Alibaba has an upside of 69% for...

Ming Lu

China Consumption Weekly (30 Oct 2023): Alibaba, Trip.com, New Oriental, Weibo

JD is competing with a broadcaster on Alibaba’s app. Trip.com’s domestic orders during National Holidays were double last year. New Oriental’s...

Ming Lu

Alibaba (BABA US): Still One of if Not the Best China Consumer Play

The dominance of retailers in the US consumer sector shows Alibaba's long term potential. Geopolitical risks driving investors away is similar to...

Eric Chen

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

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

Alibaba (9988 HK): 2Q24, Higher Margin Means Smooth Reorganization, Buy

Alibaba’s operating margin rose to 15% in 2Q24 versus 12% in 2Q23. Every expense as percentage of total revenue decreased and EBITDA of every...

Ming Lu

Alibaba (9988 HK) 3Q24 Earnings Preview: Recovery to Continue, 67% Upside

The financial recovery from 1Q24 will continue in 2Q24. Op margin will improve to 15% in 2Q24 versus 12% in 2Q23. Alibaba has an upside of 69% for...

Ming Lu

China Consumption Weekly (30 Oct 2023): Alibaba, Trip.com, New Oriental, Weibo

JD is competing with a broadcaster on Alibaba’s app. Trip.com’s domestic orders during National Holidays were double last year. New Oriental’s...

Ming Lu

Alibaba (BABA US): Still One of if Not the Best China Consumer Play

​The dominance of retailers in the US consumer sector shows Alibaba's long term potential. Geopolitical risks driving investors away is similar to...

Eric Chen

The dominance of retailers in the US consumer sector shows Alibaba's long term potential. Geopolitical risks driving investors away is similar to...