Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

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

<ul>
<li>While all eyes are on Alibaba splitting its business into six mini-Babas, some were quick to conclude that Tencent could be the next candidate for a similar split.</li>
<li>Unlike <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> whose business units have clear divisions and stand on its own, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> ’s businesses are interconnected making a similar split very difficult.</li>
<li>Having looked at Tencent’s business units and past regulatory probe on the company, it seems unlikely for the company to be the next candidate for an Alibaba style separation.</li>
</ul>


While all eyes are on Alibaba splitting its business into six mini-Babas, some were quick to conclude that Tencent could be the next candidate for a similar split.
Unlike Alibaba (ADR) (BABA US) whose business units have clear divisions and stand on its own, Tencent (700 HK) ’s businesses are interconnected making a similar split very difficult.
Having looked at Tencent’s business units and past regulatory probe on the company, it seems unlikely for the company to be the next candidate for an Alibaba style separation.


Tencent: Next Candidate for an Alibaba Style Split?

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Two days ago, media reported <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a> / <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> would split and possibly list several businesses. Last night Cainiao was reported as starting listing preparations.</li>
<li>Last night, <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com Inc. (9618 HK)</a> made two announcements it was proposing to spin off and list its <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2023/0330/2023033002822.pdf" target="_blank" rel="noopener">JD Property</a> and <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2023/0330/2023033002966.pdf" target="_blank" rel="noopener">JD Industrial</a> arms. This is NOT a spinoff war.</li>
<li>JD raised Series A and B for both companies. These were always going to be spins, like Health, Digits, and Logistics. JD Properties will be biggish.</li>
</ul>


Two days ago, media reported Alibaba Group (9988 HK) / Alibaba (ADR) (BABA US) would split and possibly list several businesses. Last night Cainiao was reported as starting listing preparations.
Last night, JD.com Inc. (9618 HK) made two announcements it was proposing to spin off and list its JD Property and JD Industrial arms. This is NOT a spinoff war.
JD raised Series A and B for both companies. These were always going to be spins, like Health, Digits, and Logistics. JD Properties will be biggish.


JD.com (9618 HK) Announces TWO Spin-Offs (That Were Always Going To Be Spinoffs)

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

Thematic (Sector/Industry)

<ul>
<li>Baba: Baba management holds a call with investors to explain recent movements. </li>
<li>700HK/ 1024HK/ BILI/ BIDU：Wechat Open Class is held, more features are announced（+/-/-/-）</li>
<li>ATAT：Accor formed alliance with Douyin to further explore independent growth (+)</li>
</ul>


Baba: Baba management holds a call with investors to explain recent movements. 
700HK/ 1024HK/ BILI/ BIDU：Wechat Open Class is held, more features are announced（+/-/-/-）
ATAT：Accor formed alliance with Douyin to further explore independent growth (+)


China TMT Update(Mar.31) - Baba/ 700HK/1024HK/BILI/BIDU/ATAT: Baba Management's Call

Oshadhi Kumarasiri

Alibaba Group Holding  / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a>'s shares rallied after announcing the business split, with investors believing that the sum of parts could be worth more than the current valuation.</li>
<li>Our analysis shows that NAV is only 12% higher than the current valuation, contrary to the idea of a significantly higher sum of parts value.</li>
<li>Therefore, we would be looking to short <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> yet again once this initial excitement settles.</li>
</ul>



Alibaba Group (9988 HK)'s shares rallied after announcing the business split, with investors believing that the sum of parts could be worth more than the current valuation.
Our analysis shows that NAV is only 12% higher than the current valuation, contrary to the idea of a significantly higher sum of parts value.
Therefore, we would be looking to short Alibaba (ADR) (BABA US) yet again once this initial excitement settles.


Alibaba’s Sum of the Parts Valuation:  Why the Initial Excitement May Be Overblown

<ul>
<li>In FY24, we expect BABA to moderately increase spending to defend its market share and user time spent through new user centric strategies.  </li>
<li>Strategies include 1) increasing share of video in Taobao’s information flow , and 2) introducing low-price features in Taobao. As a result, we cut BABA’s FY24 EPS by 5.0%.</li>
<li>However, due to 1) long-term growth, and 2) the more independent operation of its six business units in the future, we have raised BABA’s TP to US$ 109.</li>
</ul>


In FY24, we expect BABA to moderately increase spending to defend its market share and user time spent through new user centric strategies.  
Strategies include 1) increasing share of video in Taobao’s information flow , and 2) introducing low-price features in Taobao. As a result, we cut BABA’s FY24 EPS by 5.0%.
However, due to 1) long-term growth, and 2) the more independent operation of its six business units in the future, we have raised BABA’s TP to US$ 109.


[Alibaba (BABA US) Target Price Change]: Raise TP Amid Necessary Spendings in FY24

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 (9988 HK)

Tencent: Next Candidate for an Alibaba Style Split?

As Alibaba is splitting its business into six mini-Babas, some speculate that Tencent could be the next candidate. Unlike Alibaba, Tencent’s...

Shifara Samsudeen, ACMA, CGMA

JD.com (9618 HK) Announces TWO Spin-Offs (That Were Always Going To Be Spinoffs)

JD.com has announced the proposed spinoff+listing of two subs in HK. No spinoff of shares to JD.com shareholders. Properties could be big....

Travis Lundy

China TMT Update(Mar.31) - Baba/ 700HK/1024HK/BILI/BIDU/ATAT: Baba Management's Call

700HK/1024HK/BILI/BIDU：Wechat Open Class is held; ATAT：Accor formed alliance with Douyin to further explore independent growth in China ; key...

Blue Lotus Research Institute

Alibaba’s Sum of the Parts Valuation: Why the Initial Excitement May Be Overblown

our analysis shows that NAV is only 12% higher than the current valuation, indicating that the notion of a significantly higher sum of parts value...

Oshadhi Kumarasiri

[Alibaba (BABA US) Target Price Change]: Raise TP Amid Necessary Spendings in FY24

Due to 1) new measures ensuring long-term growth, and 2) the more independent operation of its six business units in the future, we have raised...

Blue Lotus Research Institute

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