In today’s briefing:
- Alibaba (BABA US): Stronger Results, Higher Conviction and Cheaper Valuation
- [Alibaba (BABA US, BUY, TP US$120) Target Price Change]: Return of Users and Merchants Will Continue
- With A Long-Anticipated IPO on the Horizon, Alibaba’s Cainiao Posts Stellar June Quarter Results
- Chindata Backs Bain’s Revised Terms
Alibaba (BABA US): Stronger Results, Higher Conviction and Cheaper Valuation
- 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, BUY, TP US$120) Target Price Change]: Return of Users and Merchants Will Continue
- BABA reported CY2Q23 top-line and non-GAAP net profit 10% and in-line vs. our estimate, and 12% and 20% vs. consensus, respectively. Taobao/T-mall 3P, international retail, and DME beat our estimate.
- We suspect WeChat cooperation has been a main driver for increasing DAU of a cohort of previously untapped users. This also drove merchants to return to the platform.
- We maintain BUY and raise TP to US$ 120 to reflect (1) higher growth of Taobao/Tmall, and (2) improved profitability of most business groups.
With A Long-Anticipated IPO on the Horizon, Alibaba’s Cainiao Posts Stellar June Quarter Results
- Within Alibaba (ADR) (BABA US)‘s June quarter results, the numbers from logistics arm Cainiao Smart Logistics (1437124D HK) stood out: revenue up 34% Y/Y, & EBITA turned to +ive
- In this insight we attempt to place Cainiao’s stellar results into context: it grew far faster than parent Alibaba’s revenue, but also faster than Chinese e-comm and Chinese express
- As Cainiao preps for its IPO, its June results should boost investors’ confidence. The numbers also hint at what is driving Cainiao’s recent performance, and which indicators to watch
Chindata Backs Bain’s Revised Terms
- Back on the 7 June, Chindata Group (CD US) announced Bain Capital’s NBIO to buy all shares of the Chinese data center provider it does not already own for $8/ADS.
- On the 13 July, Chindata announced that China Merchants Capital has made an NBIO at $9.20/ADS.
- Now Chindata has entered into a definitive agreement with Chindata at US$8.60/ADS. Bain holds more than 2/3s of Chindata to vote this through. And there is no PRC regulator approval.
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