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

MD, Blue Lotus Research Institute

Gu Jun, CFA

Equity Bottom-Up

Alibaba Group Holding  / Equity Bottom-Up

● Our channel check suggested Taobao recommendation feed progress to be below our expectation, suggesting it will be the low margin HEMA, Eleme and Cainiao driving the top line growth;● Implementation of e-commerce law remains unclear. Online only Taobrands and unauthorized brand resellers could face tax implications, putting pressure on BABA to lessen take rates on those affected;● We cut the TP from US$201 to US$180 and maintain BUY.

● Our channel check suggested Taobao recommendation feed progress to be below our expectation, suggesting it will be the low margin HEMA, Eleme and Cainiao driving the top line growth;● Implementation of e-commerce law remains unclear. Online only Taobrands and unauthorized brand resellers could face tax implications, putting pressure on BABA to lessen take rates on those affected;● We cut the TP from US$201 to US$180 and maintain BUY.

Alibaba (BABA) F2Q19 Preview: Profitability Below Our Estimates