To The Moon

🌟🌟🌟Alibaba $Alibaba(BABA)$  $BABA-W(09988)$  $Alibaba HK SDR 5to1(HBBD.SI)$ has just released its September Quarter 2024 results on Friday which was mixed, sending its shares down by 2.1%.

Alibaba posted adjusted earnings per share of RMB 15.06 (USD 2.15) which beat analysts expectations of RMB 14.79 but falling 4% year over year.  Revenue was RMB 236.5 billion (USD 33.7 billion) , up 5% year over year but slightly below Analysts expectations of RMB 239.97 billion. 

Alibaba's core China commerce retail business saw customer management revenue increase 2% year over year to RMB 70.4 billion.  This was driven by online gross merchandise value (GMV) growth. 

Alibaba's Cloud Intelligence Group revenue rose 7% to RMB 29.6 billion with AI related pruduct revenue growing in triple digits. 

Net income was RMB 43.54 billion (USD 6.20 billion), an increase of 63% year over year.  This was due to increase in income from operations, decrease in impairment of Alibaba's investments.   Non GAAP net income for Q3 24 was RMB 36.51 billion (USD 5.2 billion), a decrease of 9% compared to previous year quarter. 

Net cash provided by operating activities was RMB 31.43 billion (USD 4.48 billion), a decrease of 36% compared to previous year quarter.  Free cash flow was RMB 13.73 billion (USD 1.95 billion), a decrease of 70% compared to previous year quarter.  The decrease in free cash flow was mainly due to Alibaba's investments in its Cloud Infrastructure, refund to TMall merchants after the annual service fee was cancelled and other working capital changes. 

During the quarter, Alibaba increased investment in strategic initiatives.  These include price competitive products, customer service, membership program benefits and technology with the aim of enhancing user experience.  These efforts led to higher purchase frequency and improve feedback regarding overall shopping experience year over year. 

Alibaba has also introduced Quanzhantui, its AI powered platform marketing tool which saw steady increase in merchant adoption.  This helps merchants to improve their marketing efficiency, thereby leading to increased spending in marketing on its platform. 

Alibaba's online GMV growth was supported by double digit order growth year over year.  In October and November, Alibaba had a successfull 11.11 Global Shopping Festival during which Taobao and TMall achieved robust growth in GMV and a record number of purchases. 

The number of Alibaba's 88VIP members which is its highest spending customers grew by double digits, reaching 46 million during the quarter. 

Alibaba's Cloud Intelligence Group's revenue was RMB 29.61 billion (USD 4.2 billion), an increase of 7%.  Alibaba's Cloud has been ranked first and recognised as a leader in China.   The company has also strengthened its AI infrastructure to enhance AI model training too. 

For the quarter, Revenue from Alibaba International Digital Commerce Group grew 29% year over year to RMB 31.7 billion (USD4.5 billion).  This is attributed to growth of its cross border business especially AliExpress and Trendyol platforms in Europe and the Gulf region. 

Cainiao Smart Logistics Network's grew 8% year over year to RMB 24.6 billion (USD 3.5 billion), driven by increase in revenue from cross border fulfilment solutions.  Cainiao's strategy is to strengthen its end to end capabilities by developing a highly digital global logistics network. 

Alibaba Local Services Group grew its revenue for the quarter by 14% year over year to RMB 17.72 billion (USD 2.52 billion). 

Alibaba Digital Media and Entertainment Group saw a decrease in revenue by 1% to RMB 5.69 billion (USD 811 million).   Youku is reducing its operating loss due to increased advertising revenue as well as improved content. 

Alibaba repurchased a total of 414 million ordinary shares during the quarter for a total of USD 4.1 billion.  The remaining amount of Board authorisation for Alibaba's share repurchase program is USD 22 billion, which is effective through to  March 2027. 

Alibaba announced its plan to split into 6 business units on March 28 2023.  They are Cloud Intelligence Group, Taobao and TMall, Cainiao Smart Logistics Network, Local Services Group, Alibaba International Digital Commerce and Digital Media & Entertainment Group.  The restructuring would help Alibaba respond faster to market changes and become more agile.   Each of these units can pursue independent fundraising and a public listing when they are ready.   That would mean more value for Alibaba's shareholders in the future when the IPOs are called for. 

To me Alibaba is an amazing conglomerate which is more than just an ECommerce company.    It is expanding rapidly overseas and has a logistics arm to support its overseas expansion.  Then there is the Cloud Computing business which is Number 1 in China. 

Alibaba ticks all the core fundamentals of a quality stock.  It is profitable, has a rock solid balance sheet and an excellent management team.  Alibaba has a wide moat in terms of its ECommerce market share as it is the largest ECommerce company in China.  

Alibaba is also giving value to its shareholders with  a huge repurchase program in addition to its dividends which are paid annually.  The current dividend yield is 1.12%.

In addition to that, the Chinese authorities have embarked on a series of stimulus measures to kickstart the Chinese economy. 

As a Singaporean, I am keen to invest in the newly listed Alibaba SDR - $Alibaba HK SDR 5to1(HBBD.SI)$ as it is trading in Singapore at a ratio of 5 to 1.  This means that the minimum lot of 100 shares will only amount to SGD 3.03 X 100 = SGD 303.  If I have to invest directly in Hong Kong, I would have to pay 5 times more.  I do not have to worry about exchange rates and I am glad that dividends will be paid in Singapore dollars too.  

Tiger Brokers is currently having a promotion where all SDRs are commission free until 31 December 2024.  So that is an added incentive to start trading in Alibaba SDR. 

Is Alibaba A Good Buy?  Absolutely!  I believe that Alibaba is undervalued and have tremendous upside potential especially if any of the 6 business units would  have a public offering in the future. 

I am constantly on the lookout to buy great companies that are trading below their intrinsic value and believe that Alibaba is significantly undervalued. 

As Warren Buffett likes to say   "Price is what you pay, Value is what you get." 

@Daily_Discussion  @TigerStars  @Tiger_comments  @MillionaireTiger  @CaptainTiger