Alibaba: An Undervalued Empire With 45%+ Upside

seekingalpha2021-07-13

Summary Alibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms. Its stock price has been under pressure for over a year by perceived political/delisting risk ...

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Comment（13）

Falafulu
·2021-07-14
Wow
Reply
1
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ProsperTTM
·2021-07-13
Buy to hold for mid to long term
Reply
3
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TayYZ
·2021-07-13
Yes
Reply
5
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JHew
·2021-07-13
[財迷]
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5
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ValuInvestor
·2021-07-13
Still too much risk from China regulators
Reply
2
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- kuppi:
  yes
  2021-07-13
  Reply
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FlareSpark
·2021-07-13
?
Reply
4
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- Milankaka:
  [Miser]
  2021-07-13
  Reply
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DansonYong
·2021-07-13
Yes exactly
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2
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KH321
·2021-07-13
Everyone says good, but price not rising.
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3
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- rachelswl:
  need to wait long term
  2021-07-13
  Reply
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Reallyreal
·2021-07-13
Yeaa
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5
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ac1887
·2021-07-13
Good.
Reply
6
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- Reallyreal:
  Yup!
  2021-07-13
  Reply
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JackFruuud
·2021-07-13
?
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4
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- angieee:
  waiting for quite a while :,))
  2021-07-13
  Reply
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humansharkk
·2021-07-13
Wow insightful!!!
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4
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- Stellin:
  Agreed
  2021-07-13
  Reply
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- JackFruuud:
  ?
  2021-07-13
  Reply
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- Adollar:
  Good stock to buy
  2021-07-13
  Reply
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Bryan1999
·2021-07-13
Like
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5
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- NicholasTZL:
  Naisr
  2021-07-13
  Reply
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It has over 1B annual act","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BABA":"阿里巴巴","09988":"阿里巴巴-W"},"translate_title":"阿里巴巴：估值被低估的帝国，增值45%+","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"09988":0.9,"BABA":0.9},"content_text":"Summary\n\nAlibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.\nIts stock price has been under pressure for over a year by perceived political/delisting risk and its recent Ant Financial IPO cancellation.\nI break it down by business units, show its strength and true value, and discuss its delisting risks.\n\nPrice action deviates from Fundamentals\nAlibaba Group Holding Limited(NYSE:BABA)stock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon (AMZN) was up 101%, its Latin American peer MercadoLibre (MELI) was up 172%, even the S&P 500 index was up 39%.\nData by YCharts\nAlibaba is the largest eCommerce operation in the world. It has over 1B annual active consumers, over 1T GMV (gross merchandise volume) in FY21, both numbers larger than any other e-commerce company in the world, Amazon included.\nIn the meantime, Alibaba's core commerce and cloud computing recorded 42% and 50% YoY growth FY21. These are jaw-dropping growth numbers, especially at Alibaba's massive scale.\nAlso worth noting, while its revenue grows at an impressive rate, its Ebitda profit margin continues to show 17% YoY improvement, further demonstrate its superior unit economics, and effective cost control as it scales up.\n\nSource: 4Q21 AlibabaInvestor presentation\nInvestment Thesis\nMy conservative model values Alibaba between $773B ($299/share) to $967B ($373/share). It offers an upside potential between 45% and 81% to its closing price of $206/share on 7/9/21.\nThe table below provides a summary view of my Sum-of-all-parts valuation, and I discuss them in detail in later sections.\n\nSource: Excel sheet prepared by Author\nValuation By Segments\nAlibaba has four business segments and two investment segments, they are:\n\nCore Commerce: Taobao, TMall, Alibaba, AliExpress, Lazada, ele.me, etc.\nCloud Computing: Alibaba Cloud\nDigital Media: Youku, Ali Sports, AliGame, etc.\nInnovative Initiatives: gmap, AliOS, etc\nAnt Group\nOther strategic Investments: DiDi, bilibili, etc\n\nLet us dive into them.\n\nSource:Alibaba Investor Day2020\n1. Core Commerce\nMarketplace-based core commerceincludes Taobao, TMall, 1688.com, alibaba.com, AliExpress, TMall Market. These are mature and profit-generating marketplaces with steady growth.\nThese are the crown jewels of Alibaba's empire. It composes of No.1 Online retail, No.1 online wholesale, and No 1 B2C Export marketplace in China.\nFY21 adj Ebitda for marketplace-based core commerce is $35B.\nI use a moderate 15x - 20x Ev/Ebitda ratio (e.g. Amazon is 30x+ Ev/Ebitda), values its marketplace-based core commerce between 570B and 700B.\nLazada:international retail marketplace in SEA\nAlibaba, through three rounds of a total $4B investment, is a majority owner of Lazada.\nWhile Shopee (SE) takes the commanding lead in the SEA e-commerce marketplace, Lazada is still a No.2 with 100Mil+ monthly active users, ahead of Tokopedia.\nAlibaba only provides international e-commerce in aggregate (~5B) in FY21, with no revenue breakdown. Lazada and AliExpress are 2 primary contributors in this segment.\nAs a reference, Tokopedia, an e-commerce competitor and No.3 in SEA, was valued at $18B.\nI take a conservative approach and value Lazada between $5B (acquisition cost) and $10B (50% discount to Tokopedia's recent valuation despite Lazada's slightly larger size).\nLocal Services(ele.me, koubei)\nEle.me has about 80% of DoorDash (DASH) revenue, with 8x active customers (40Mil vs 5Mil) in FY21. In food delivery services in China, Meituan leads with 65% market share, ele.me No.2 with 27.4% market share, 3B FY21 revenue.\nIf we use DoorDash valuation at 15x EV/Sales, that would value ele.me at 45B, if we use Grubhub's (GRUB) 8x EV/Sales, it values ele.me at $24B\nAlibaba acquired ele.me in 2018 for $9.5B.\nI take a conservative approach and value ele.me between 9.5B (acquisition cost) and $24B (use Grub Ev/Sales ratio).\nNew Retail(Freshippo)\nKnown as Hema in China, it is similar to Amazon Go, a new retail format store leveraging technology to provide zero human touch shopping experience.\nI consider it as a part of its core commerce strategy to maintain its competitive edge and assign no additional value.\nLogistic(Cainiao)\nCainiao is Alibaba's logistic arm.\nBABA paid 3.3B to increase its Cainiao stake from 51% to 63% in its latestroundin 2019. That values its stake ~18B at cost.\nCross border e-commerece(Kaola)\nKaola is considered to be a TMall extension to improve its core competency and I assign no additional value.\nSource: FY21 Investorpresentation\n2. Alibaba Cloud\nAlibaba Cloud's YoY revenue growth was 62% and 50% in the last two years. Its FY21 revenue was $9.2B and turned cash flow positive the first time with 47M adjusted Ebitda.\nIn terms of China's cloud market share, Alibaba cloud leads the pack with 39.8% as of Q1 2021.\nAccording to China Internet Watch, cloud infrastructure spending growth in China outpaced the RoW, supported by the government's strategic priority in cloud computing, and it has been consistently over 50% over the last 7 quarters.\n\n\nSource:China Cloud market 1Q21- China Internet Watch\nIf we zoom out globally, Alibaba cloud ranks No 4 with a 6% market share, right after Amazon, Microsoft (MSFT), and Google (GOOG).\nIt is about 20% the size of Amazon cloud in this $150B global market.\n\nSource:Cloud Market Q3Y20Canalys\nSimilar research from Synergy Research Group in Q1 21 also confirmed the same ranking/market share.\n\nSource: Synergy Research Group on Statista\nUsing a very conservative 10x P/S values Alibaba Cloud at $100B.\nBoth GS (GS) and MS (MS)valuedAlibaba Cloud at $120B+ a year ago after Alibaba disclosed its 1Q21 fiscal data in Aug 2020.\nGiven the above, I value Alibaba Cloud between 100B and 120B.\n3. Digital Media and Entertainment\nIt includes YouKu, AliSports, AliGame, UC\nYouKu has 500M Monthly Active Users, 800M video views, one of China's top video/streaming service platforms, along with iQIYI, and Tencent Video.\nAlibaba spent $4B in 2016 to acquire Youku.\nIts main competitor iQIYI (IQ) is listed in Nasdaq, currently valued at 10.4B.\nDigital media/entertainment reported $4.5B revenue in FY21, with an adjusted Ebitda is 0.9B.\nI value Youku (and the rest of segment assets) between $4.5B (acquisition cost) and 9B (10x Ev/Ebitda).\n4. Innovation Initiatives\nAs I have few visibilities in these innovation initiatives, I take a conservative approach and assign no value.\n5. Ant Group\nAnt Group valuation could certainly be a controversial take.\nIts valuation hit $320B at its peak prior to IPO. Since its IPO halt in Nov 2020, its valuation has declined significantly, the latestanalysisfrom Sanford Bernstein valued it at $120B.\nAt a $120B valuation, BABA's 1/3 stake is worth $40B.\nput aside valuation, a head-to-head comparison between 2 dominating FinTech in China (Ant and Tencent) shows its massive scale in absolute numbers.\n\nsource:TechCrunchchina's top fintech platform Ant vs Tencent\nPut the numbers into perspective, Ant Group's active user is about 2x PayPal (PYPL) size, and roughly the same revenue. PayPal is currently valued at $350B.\n\nsource:SPGlobal\nAn insightful comparison from S&P Global market points out while Ant and PayPal revenue are comparable, Ant has about 20x TPV (Transaction Payment Volume) more than PayPal and Ant's take rate is only 5% of PayPal's.\nNote: PayPal take rate 2.5%, and Ant is at a mere 0.11%.\nAs shown in Chart 1 and 2, PayPal's take rate has been steadily declining since 2018, while Ant increases.\nIn summary, I think Bernstein's $120B valuations is a very conservative number. I consider Ant is on par with PayPal, and even with a 50% discount shall value Ant Group at $175B.\nThus I would value Alibaba's 1/3 stake in Ant Group between $40B and $58B.\n6. Strategic Investments\nReported by Alibaba at $45B valuations as of Jun30, 2020.\n\nSome notable investment includes:\n8% ownership stake in Bilibili (BILI)\nA single-digit ownership stake in DiDi (DIDI)\nDelisting Risk\nNow let us talk about the elephant in the room - its various risks, particularly its delisting risk as discussed frequently among US market participants\nI discussed the general Chinese ADR delisting risk in a recent Tweet thread. For these interested in the details:\n\nIn summary:\n\ndelisting poses an immediate trading liquidity risk, thus short-term volatility.\nStocks are fungible. For dually listed stocks such as Alibaba, there is no/limited long-term material impact to shareholders especially if one is prepared and ready to receive its shares in the other exchange. In BABA's case, that would be its shares listed on Hong Kong Stock Exchange.\nThere are also established tender processes to redeem if the company offers, which was exactly what happened with China Mobile and China Unicom in earlier 2021.\n\nOther Concerns\nAnti-monopoly violation: Alibaba was recently levied a $2.8B fine due to anti-monopoly violation. In relative terms, that fine alone has no material impact as it was less than 0.5% of its market cap. There are legit concerns that BABA could be subject to further regulatory fines in a less predictable manner.\nJack Ma: Jack Ma risk has been talked about a lot. The fact is Jack Ma already stepped down from both chairmanship and CEO role of Alibaba and has gradually detached himself (at least in the public) from the business.\nAnt Group IPO halt: I think Ant Group IPO halt was a big disappointment and shows certain unpredictability in the current environment. However, I think that has been more than priced in.\nConcluding Thoughts\nA conservative sum of all parts values BABA enterprise value between 773B ($299/share) and 965B ($373/share). At the current price of $206/share, it offers 45% to 81% upside potential, and I am increasing my position at the current price.","kind":"news","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":145227704,"gmtCreate":1626226708308,"gmtModify":1703755869680,"author":{"id":"3554966833368904","authorId":"3554966833368904","name":"Falafulu","avatar":"https://static.tigerbbs.com/57de22e9bf76a9f36da485155977e123","vip":1,"crmLevel":5,"crmLevelSwitch":0,"authorIdStr":"3554966833368904","idStr":"3554966833368904"},"htmlText":"Wow","listText":"Wow","text":"Wow","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/145227704","repostId":1171355403,"repostType":2,"repost":{"id":"1171355403","kind":"news","pubTimestamp":1626140399,"share":"https://ttm.financial/m/news/1171355403?lang=&edition=fundamental","pubTime":"2021-07-13 09:39","market":"us","language":"en","title":"Alibaba: An Undervalued Empire With 45%+ Upside","url":"https://stock-news.laohu8.com/highlight/detail?id=1171355403","media":"seekingalpha","summary":"Alibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.I break it down by business units, show its strength and true value, and discuss its delisting risks.Alibaba Group Holding Limitedstock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon was up 101%, its Latin American peer MercadoLibre was up 172%, even the S&P 500 index was up 39%.Alibaba is the largest eCommerce operation in the world. It has over 1B annual act","content":"Summary\n<ul>\n <li>Alibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.</li>\n <li>Its stock price has been under pressure for over a year by perceived political/delisting risk and its recent Ant Financial IPO cancellation.</li>\n <li>I break it down by business units, show its strength and true value, and discuss its delisting risks.</li>\n</ul>\nPrice action deviates from Fundamentals\nAlibaba Group Holding Limited(NYSE:BABA)stock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon (AMZN) was up 101%, its Latin American peer MercadoLibre (MELI) was up 172%, even the S&amp;P 500 index was up 39%.\n<img src=\"https://static.tigerbbs.com/699af948598c5dab55d7ba41931d1944\" tg-width=\"635\" tg-height=\"467\" referrerpolicy=\"no-referrer\">Data by YCharts\nAlibaba is the largest eCommerce operation in the world. It has over 1B annual active consumers, over 1T GMV (gross merchandise volume) in FY21, both numbers larger than any other e-commerce company in the world, Amazon included.\nIn the meantime, Alibaba's core commerce and cloud computing recorded 42% and 50% YoY growth FY21. These are jaw-dropping growth numbers, especially at Alibaba's massive scale.\nAlso worth noting, while its revenue grows at an impressive rate, its Ebitda profit margin continues to show 17% YoY improvement, further demonstrate its superior unit economics, and effective cost control as it scales up.\n<img src=\"https://static.tigerbbs.com/b69f23fbc36af93ba24ecf933c2b4bbe\" tg-width=\"640\" tg-height=\"474\" referrerpolicy=\"no-referrer\">\nSource: 4Q21 AlibabaInvestor presentation\nInvestment Thesis\nMy conservative model values Alibaba between $773B ($299/share) to $967B ($373/share). It offers an upside potential between 45% and 81% to its closing price of $206/share on 7/9/21.\nThe table below provides a summary view of my Sum-of-all-parts valuation, and I discuss them in detail in later sections.\n<img src=\"https://static.tigerbbs.com/1c3b44cb0364f61901a479a1f6948afd\" tg-width=\"640\" tg-height=\"348\" referrerpolicy=\"no-referrer\">\nSource: Excel sheet prepared by Author\nValuation By Segments\nAlibaba has four business segments and two investment segments, they are:\n<ul>\n <li>Core Commerce: Taobao, TMall, Alibaba, AliExpress, Lazada, ele.me, etc.</li>\n <li>Cloud Computing: Alibaba Cloud</li>\n <li>Digital Media: Youku, Ali Sports, AliGame, etc.</li>\n <li>Innovative Initiatives: gmap, AliOS, etc</li>\n <li>Ant Group</li>\n <li>Other strategic Investments: DiDi, bilibili, etc</li>\n</ul>\nLet us dive into them.\n<img src=\"https://static.tigerbbs.com/033f24b75c357021d3d1177cc2e3bbf4\" tg-width=\"640\" tg-height=\"140\" referrerpolicy=\"no-referrer\">\nSource:Alibaba Investor Day2020\n1. Core Commerce\nMarketplace-based core commerceincludes Taobao, TMall, 1688.com, alibaba.com, AliExpress, TMall Market. These are mature and profit-generating marketplaces with steady growth.\nThese are the crown jewels of Alibaba's empire. It composes of No.1 Online retail, No.1 online wholesale, and No 1 B2C Export marketplace in China.\nFY21 adj Ebitda for marketplace-based core commerce is $35B.\nI use a moderate 15x - 20x Ev/Ebitda ratio (e.g. Amazon is 30x+ Ev/Ebitda), values its marketplace-based core commerce between 570B and 700B.\nLazada:international retail marketplace in SEA\nAlibaba, through three rounds of a total $4B investment, is a majority owner of Lazada.\nWhile Shopee (SE) takes the commanding lead in the SEA e-commerce marketplace, Lazada is still a No.2 with 100Mil+ monthly active users, ahead of Tokopedia.\nAlibaba only provides international e-commerce in aggregate (~5B) in FY21, with no revenue breakdown. Lazada and AliExpress are 2 primary contributors in this segment.\nAs a reference, Tokopedia, an e-commerce competitor and No.3 in SEA, was valued at $18B.\nI take a conservative approach and value Lazada between $5B (acquisition cost) and $10B (50% discount to Tokopedia's recent valuation despite Lazada's slightly larger size).\nLocal Services(ele.me, koubei)\nEle.me has about 80% of DoorDash (DASH) revenue, with 8x active customers (40Mil vs 5Mil) in FY21. In food delivery services in China, Meituan leads with 65% market share, ele.me No.2 with 27.4% market share, 3B FY21 revenue.\nIf we use DoorDash valuation at 15x EV/Sales, that would value ele.me at 45B, if we use Grubhub's (GRUB) 8x EV/Sales, it values ele.me at $24B\nAlibaba acquired ele.me in 2018 for $9.5B.\nI take a conservative approach and value ele.me between 9.5B (acquisition cost) and $24B (use Grub Ev/Sales ratio).\nNew Retail(Freshippo)\nKnown as Hema in China, it is similar to Amazon Go, a new retail format store leveraging technology to provide zero human touch shopping experience.\nI consider it as a part of its core commerce strategy to maintain its competitive edge and assign no additional value.\nLogistic(Cainiao)\nCainiao is Alibaba's logistic arm.\nBABA paid 3.3B to increase its Cainiao stake from 51% to 63% in its latestroundin 2019. That values its stake ~18B at cost.\nCross border e-commerece(Kaola)\nKaola is considered to be a TMall extension to improve its core competency and I assign no additional value.\n<img src=\"https://static.tigerbbs.com/80468b018507ac3b52aeec68b0598486\" tg-width=\"640\" tg-height=\"482\" referrerpolicy=\"no-referrer\">Source: FY21 Investorpresentation\n2. Alibaba Cloud\nAlibaba Cloud's YoY revenue growth was 62% and 50% in the last two years. Its FY21 revenue was $9.2B and turned cash flow positive the first time with 47M adjusted Ebitda.\nIn terms of China's cloud market share, Alibaba cloud leads the pack with 39.8% as of Q1 2021.\nAccording to China Internet Watch, cloud infrastructure spending growth in China outpaced the RoW, supported by the government's strategic priority in cloud computing, and it has been consistently over 50% over the last 7 quarters.\n<img src=\"https://static.tigerbbs.com/cb80ade495a99acd13fa3efc4fc3f518\" tg-width=\"640\" tg-height=\"391\" referrerpolicy=\"no-referrer\">\n<img src=\"https://static.tigerbbs.com/b8eb951fb359485adc84747b78e74c71\" tg-width=\"640\" tg-height=\"383\" referrerpolicy=\"no-referrer\">\nSource:China Cloud market 1Q21- China Internet Watch\nIf we zoom out globally, Alibaba cloud ranks No 4 with a 6% market share, right after Amazon, Microsoft (MSFT), and Google (GOOG).\nIt is about 20% the size of Amazon cloud in this $150B global market.\n<img src=\"https://static.tigerbbs.com/5ef9f1797dbfd7d1ca0ad84c3e009923\" tg-width=\"640\" tg-height=\"364\" referrerpolicy=\"no-referrer\">\nSource:Cloud Market Q3Y20Canalys\nSimilar research from Synergy Research Group in Q1 21 also confirmed the same ranking/market share.\n<img src=\"https://static.tigerbbs.com/cb5b1ff4c0cdbf586867d03a369d395e\" tg-width=\"499\" tg-height=\"497\" referrerpolicy=\"no-referrer\">\nSource: Synergy Research Group on Statista\nUsing a very conservative 10x P/S values Alibaba Cloud at $100B.\nBoth GS (GS) and MS (MS)valuedAlibaba Cloud at $120B+ a year ago after Alibaba disclosed its 1Q21 fiscal data in Aug 2020.\nGiven the above, I value Alibaba Cloud between 100B and 120B.\n3. Digital Media and Entertainment\nIt includes YouKu, AliSports, AliGame, UC\nYouKu has 500M Monthly Active Users, 800M video views, one of China's top video/streaming service platforms, along with iQIYI, and Tencent Video.\nAlibaba spent $4B in 2016 to acquire Youku.\nIts main competitor iQIYI (IQ) is listed in Nasdaq, currently valued at 10.4B.\nDigital media/entertainment reported $4.5B revenue in FY21, with an adjusted Ebitda is 0.9B.\nI value Youku (and the rest of segment assets) between $4.5B (acquisition cost) and 9B (10x Ev/Ebitda).\n4. Innovation Initiatives\nAs I have few visibilities in these innovation initiatives, I take a conservative approach and assign no value.\n5. Ant Group\nAnt Group valuation could certainly be a controversial take.\nIts valuation hit $320B at its peak prior to IPO. Since its IPO halt in Nov 2020, its valuation has declined significantly, the latestanalysisfrom Sanford Bernstein valued it at $120B.\nAt a $120B valuation, BABA's 1/3 stake is worth $40B.\nput aside valuation, a head-to-head comparison between 2 dominating FinTech in China (Ant and Tencent) shows its massive scale in absolute numbers.\n<img src=\"https://static.tigerbbs.com/f6ed30632a6897a6c57eca61205d3bc7\" tg-width=\"640\" tg-height=\"353\" referrerpolicy=\"no-referrer\">\nsource:TechCrunchchina's top fintech platform Ant vs Tencent\nPut the numbers into perspective, Ant Group's active user is about 2x PayPal (PYPL) size, and roughly the same revenue. PayPal is currently valued at $350B.\n<img src=\"https://static.tigerbbs.com/3318320d7217809542f5c2516c83cb01\" tg-width=\"640\" tg-height=\"764\" referrerpolicy=\"no-referrer\">\nsource:SPGlobal\nAn insightful comparison from S&amp;P Global market points out while Ant and PayPal revenue are comparable, Ant has about 20x TPV (Transaction Payment Volume) more than PayPal and Ant's take rate is only 5% of PayPal's.\nNote: PayPal take rate 2.5%, and Ant is at a mere 0.11%.\nAs shown in Chart 1 and 2, PayPal's take rate has been steadily declining since 2018, while Ant increases.\nIn summary, I think Bernstein's $120B valuations is a very conservative number. I consider Ant is on par with PayPal, and even with a 50% discount shall value Ant Group at $175B.\nThus I would value Alibaba's 1/3 stake in Ant Group between $40B and $58B.\n6. Strategic Investments\nReported by Alibaba at $45B valuations as of Jun30, 2020.\n<img src=\"https://static.tigerbbs.com/ce0e36c5240ce4a4c741785ea8a9de96\" tg-width=\"207\" tg-height=\"350\" referrerpolicy=\"no-referrer\">\nSome notable investment includes:\n8% ownership stake in Bilibili (BILI)\nA single-digit ownership stake in DiDi (DIDI)\nDelisting Risk\nNow let us talk about the elephant in the room - its various risks, particularly its delisting risk as discussed frequently among US market participants\nI discussed the general Chinese ADR delisting risk in a recent Tweet thread. For these interested in the details:\n<img src=\"https://static.tigerbbs.com/fbfb7535a1b9fc863aa6d492ae17dc3f\" tg-width=\"583\" tg-height=\"432\">\nIn summary:\n<ol>\n <li>delisting poses an immediate trading liquidity risk, thus short-term volatility.</li>\n <li>Stocks are fungible. For dually listed stocks such as Alibaba, there is no/limited long-term material impact to shareholders especially if one is prepared and ready to receive its shares in the other exchange. In BABA's case, that would be its shares listed on Hong Kong Stock Exchange.</li>\n <li>There are also established tender processes to redeem if the company offers, which was exactly what happened with China Mobile and China Unicom in earlier 2021.</li>\n</ol>\nOther Concerns\nAnti-monopoly violation: Alibaba was recently levied a $2.8B fine due to anti-monopoly violation. In relative terms, that fine alone has no material impact as it was less than 0.5% of its market cap. There are legit concerns that BABA could be subject to further regulatory fines in a less predictable manner.\nJack Ma: Jack Ma risk has been talked about a lot. The fact is Jack Ma already stepped down from both chairmanship and CEO role of Alibaba and has gradually detached himself (at least in the public) from the business.\nAnt Group IPO halt: I think Ant Group IPO halt was a big disappointment and shows certain unpredictability in the current environment. However, I think that has been more than priced in.\nConcluding Thoughts\nA conservative sum of all parts values BABA enterprise value between 773B ($299/share) and 965B ($373/share). At the current price of $206/share, it offers 45% to 81% upside potential, and I am increasing my position at the current price.","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Alibaba: An Undervalued Empire With 45%+ Upside</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAlibaba: An Undervalued Empire With 45%+ Upside\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-07-13 09:39 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nAlibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.\nIts stock price has been under pressure for over a year by perceived political/delisting risk ...\n\n<a href=\"https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BABA":"阿里巴巴","09988":"阿里巴巴-W"},"source_url":"https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1171355403","content_text":"Summary\n\nAlibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.\nIts stock price has been under pressure for over a year by perceived political/delisting risk and its recent Ant Financial IPO cancellation.\nI break it down by business units, show its strength and true value, and discuss its delisting risks.\n\nPrice action deviates from Fundamentals\nAlibaba Group Holding Limited(NYSE:BABA)stock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon (AMZN) was up 101%, its Latin American peer MercadoLibre (MELI) was up 172%, even the S&P 500 index was up 39%.\nData by YCharts\nAlibaba is the largest eCommerce operation in the world. It has over 1B annual active consumers, over 1T GMV (gross merchandise volume) in FY21, both numbers larger than any other e-commerce company in the world, Amazon included.\nIn the meantime, Alibaba's core commerce and cloud computing recorded 42% and 50% YoY growth FY21. These are jaw-dropping growth numbers, especially at Alibaba's massive scale.\nAlso worth noting, while its revenue grows at an impressive rate, its Ebitda profit margin continues to show 17% YoY improvement, further demonstrate its superior unit economics, and effective cost control as it scales up.\n\nSource: 4Q21 AlibabaInvestor presentation\nInvestment Thesis\nMy conservative model values Alibaba between $773B ($299/share) to $967B ($373/share). It offers an upside potential between 45% and 81% to its closing price of $206/share on 7/9/21.\nThe table below provides a summary view of my Sum-of-all-parts valuation, and I discuss them in detail in later sections.\n\nSource: Excel sheet prepared by Author\nValuation By Segments\nAlibaba has four business segments and two investment segments, they are:\n\nCore Commerce: Taobao, TMall, Alibaba, AliExpress, Lazada, ele.me, etc.\nCloud Computing: Alibaba Cloud\nDigital Media: Youku, Ali Sports, AliGame, etc.\nInnovative Initiatives: gmap, AliOS, etc\nAnt Group\nOther strategic Investments: DiDi, bilibili, etc\n\nLet us dive into them.\n\nSource:Alibaba Investor Day2020\n1. Core Commerce\nMarketplace-based core commerceincludes Taobao, TMall, 1688.com, alibaba.com, AliExpress, TMall Market. These are mature and profit-generating marketplaces with steady growth.\nThese are the crown jewels of Alibaba's empire. It composes of No.1 Online retail, No.1 online wholesale, and No 1 B2C Export marketplace in China.\nFY21 adj Ebitda for marketplace-based core commerce is $35B.\nI use a moderate 15x - 20x Ev/Ebitda ratio (e.g. Amazon is 30x+ Ev/Ebitda), values its marketplace-based core commerce between 570B and 700B.\nLazada:international retail marketplace in SEA\nAlibaba, through three rounds of a total $4B investment, is a majority owner of Lazada.\nWhile Shopee (SE) takes the commanding lead in the SEA e-commerce marketplace, Lazada is still a No.2 with 100Mil+ monthly active users, ahead of Tokopedia.\nAlibaba only provides international e-commerce in aggregate (~5B) in FY21, with no revenue breakdown. Lazada and AliExpress are 2 primary contributors in this segment.\nAs a reference, Tokopedia, an e-commerce competitor and No.3 in SEA, was valued at $18B.\nI take a conservative approach and value Lazada between $5B (acquisition cost) and $10B (50% discount to Tokopedia's recent valuation despite Lazada's slightly larger size).\nLocal Services(ele.me, koubei)\nEle.me has about 80% of DoorDash (DASH) revenue, with 8x active customers (40Mil vs 5Mil) in FY21. In food delivery services in China, Meituan leads with 65% market share, ele.me No.2 with 27.4% market share, 3B FY21 revenue.\nIf we use DoorDash valuation at 15x EV/Sales, that would value ele.me at 45B, if we use Grubhub's (GRUB) 8x EV/Sales, it values ele.me at $24B\nAlibaba acquired ele.me in 2018 for $9.5B.\nI take a conservative approach and value ele.me between 9.5B (acquisition cost) and $24B (use Grub Ev/Sales ratio).\nNew Retail(Freshippo)\nKnown as Hema in China, it is similar to Amazon Go, a new retail format store leveraging technology to provide zero human touch shopping experience.\nI consider it as a part of its core commerce strategy to maintain its competitive edge and assign no additional value.\nLogistic(Cainiao)\nCainiao is Alibaba's logistic arm.\nBABA paid 3.3B to increase its Cainiao stake from 51% to 63% in its latestroundin 2019. That values its stake ~18B at cost.\nCross border e-commerece(Kaola)\nKaola is considered to be a TMall extension to improve its core competency and I assign no additional value.\nSource: FY21 Investorpresentation\n2. Alibaba Cloud\nAlibaba Cloud's YoY revenue growth was 62% and 50% in the last two years. Its FY21 revenue was $9.2B and turned cash flow positive the first time with 47M adjusted Ebitda.\nIn terms of China's cloud market share, Alibaba cloud leads the pack with 39.8% as of Q1 2021.\nAccording to China Internet Watch, cloud infrastructure spending growth in China outpaced the RoW, supported by the government's strategic priority in cloud computing, and it has been consistently over 50% over the last 7 quarters.\n\n\nSource:China Cloud market 1Q21- China Internet Watch\nIf we zoom out globally, Alibaba cloud ranks No 4 with a 6% market share, right after Amazon, Microsoft (MSFT), and Google (GOOG).\nIt is about 20% the size of Amazon cloud in this $150B global market.\n\nSource:Cloud Market Q3Y20Canalys\nSimilar research from Synergy Research Group in Q1 21 also confirmed the same ranking/market share.\n\nSource: Synergy Research Group on Statista\nUsing a very conservative 10x P/S values Alibaba Cloud at $100B.\nBoth GS (GS) and MS (MS)valuedAlibaba Cloud at $120B+ a year ago after Alibaba disclosed its 1Q21 fiscal data in Aug 2020.\nGiven the above, I value Alibaba Cloud between 100B and 120B.\n3. Digital Media and Entertainment\nIt includes YouKu, AliSports, AliGame, UC\nYouKu has 500M Monthly Active Users, 800M video views, one of China's top video/streaming service platforms, along with iQIYI, and Tencent Video.\nAlibaba spent $4B in 2016 to acquire Youku.\nIts main competitor iQIYI (IQ) is listed in Nasdaq, currently valued at 10.4B.\nDigital media/entertainment reported $4.5B revenue in FY21, with an adjusted Ebitda is 0.9B.\nI value Youku (and the rest of segment assets) between $4.5B (acquisition cost) and 9B (10x Ev/Ebitda).\n4. Innovation Initiatives\nAs I have few visibilities in these innovation initiatives, I take a conservative approach and assign no value.\n5. Ant Group\nAnt Group valuation could certainly be a controversial take.\nIts valuation hit $320B at its peak prior to IPO. Since its IPO halt in Nov 2020, its valuation has declined significantly, the latestanalysisfrom Sanford Bernstein valued it at $120B.\nAt a $120B valuation, BABA's 1/3 stake is worth $40B.\nput aside valuation, a head-to-head comparison between 2 dominating FinTech in China (Ant and Tencent) shows its massive scale in absolute numbers.\n\nsource:TechCrunchchina's top fintech platform Ant vs Tencent\nPut the numbers into perspective, Ant Group's active user is about 2x PayPal (PYPL) size, and roughly the same revenue. PayPal is currently valued at $350B.\n\nsource:SPGlobal\nAn insightful comparison from S&P Global market points out while Ant and PayPal revenue are comparable, Ant has about 20x TPV (Transaction Payment Volume) more than PayPal and Ant's take rate is only 5% of PayPal's.\nNote: PayPal take rate 2.5%, and Ant is at a mere 0.11%.\nAs shown in Chart 1 and 2, PayPal's take rate has been steadily declining since 2018, while Ant increases.\nIn summary, I think Bernstein's $120B valuations is a very conservative number. I consider Ant is on par with PayPal, and even with a 50% discount shall value Ant Group at $175B.\nThus I would value Alibaba's 1/3 stake in Ant Group between $40B and $58B.\n6. Strategic Investments\nReported by Alibaba at $45B valuations as of Jun30, 2020.\n\nSome notable investment includes:\n8% ownership stake in Bilibili (BILI)\nA single-digit ownership stake in DiDi (DIDI)\nDelisting Risk\nNow let us talk about the elephant in the room - its various risks, particularly its delisting risk as discussed frequently among US market participants\nI discussed the general Chinese ADR delisting risk in a recent Tweet thread. For these interested in the details:\n\nIn summary:\n\ndelisting poses an immediate trading liquidity risk, thus short-term volatility.\nStocks are fungible. For dually listed stocks such as Alibaba, there is no/limited long-term material impact to shareholders especially if one is prepared and ready to receive its shares in the other exchange. In BABA's case, that would be its shares listed on Hong Kong Stock Exchange.\nThere are also established tender processes to redeem if the company offers, which was exactly what happened with China Mobile and China Unicom in earlier 2021.\n\nOther Concerns\nAnti-monopoly violation: Alibaba was recently levied a $2.8B fine due to anti-monopoly violation. In relative terms, that fine alone has no material impact as it was less than 0.5% of its market cap. There are legit concerns that BABA could be subject to further regulatory fines in a less predictable manner.\nJack Ma: Jack Ma risk has been talked about a lot. The fact is Jack Ma already stepped down from both chairmanship and CEO role of Alibaba and has gradually detached himself (at least in the public) from the business.\nAnt Group IPO halt: I think Ant Group IPO halt was a big disappointment and shows certain unpredictability in the current environment. However, I think that has been more than priced in.\nConcluding Thoughts\nA conservative sum of all parts values BABA enterprise value between 773B ($299/share) and 965B ($373/share). At the current price of $206/share, it offers 45% to 81% upside potential, and I am increasing my position at the current price.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":142558735,"gmtCreate":1626163657827,"gmtModify":1703754599163,"author":{"id":"3575786148063178","authorId":"3575786148063178","name":"ProsperTTM","avatar":"https://community-static.tradeup.com/news/4a782324ef533f7dde9d7e051b3cc7ed","vip":1,"crmLevel":5,"crmLevelSwitch":1,"authorIdStr":"3575786148063178","idStr":"3575786148063178"},"htmlText":"Buy to hold for mid to long term&nbsp;","listText":"Buy to hold for mid to long term&nbsp;","text":"Buy to hold for mid to long term","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/142558735","repostId":1171355403,"repostType":2,"repost":{"id":"1171355403","kind":"news","pubTimestamp":1626140399,"share":"https://ttm.financial/m/news/1171355403?lang=&edition=fundamental","pubTime":"2021-07-13 09:39","market":"us","language":"en","title":"Alibaba: An Undervalued Empire With 45%+ Upside","url":"https://stock-news.laohu8.com/highlight/detail?id=1171355403","media":"seekingalpha","summary":"Alibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.I break it down by business units, show its strength and true value, and discuss its delisting risks.Alibaba Group Holding Limitedstock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon was up 101%, its Latin American peer MercadoLibre was up 172%, even the S&P 500 index was up 39%.Alibaba is the largest eCommerce operation in the world. It has over 1B annual act","content":"Summary\n<ul>\n <li>Alibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.</li>\n <li>Its stock price has been under pressure for over a year by perceived political/delisting risk and its recent Ant Financial IPO cancellation.</li>\n <li>I break it down by business units, show its strength and true value, and discuss its delisting risks.</li>\n</ul>\nPrice action deviates from Fundamentals\nAlibaba Group Holding Limited(NYSE:BABA)stock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon (AMZN) was up 101%, its Latin American peer MercadoLibre (MELI) was up 172%, even the S&amp;P 500 index was up 39%.\n<img src=\"https://static.tigerbbs.com/699af948598c5dab55d7ba41931d1944\" tg-width=\"635\" tg-height=\"467\" referrerpolicy=\"no-referrer\">Data by YCharts\nAlibaba is the largest eCommerce operation in the world. It has over 1B annual active consumers, over 1T GMV (gross merchandise volume) in FY21, both numbers larger than any other e-commerce company in the world, Amazon included.\nIn the meantime, Alibaba's core commerce and cloud computing recorded 42% and 50% YoY growth FY21. These are jaw-dropping growth numbers, especially at Alibaba's massive scale.\nAlso worth noting, while its revenue grows at an impressive rate, its Ebitda profit margin continues to show 17% YoY improvement, further demonstrate its superior unit economics, and effective cost control as it scales up.\n<img src=\"https://static.tigerbbs.com/b69f23fbc36af93ba24ecf933c2b4bbe\" tg-width=\"640\" tg-height=\"474\" referrerpolicy=\"no-referrer\">\nSource: 4Q21 AlibabaInvestor presentation\nInvestment Thesis\nMy conservative model values Alibaba between $773B ($299/share) to $967B ($373/share). It offers an upside potential between 45% and 81% to its closing price of $206/share on 7/9/21.\nThe table below provides a summary view of my Sum-of-all-parts valuation, and I discuss them in detail in later sections.\n<img src=\"https://static.tigerbbs.com/1c3b44cb0364f61901a479a1f6948afd\" tg-width=\"640\" tg-height=\"348\" referrerpolicy=\"no-referrer\">\nSource: Excel sheet prepared by Author\nValuation By Segments\nAlibaba has four business segments and two investment segments, they are:\n<ul>\n <li>Core Commerce: Taobao, TMall, Alibaba, AliExpress, Lazada, ele.me, etc.</li>\n <li>Cloud Computing: Alibaba Cloud</li>\n <li>Digital Media: Youku, Ali Sports, AliGame, etc.</li>\n <li>Innovative Initiatives: gmap, AliOS, etc</li>\n <li>Ant Group</li>\n <li>Other strategic Investments: DiDi, bilibili, etc</li>\n</ul>\nLet us dive into them.\n<img src=\"https://static.tigerbbs.com/033f24b75c357021d3d1177cc2e3bbf4\" tg-width=\"640\" tg-height=\"140\" referrerpolicy=\"no-referrer\">\nSource:Alibaba Investor Day2020\n1. Core Commerce\nMarketplace-based core commerceincludes Taobao, TMall, 1688.com, alibaba.com, AliExpress, TMall Market. These are mature and profit-generating marketplaces with steady growth.\nThese are the crown jewels of Alibaba's empire. It composes of No.1 Online retail, No.1 online wholesale, and No 1 B2C Export marketplace in China.\nFY21 adj Ebitda for marketplace-based core commerce is $35B.\nI use a moderate 15x - 20x Ev/Ebitda ratio (e.g. Amazon is 30x+ Ev/Ebitda), values its marketplace-based core commerce between 570B and 700B.\nLazada:international retail marketplace in SEA\nAlibaba, through three rounds of a total $4B investment, is a majority owner of Lazada.\nWhile Shopee (SE) takes the commanding lead in the SEA e-commerce marketplace, Lazada is still a No.2 with 100Mil+ monthly active users, ahead of Tokopedia.\nAlibaba only provides international e-commerce in aggregate (~5B) in FY21, with no revenue breakdown. Lazada and AliExpress are 2 primary contributors in this segment.\nAs a reference, Tokopedia, an e-commerce competitor and No.3 in SEA, was valued at $18B.\nI take a conservative approach and value Lazada between $5B (acquisition cost) and $10B (50% discount to Tokopedia's recent valuation despite Lazada's slightly larger size).\nLocal Services(ele.me, koubei)\nEle.me has about 80% of DoorDash (DASH) revenue, with 8x active customers (40Mil vs 5Mil) in FY21. In food delivery services in China, Meituan leads with 65% market share, ele.me No.2 with 27.4% market share, 3B FY21 revenue.\nIf we use DoorDash valuation at 15x EV/Sales, that would value ele.me at 45B, if we use Grubhub's (GRUB) 8x EV/Sales, it values ele.me at $24B\nAlibaba acquired ele.me in 2018 for $9.5B.\nI take a conservative approach and value ele.me between 9.5B (acquisition cost) and $24B (use Grub Ev/Sales ratio).\nNew Retail(Freshippo)\nKnown as Hema in China, it is similar to Amazon Go, a new retail format store leveraging technology to provide zero human touch shopping experience.\nI consider it as a part of its core commerce strategy to maintain its competitive edge and assign no additional value.\nLogistic(Cainiao)\nCainiao is Alibaba's logistic arm.\nBABA paid 3.3B to increase its Cainiao stake from 51% to 63% in its latestroundin 2019. That values its stake ~18B at cost.\nCross border e-commerece(Kaola)\nKaola is considered to be a TMall extension to improve its core competency and I assign no additional value.\n<img src=\"https://static.tigerbbs.com/80468b018507ac3b52aeec68b0598486\" tg-width=\"640\" tg-height=\"482\" referrerpolicy=\"no-referrer\">Source: FY21 Investorpresentation\n2. Alibaba Cloud\nAlibaba Cloud's YoY revenue growth was 62% and 50% in the last two years. Its FY21 revenue was $9.2B and turned cash flow positive the first time with 47M adjusted Ebitda.\nIn terms of China's cloud market share, Alibaba cloud leads the pack with 39.8% as of Q1 2021.\nAccording to China Internet Watch, cloud infrastructure spending growth in China outpaced the RoW, supported by the government's strategic priority in cloud computing, and it has been consistently over 50% over the last 7 quarters.\n<img src=\"https://static.tigerbbs.com/cb80ade495a99acd13fa3efc4fc3f518\" tg-width=\"640\" tg-height=\"391\" referrerpolicy=\"no-referrer\">\n<img src=\"https://static.tigerbbs.com/b8eb951fb359485adc84747b78e74c71\" tg-width=\"640\" tg-height=\"383\" referrerpolicy=\"no-referrer\">\nSource:China Cloud market 1Q21- China Internet Watch\nIf we zoom out globally, Alibaba cloud ranks No 4 with a 6% market share, right after Amazon, Microsoft (MSFT), and Google (GOOG).\nIt is about 20% the size of Amazon cloud in this $150B global market.\n<img src=\"https://static.tigerbbs.com/5ef9f1797dbfd7d1ca0ad84c3e009923\" tg-width=\"640\" tg-height=\"364\" referrerpolicy=\"no-referrer\">\nSource:Cloud Market Q3Y20Canalys\nSimilar research from Synergy Research Group in Q1 21 also confirmed the same ranking/market share.\n<img src=\"https://static.tigerbbs.com/cb5b1ff4c0cdbf586867d03a369d395e\" tg-width=\"499\" tg-height=\"497\" referrerpolicy=\"no-referrer\">\nSource: Synergy Research Group on Statista\nUsing a very conservative 10x P/S values Alibaba Cloud at $100B.\nBoth GS (GS) and MS (MS)valuedAlibaba Cloud at $120B+ a year ago after Alibaba disclosed its 1Q21 fiscal data in Aug 2020.\nGiven the above, I value Alibaba Cloud between 100B and 120B.\n3. Digital Media and Entertainment\nIt includes YouKu, AliSports, AliGame, UC\nYouKu has 500M Monthly Active Users, 800M video views, one of China's top video/streaming service platforms, along with iQIYI, and Tencent Video.\nAlibaba spent $4B in 2016 to acquire Youku.\nIts main competitor iQIYI (IQ) is listed in Nasdaq, currently valued at 10.4B.\nDigital media/entertainment reported $4.5B revenue in FY21, with an adjusted Ebitda is 0.9B.\nI value Youku (and the rest of segment assets) between $4.5B (acquisition cost) and 9B (10x Ev/Ebitda).\n4. Innovation Initiatives\nAs I have few visibilities in these innovation initiatives, I take a conservative approach and assign no value.\n5. Ant Group\nAnt Group valuation could certainly be a controversial take.\nIts valuation hit $320B at its peak prior to IPO. Since its IPO halt in Nov 2020, its valuation has declined significantly, the latestanalysisfrom Sanford Bernstein valued it at $120B.\nAt a $120B valuation, BABA's 1/3 stake is worth $40B.\nput aside valuation, a head-to-head comparison between 2 dominating FinTech in China (Ant and Tencent) shows its massive scale in absolute numbers.\n<img src=\"https://static.tigerbbs.com/f6ed30632a6897a6c57eca61205d3bc7\" tg-width=\"640\" tg-height=\"353\" referrerpolicy=\"no-referrer\">\nsource:TechCrunchchina's top fintech platform Ant vs Tencent\nPut the numbers into perspective, Ant Group's active user is about 2x PayPal (PYPL) size, and roughly the same revenue. PayPal is currently valued at $350B.\n<img src=\"https://static.tigerbbs.com/3318320d7217809542f5c2516c83cb01\" tg-width=\"640\" tg-height=\"764\" referrerpolicy=\"no-referrer\">\nsource:SPGlobal\nAn insightful comparison from S&amp;P Global market points out while Ant and PayPal revenue are comparable, Ant has about 20x TPV (Transaction Payment Volume) more than PayPal and Ant's take rate is only 5% of PayPal's.\nNote: PayPal take rate 2.5%, and Ant is at a mere 0.11%.\nAs shown in Chart 1 and 2, PayPal's take rate has been steadily declining since 2018, while Ant increases.\nIn summary, I think Bernstein's $120B valuations is a very conservative number. I consider Ant is on par with PayPal, and even with a 50% discount shall value Ant Group at $175B.\nThus I would value Alibaba's 1/3 stake in Ant Group between $40B and $58B.\n6. Strategic Investments\nReported by Alibaba at $45B valuations as of Jun30, 2020.\n<img src=\"https://static.tigerbbs.com/ce0e36c5240ce4a4c741785ea8a9de96\" tg-width=\"207\" tg-height=\"350\" referrerpolicy=\"no-referrer\">\nSome notable investment includes:\n8% ownership stake in Bilibili (BILI)\nA single-digit ownership stake in DiDi (DIDI)\nDelisting Risk\nNow let us talk about the elephant in the room - its various risks, particularly its delisting risk as discussed frequently among US market participants\nI discussed the general Chinese ADR delisting risk in a recent Tweet thread. For these interested in the details:\n<img src=\"https://static.tigerbbs.com/fbfb7535a1b9fc863aa6d492ae17dc3f\" tg-width=\"583\" tg-height=\"432\">\nIn summary:\n<ol>\n <li>delisting poses an immediate trading liquidity risk, thus short-term volatility.</li>\n <li>Stocks are fungible. For dually listed stocks such as Alibaba, there is no/limited long-term material impact to shareholders especially if one is prepared and ready to receive its shares in the other exchange. In BABA's case, that would be its shares listed on Hong Kong Stock Exchange.</li>\n <li>There are also established tender processes to redeem if the company offers, which was exactly what happened with China Mobile and China Unicom in earlier 2021.</li>\n</ol>\nOther Concerns\nAnti-monopoly violation: Alibaba was recently levied a $2.8B fine due to anti-monopoly violation. In relative terms, that fine alone has no material impact as it was less than 0.5% of its market cap. There are legit concerns that BABA could be subject to further regulatory fines in a less predictable manner.\nJack Ma: Jack Ma risk has been talked about a lot. The fact is Jack Ma already stepped down from both chairmanship and CEO role of Alibaba and has gradually detached himself (at least in the public) from the business.\nAnt Group IPO halt: I think Ant Group IPO halt was a big disappointment and shows certain unpredictability in the current environment. However, I think that has been more than priced in.\nConcluding Thoughts\nA conservative sum of all parts values BABA enterprise value between 773B ($299/share) and 965B ($373/share). At the current price of $206/share, it offers 45% to 81% upside potential, and I am increasing my position at the current price.","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Alibaba: An Undervalued Empire With 45%+ Upside</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAlibaba: An Undervalued Empire With 45%+ Upside\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-07-13 09:39 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nAlibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.\nIts stock price has been under pressure for over a year by perceived political/delisting risk ...\n\n<a href=\"https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BABA":"阿里巴巴","09988":"阿里巴巴-W"},"source_url":"https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1171355403","content_text":"Summary\n\nAlibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.\nIts stock price has been under pressure for over a year by perceived political/delisting risk and its recent Ant Financial IPO cancellation.\nI break it down by business units, show its strength and true value, and discuss its delisting risks.\n\nPrice action deviates from Fundamentals\nAlibaba Group Holding Limited(NYSE:BABA)stock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon (AMZN) was up 101%, its Latin American peer MercadoLibre (MELI) was up 172%, even the S&P 500 index was up 39%.\nData by YCharts\nAlibaba is the largest eCommerce operation in the world. It has over 1B annual active consumers, over 1T GMV (gross merchandise volume) in FY21, both numbers larger than any other e-commerce company in the world, Amazon included.\nIn the meantime, Alibaba's core commerce and cloud computing recorded 42% and 50% YoY growth FY21. These are jaw-dropping growth numbers, especially at Alibaba's massive scale.\nAlso worth noting, while its revenue grows at an impressive rate, its Ebitda profit margin continues to show 17% YoY improvement, further demonstrate its superior unit economics, and effective cost control as it scales up.\n\nSource: 4Q21 AlibabaInvestor presentation\nInvestment Thesis\nMy conservative model values Alibaba between $773B ($299/share) to $967B ($373/share). It offers an upside potential between 45% and 81% to its closing price of $206/share on 7/9/21.\nThe table below provides a summary view of my Sum-of-all-parts valuation, and I discuss them in detail in later sections.\n\nSource: Excel sheet prepared by Author\nValuation By Segments\nAlibaba has four business segments and two investment segments, they are:\n\nCore Commerce: Taobao, TMall, Alibaba, AliExpress, Lazada, ele.me, etc.\nCloud Computing: Alibaba Cloud\nDigital Media: Youku, Ali Sports, AliGame, etc.\nInnovative Initiatives: gmap, AliOS, etc\nAnt Group\nOther strategic Investments: DiDi, bilibili, etc\n\nLet us dive into them.\n\nSource:Alibaba Investor Day2020\n1. Core Commerce\nMarketplace-based core commerceincludes Taobao, TMall, 1688.com, alibaba.com, AliExpress, TMall Market. These are mature and profit-generating marketplaces with steady growth.\nThese are the crown jewels of Alibaba's empire. It composes of No.1 Online retail, No.1 online wholesale, and No 1 B2C Export marketplace in China.\nFY21 adj Ebitda for marketplace-based core commerce is $35B.\nI use a moderate 15x - 20x Ev/Ebitda ratio (e.g. Amazon is 30x+ Ev/Ebitda), values its marketplace-based core commerce between 570B and 700B.\nLazada:international retail marketplace in SEA\nAlibaba, through three rounds of a total $4B investment, is a majority owner of Lazada.\nWhile Shopee (SE) takes the commanding lead in the SEA e-commerce marketplace, Lazada is still a No.2 with 100Mil+ monthly active users, ahead of Tokopedia.\nAlibaba only provides international e-commerce in aggregate (~5B) in FY21, with no revenue breakdown. Lazada and AliExpress are 2 primary contributors in this segment.\nAs a reference, Tokopedia, an e-commerce competitor and No.3 in SEA, was valued at $18B.\nI take a conservative approach and value Lazada between $5B (acquisition cost) and $10B (50% discount to Tokopedia's recent valuation despite Lazada's slightly larger size).\nLocal Services(ele.me, koubei)\nEle.me has about 80% of DoorDash (DASH) revenue, with 8x active customers (40Mil vs 5Mil) in FY21. In food delivery services in China, Meituan leads with 65% market share, ele.me No.2 with 27.4% market share, 3B FY21 revenue.\nIf we use DoorDash valuation at 15x EV/Sales, that would value ele.me at 45B, if we use Grubhub's (GRUB) 8x EV/Sales, it values ele.me at $24B\nAlibaba acquired ele.me in 2018 for $9.5B.\nI take a conservative approach and value ele.me between 9.5B (acquisition cost) and $24B (use Grub Ev/Sales ratio).\nNew Retail(Freshippo)\nKnown as Hema in China, it is similar to Amazon Go, a new retail format store leveraging technology to provide zero human touch shopping experience.\nI consider it as a part of its core commerce strategy to maintain its competitive edge and assign no additional value.\nLogistic(Cainiao)\nCainiao is Alibaba's logistic arm.\nBABA paid 3.3B to increase its Cainiao stake from 51% to 63% in its latestroundin 2019. That values its stake ~18B at cost.\nCross border e-commerece(Kaola)\nKaola is considered to be a TMall extension to improve its core competency and I assign no additional value.\nSource: FY21 Investorpresentation\n2. Alibaba Cloud\nAlibaba Cloud's YoY revenue growth was 62% and 50% in the last two years. Its FY21 revenue was $9.2B and turned cash flow positive the first time with 47M adjusted Ebitda.\nIn terms of China's cloud market share, Alibaba cloud leads the pack with 39.8% as of Q1 2021.\nAccording to China Internet Watch, cloud infrastructure spending growth in China outpaced the RoW, supported by the government's strategic priority in cloud computing, and it has been consistently over 50% over the last 7 quarters.\n\n\nSource:China Cloud market 1Q21- China Internet Watch\nIf we zoom out globally, Alibaba cloud ranks No 4 with a 6% market share, right after Amazon, Microsoft (MSFT), and Google (GOOG).\nIt is about 20% the size of Amazon cloud in this $150B global market.\n\nSource:Cloud Market Q3Y20Canalys\nSimilar research from Synergy Research Group in Q1 21 also confirmed the same ranking/market share.\n\nSource: Synergy Research Group on Statista\nUsing a very conservative 10x P/S values Alibaba Cloud at $100B.\nBoth GS (GS) and MS (MS)valuedAlibaba Cloud at $120B+ a year ago after Alibaba disclosed its 1Q21 fiscal data in Aug 2020.\nGiven the above, I value Alibaba Cloud between 100B and 120B.\n3. Digital Media and Entertainment\nIt includes YouKu, AliSports, AliGame, UC\nYouKu has 500M Monthly Active Users, 800M video views, one of China's top video/streaming service platforms, along with iQIYI, and Tencent Video.\nAlibaba spent $4B in 2016 to acquire Youku.\nIts main competitor iQIYI (IQ) is listed in Nasdaq, currently valued at 10.4B.\nDigital media/entertainment reported $4.5B revenue in FY21, with an adjusted Ebitda is 0.9B.\nI value Youku (and the rest of segment assets) between $4.5B (acquisition cost) and 9B (10x Ev/Ebitda).\n4. Innovation Initiatives\nAs I have few visibilities in these innovation initiatives, I take a conservative approach and assign no value.\n5. Ant Group\nAnt Group valuation could certainly be a controversial take.\nIts valuation hit $320B at its peak prior to IPO. Since its IPO halt in Nov 2020, its valuation has declined significantly, the latestanalysisfrom Sanford Bernstein valued it at $120B.\nAt a $120B valuation, BABA's 1/3 stake is worth $40B.\nput aside valuation, a head-to-head comparison between 2 dominating FinTech in China (Ant and Tencent) shows its massive scale in absolute numbers.\n\nsource:TechCrunchchina's top fintech platform Ant vs Tencent\nPut the numbers into perspective, Ant Group's active user is about 2x PayPal (PYPL) size, and roughly the same revenue. PayPal is currently valued at $350B.\n\nsource:SPGlobal\nAn insightful comparison from S&P Global market points out while Ant and PayPal revenue are comparable, Ant has about 20x TPV (Transaction Payment Volume) more than PayPal and Ant's take rate is only 5% of PayPal's.\nNote: PayPal take rate 2.5%, and Ant is at a mere 0.11%.\nAs shown in Chart 1 and 2, PayPal's take rate has been steadily declining since 2018, while Ant increases.\nIn summary, I think Bernstein's $120B valuations is a very conservative number. I consider Ant is on par with PayPal, and even with a 50% discount shall value Ant Group at $175B.\nThus I would value Alibaba's 1/3 stake in Ant Group between $40B and $58B.\n6. Strategic Investments\nReported by Alibaba at $45B valuations as of Jun30, 2020.\n\nSome notable investment includes:\n8% ownership stake in Bilibili (BILI)\nA single-digit ownership stake in DiDi (DIDI)\nDelisting Risk\nNow let us talk about the elephant in the room - its various risks, particularly its delisting risk as discussed frequently among US market participants\nI discussed the general Chinese ADR delisting risk in a recent Tweet thread. For these interested in the details:\n\nIn summary:\n\ndelisting poses an immediate trading liquidity risk, thus short-term volatility.\nStocks are fungible. For dually listed stocks such as Alibaba, there is no/limited long-term material impact to shareholders especially if one is prepared and ready to receive its shares in the other exchange. In BABA's case, that would be its shares listed on Hong Kong Stock Exchange.\nThere are also established tender processes to redeem if the company offers, which was exactly what happened with China Mobile and China Unicom in earlier 2021.\n\nOther Concerns\nAnti-monopoly violation: Alibaba was recently levied a $2.8B fine due to anti-monopoly violation. In relative terms, that fine alone has no material impact as it was less than 0.5% of its market cap. There are legit concerns that BABA could be subject to further regulatory fines in a less predictable manner.\nJack Ma: Jack Ma risk has been talked about a lot. The fact is Jack Ma already stepped down from both chairmanship and CEO role of Alibaba and has gradually detached himself (at least in the public) from the business.\nAnt Group IPO halt: I think Ant Group IPO halt was a big disappointment and shows certain unpredictability in the current environment. However, I think that has been more than priced in.\nConcluding Thoughts\nA conservative sum of all parts values BABA enterprise value between 773B ($299/share) and 965B ($373/share). At the current price of $206/share, it offers 45% to 81% upside potential, and I am increasing my position at the current price.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":142261223,"gmtCreate":1626153720162,"gmtModify":1703754428141,"author":{"id":"3573347217115205","authorId":"3573347217115205","name":"TayYZ","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":2,"crmLevelSwitch":0,"authorIdStr":"3573347217115205","idStr":"3573347217115205"},"htmlText":"Yes","listText":"Yes","text":"Yes","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/142261223","repostId":1171355403,"repostType":4,"repost":{"id":"1171355403","kind":"news","pubTimestamp":1626140399,"share":"https://ttm.financial/m/news/1171355403?lang=&edition=fundamental","pubTime":"2021-07-13 09:39","market":"us","language":"en","title":"Alibaba: An Undervalued Empire With 45%+ Upside","url":"https://stock-news.laohu8.com/highlight/detail?id=1171355403","media":"seekingalpha","summary":"Alibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.I break it down by business units, show its strength and true value, and discuss its delisting risks.Alibaba Group Holding Limitedstock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon was up 101%, its Latin American peer MercadoLibre was up 172%, even the S&P 500 index was up 39%.Alibaba is the largest eCommerce operation in the world. It has over 1B annual act","content":"Summary\n<ul>\n <li>Alibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.</li>\n <li>Its stock price has been under pressure for over a year by perceived political/delisting risk and its recent Ant Financial IPO cancellation.</li>\n <li>I break it down by business units, show its strength and true value, and discuss its delisting risks.</li>\n</ul>\nPrice action deviates from Fundamentals\nAlibaba Group Holding Limited(NYSE:BABA)stock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon (AMZN) was up 101%, its Latin American peer MercadoLibre (MELI) was up 172%, even the S&amp;P 500 index was up 39%.\n<img src=\"https://static.tigerbbs.com/699af948598c5dab55d7ba41931d1944\" tg-width=\"635\" tg-height=\"467\" referrerpolicy=\"no-referrer\">Data by YCharts\nAlibaba is the largest eCommerce operation in the world. It has over 1B annual active consumers, over 1T GMV (gross merchandise volume) in FY21, both numbers larger than any other e-commerce company in the world, Amazon included.\nIn the meantime, Alibaba's core commerce and cloud computing recorded 42% and 50% YoY growth FY21. These are jaw-dropping growth numbers, especially at Alibaba's massive scale.\nAlso worth noting, while its revenue grows at an impressive rate, its Ebitda profit margin continues to show 17% YoY improvement, further demonstrate its superior unit economics, and effective cost control as it scales up.\n<img src=\"https://static.tigerbbs.com/b69f23fbc36af93ba24ecf933c2b4bbe\" tg-width=\"640\" tg-height=\"474\" referrerpolicy=\"no-referrer\">\nSource: 4Q21 AlibabaInvestor presentation\nInvestment Thesis\nMy conservative model values Alibaba between $773B ($299/share) to $967B ($373/share). It offers an upside potential between 45% and 81% to its closing price of $206/share on 7/9/21.\nThe table below provides a summary view of my Sum-of-all-parts valuation, and I discuss them in detail in later sections.\n<img src=\"https://static.tigerbbs.com/1c3b44cb0364f61901a479a1f6948afd\" tg-width=\"640\" tg-height=\"348\" referrerpolicy=\"no-referrer\">\nSource: Excel sheet prepared by Author\nValuation By Segments\nAlibaba has four business segments and two investment segments, they are:\n<ul>\n <li>Core Commerce: Taobao, TMall, Alibaba, AliExpress, Lazada, ele.me, etc.</li>\n <li>Cloud Computing: Alibaba Cloud</li>\n <li>Digital Media: Youku, Ali Sports, AliGame, etc.</li>\n <li>Innovative Initiatives: gmap, AliOS, etc</li>\n <li>Ant Group</li>\n <li>Other strategic Investments: DiDi, bilibili, etc</li>\n</ul>\nLet us dive into them.\n<img src=\"https://static.tigerbbs.com/033f24b75c357021d3d1177cc2e3bbf4\" tg-width=\"640\" tg-height=\"140\" referrerpolicy=\"no-referrer\">\nSource:Alibaba Investor Day2020\n1. Core Commerce\nMarketplace-based core commerceincludes Taobao, TMall, 1688.com, alibaba.com, AliExpress, TMall Market. These are mature and profit-generating marketplaces with steady growth.\nThese are the crown jewels of Alibaba's empire. It composes of No.1 Online retail, No.1 online wholesale, and No 1 B2C Export marketplace in China.\nFY21 adj Ebitda for marketplace-based core commerce is $35B.\nI use a moderate 15x - 20x Ev/Ebitda ratio (e.g. Amazon is 30x+ Ev/Ebitda), values its marketplace-based core commerce between 570B and 700B.\nLazada:international retail marketplace in SEA\nAlibaba, through three rounds of a total $4B investment, is a majority owner of Lazada.\nWhile Shopee (SE) takes the commanding lead in the SEA e-commerce marketplace, Lazada is still a No.2 with 100Mil+ monthly active users, ahead of Tokopedia.\nAlibaba only provides international e-commerce in aggregate (~5B) in FY21, with no revenue breakdown. Lazada and AliExpress are 2 primary contributors in this segment.\nAs a reference, Tokopedia, an e-commerce competitor and No.3 in SEA, was valued at $18B.\nI take a conservative approach and value Lazada between $5B (acquisition cost) and $10B (50% discount to Tokopedia's recent valuation despite Lazada's slightly larger size).\nLocal Services(ele.me, koubei)\nEle.me has about 80% of DoorDash (DASH) revenue, with 8x active customers (40Mil vs 5Mil) in FY21. In food delivery services in China, Meituan leads with 65% market share, ele.me No.2 with 27.4% market share, 3B FY21 revenue.\nIf we use DoorDash valuation at 15x EV/Sales, that would value ele.me at 45B, if we use Grubhub's (GRUB) 8x EV/Sales, it values ele.me at $24B\nAlibaba acquired ele.me in 2018 for $9.5B.\nI take a conservative approach and value ele.me between 9.5B (acquisition cost) and $24B (use Grub Ev/Sales ratio).\nNew Retail(Freshippo)\nKnown as Hema in China, it is similar to Amazon Go, a new retail format store leveraging technology to provide zero human touch shopping experience.\nI consider it as a part of its core commerce strategy to maintain its competitive edge and assign no additional value.\nLogistic(Cainiao)\nCainiao is Alibaba's logistic arm.\nBABA paid 3.3B to increase its Cainiao stake from 51% to 63% in its latestroundin 2019. That values its stake ~18B at cost.\nCross border e-commerece(Kaola)\nKaola is considered to be a TMall extension to improve its core competency and I assign no additional value.\n<img src=\"https://static.tigerbbs.com/80468b018507ac3b52aeec68b0598486\" tg-width=\"640\" tg-height=\"482\" referrerpolicy=\"no-referrer\">Source: FY21 Investorpresentation\n2. Alibaba Cloud\nAlibaba Cloud's YoY revenue growth was 62% and 50% in the last two years. Its FY21 revenue was $9.2B and turned cash flow positive the first time with 47M adjusted Ebitda.\nIn terms of China's cloud market share, Alibaba cloud leads the pack with 39.8% as of Q1 2021.\nAccording to China Internet Watch, cloud infrastructure spending growth in China outpaced the RoW, supported by the government's strategic priority in cloud computing, and it has been consistently over 50% over the last 7 quarters.\n<img src=\"https://static.tigerbbs.com/cb80ade495a99acd13fa3efc4fc3f518\" tg-width=\"640\" tg-height=\"391\" referrerpolicy=\"no-referrer\">\n<img src=\"https://static.tigerbbs.com/b8eb951fb359485adc84747b78e74c71\" tg-width=\"640\" tg-height=\"383\" referrerpolicy=\"no-referrer\">\nSource:China Cloud market 1Q21- China Internet Watch\nIf we zoom out globally, Alibaba cloud ranks No 4 with a 6% market share, right after Amazon, Microsoft (MSFT), and Google (GOOG).\nIt is about 20% the size of Amazon cloud in this $150B global market.\n<img src=\"https://static.tigerbbs.com/5ef9f1797dbfd7d1ca0ad84c3e009923\" tg-width=\"640\" tg-height=\"364\" referrerpolicy=\"no-referrer\">\nSource:Cloud Market Q3Y20Canalys\nSimilar research from Synergy Research Group in Q1 21 also confirmed the same ranking/market share.\n<img src=\"https://static.tigerbbs.com/cb5b1ff4c0cdbf586867d03a369d395e\" tg-width=\"499\" tg-height=\"497\" referrerpolicy=\"no-referrer\">\nSource: Synergy Research Group on Statista\nUsing a very conservative 10x P/S values Alibaba Cloud at $100B.\nBoth GS (GS) and MS (MS)valuedAlibaba Cloud at $120B+ a year ago after Alibaba disclosed its 1Q21 fiscal data in Aug 2020.\nGiven the above, I value Alibaba Cloud between 100B and 120B.\n3. Digital Media and Entertainment\nIt includes YouKu, AliSports, AliGame, UC\nYouKu has 500M Monthly Active Users, 800M video views, one of China's top video/streaming service platforms, along with iQIYI, and Tencent Video.\nAlibaba spent $4B in 2016 to acquire Youku.\nIts main competitor iQIYI (IQ) is listed in Nasdaq, currently valued at 10.4B.\nDigital media/entertainment reported $4.5B revenue in FY21, with an adjusted Ebitda is 0.9B.\nI value Youku (and the rest of segment assets) between $4.5B (acquisition cost) and 9B (10x Ev/Ebitda).\n4. Innovation Initiatives\nAs I have few visibilities in these innovation initiatives, I take a conservative approach and assign no value.\n5. Ant Group\nAnt Group valuation could certainly be a controversial take.\nIts valuation hit $320B at its peak prior to IPO. Since its IPO halt in Nov 2020, its valuation has declined significantly, the latestanalysisfrom Sanford Bernstein valued it at $120B.\nAt a $120B valuation, BABA's 1/3 stake is worth $40B.\nput aside valuation, a head-to-head comparison between 2 dominating FinTech in China (Ant and Tencent) shows its massive scale in absolute numbers.\n<img src=\"https://static.tigerbbs.com/f6ed30632a6897a6c57eca61205d3bc7\" tg-width=\"640\" tg-height=\"353\" referrerpolicy=\"no-referrer\">\nsource:TechCrunchchina's top fintech platform Ant vs Tencent\nPut the numbers into perspective, Ant Group's active user is about 2x PayPal (PYPL) size, and roughly the same revenue. PayPal is currently valued at $350B.\n<img src=\"https://static.tigerbbs.com/3318320d7217809542f5c2516c83cb01\" tg-width=\"640\" tg-height=\"764\" referrerpolicy=\"no-referrer\">\nsource:SPGlobal\nAn insightful comparison from S&amp;P Global market points out while Ant and PayPal revenue are comparable, Ant has about 20x TPV (Transaction Payment Volume) more than PayPal and Ant's take rate is only 5% of PayPal's.\nNote: PayPal take rate 2.5%, and Ant is at a mere 0.11%.\nAs shown in Chart 1 and 2, PayPal's take rate has been steadily declining since 2018, while Ant increases.\nIn summary, I think Bernstein's $120B valuations is a very conservative number. I consider Ant is on par with PayPal, and even with a 50% discount shall value Ant Group at $175B.\nThus I would value Alibaba's 1/3 stake in Ant Group between $40B and $58B.\n6. Strategic Investments\nReported by Alibaba at $45B valuations as of Jun30, 2020.\n<img src=\"https://static.tigerbbs.com/ce0e36c5240ce4a4c741785ea8a9de96\" tg-width=\"207\" tg-height=\"350\" referrerpolicy=\"no-referrer\">\nSome notable investment includes:\n8% ownership stake in Bilibili (BILI)\nA single-digit ownership stake in DiDi (DIDI)\nDelisting Risk\nNow let us talk about the elephant in the room - its various risks, particularly its delisting risk as discussed frequently among US market participants\nI discussed the general Chinese ADR delisting risk in a recent Tweet thread. For these interested in the details:\n<img src=\"https://static.tigerbbs.com/fbfb7535a1b9fc863aa6d492ae17dc3f\" tg-width=\"583\" tg-height=\"432\">\nIn summary:\n<ol>\n <li>delisting poses an immediate trading liquidity risk, thus short-term volatility.</li>\n <li>Stocks are fungible. For dually listed stocks such as Alibaba, there is no/limited long-term material impact to shareholders especially if one is prepared and ready to receive its shares in the other exchange. In BABA's case, that would be its shares listed on Hong Kong Stock Exchange.</li>\n <li>There are also established tender processes to redeem if the company offers, which was exactly what happened with China Mobile and China Unicom in earlier 2021.</li>\n</ol>\nOther Concerns\nAnti-monopoly violation: Alibaba was recently levied a $2.8B fine due to anti-monopoly violation. In relative terms, that fine alone has no material impact as it was less than 0.5% of its market cap. There are legit concerns that BABA could be subject to further regulatory fines in a less predictable manner.\nJack Ma: Jack Ma risk has been talked about a lot. The fact is Jack Ma already stepped down from both chairmanship and CEO role of Alibaba and has gradually detached himself (at least in the public) from the business.\nAnt Group IPO halt: I think Ant Group IPO halt was a big disappointment and shows certain unpredictability in the current environment. However, I think that has been more than priced in.\nConcluding Thoughts\nA conservative sum of all parts values BABA enterprise value between 773B ($299/share) and 965B ($373/share). At the current price of $206/share, it offers 45% to 81% upside potential, and I am increasing my position at the current price.","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Alibaba: An Undervalued Empire With 45%+ Upside</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAlibaba: An Undervalued Empire With 45%+ Upside\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-07-13 09:39 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nAlibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.\nIts stock price has been under pressure for over a year by perceived political/delisting risk ...\n\n<a href=\"https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BABA":"阿里巴巴","09988":"阿里巴巴-W"},"source_url":"https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1171355403","content_text":"Summary\n\nAlibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.\nIts stock price has been under pressure for over a year by perceived political/delisting risk and its recent Ant Financial IPO cancellation.\nI break it down by business units, show its strength and true value, and discuss its delisting risks.\n\nPrice action deviates from Fundamentals\nAlibaba Group Holding Limited(NYSE:BABA)stock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon (AMZN) was up 101%, its Latin American peer MercadoLibre (MELI) was up 172%, even the S&P 500 index was up 39%.\nData by YCharts\nAlibaba is the largest eCommerce operation in the world. It has over 1B annual active consumers, over 1T GMV (gross merchandise volume) in FY21, both numbers larger than any other e-commerce company in the world, Amazon included.\nIn the meantime, Alibaba's core commerce and cloud computing recorded 42% and 50% YoY growth FY21. These are jaw-dropping growth numbers, especially at Alibaba's massive scale.\nAlso worth noting, while its revenue grows at an impressive rate, its Ebitda profit margin continues to show 17% YoY improvement, further demonstrate its superior unit economics, and effective cost control as it scales up.\n\nSource: 4Q21 AlibabaInvestor presentation\nInvestment Thesis\nMy conservative model values Alibaba between $773B ($299/share) to $967B ($373/share). It offers an upside potential between 45% and 81% to its closing price of $206/share on 7/9/21.\nThe table below provides a summary view of my Sum-of-all-parts valuation, and I discuss them in detail in later sections.\n\nSource: Excel sheet prepared by Author\nValuation By Segments\nAlibaba has four business segments and two investment segments, they are:\n\nCore Commerce: Taobao, TMall, Alibaba, AliExpress, Lazada, ele.me, etc.\nCloud Computing: Alibaba Cloud\nDigital Media: Youku, Ali Sports, AliGame, etc.\nInnovative Initiatives: gmap, AliOS, etc\nAnt Group\nOther strategic Investments: DiDi, bilibili, etc\n\nLet us dive into them.\n\nSource:Alibaba Investor Day2020\n1. Core Commerce\nMarketplace-based core commerceincludes Taobao, TMall, 1688.com, alibaba.com, AliExpress, TMall Market. These are mature and profit-generating marketplaces with steady growth.\nThese are the crown jewels of Alibaba's empire. It composes of No.1 Online retail, No.1 online wholesale, and No 1 B2C Export marketplace in China.\nFY21 adj Ebitda for marketplace-based core commerce is $35B.\nI use a moderate 15x - 20x Ev/Ebitda ratio (e.g. Amazon is 30x+ Ev/Ebitda), values its marketplace-based core commerce between 570B and 700B.\nLazada:international retail marketplace in SEA\nAlibaba, through three rounds of a total $4B investment, is a majority owner of Lazada.\nWhile Shopee (SE) takes the commanding lead in the SEA e-commerce marketplace, Lazada is still a No.2 with 100Mil+ monthly active users, ahead of Tokopedia.\nAlibaba only provides international e-commerce in aggregate (~5B) in FY21, with no revenue breakdown. Lazada and AliExpress are 2 primary contributors in this segment.\nAs a reference, Tokopedia, an e-commerce competitor and No.3 in SEA, was valued at $18B.\nI take a conservative approach and value Lazada between $5B (acquisition cost) and $10B (50% discount to Tokopedia's recent valuation despite Lazada's slightly larger size).\nLocal Services(ele.me, koubei)\nEle.me has about 80% of DoorDash (DASH) revenue, with 8x active customers (40Mil vs 5Mil) in FY21. In food delivery services in China, Meituan leads with 65% market share, ele.me No.2 with 27.4% market share, 3B FY21 revenue.\nIf we use DoorDash valuation at 15x EV/Sales, that would value ele.me at 45B, if we use Grubhub's (GRUB) 8x EV/Sales, it values ele.me at $24B\nAlibaba acquired ele.me in 2018 for $9.5B.\nI take a conservative approach and value ele.me between 9.5B (acquisition cost) and $24B (use Grub Ev/Sales ratio).\nNew Retail(Freshippo)\nKnown as Hema in China, it is similar to Amazon Go, a new retail format store leveraging technology to provide zero human touch shopping experience.\nI consider it as a part of its core commerce strategy to maintain its competitive edge and assign no additional value.\nLogistic(Cainiao)\nCainiao is Alibaba's logistic arm.\nBABA paid 3.3B to increase its Cainiao stake from 51% to 63% in its latestroundin 2019. That values its stake ~18B at cost.\nCross border e-commerece(Kaola)\nKaola is considered to be a TMall extension to improve its core competency and I assign no additional value.\nSource: FY21 Investorpresentation\n2. Alibaba Cloud\nAlibaba Cloud's YoY revenue growth was 62% and 50% in the last two years. Its FY21 revenue was $9.2B and turned cash flow positive the first time with 47M adjusted Ebitda.\nIn terms of China's cloud market share, Alibaba cloud leads the pack with 39.8% as of Q1 2021.\nAccording to China Internet Watch, cloud infrastructure spending growth in China outpaced the RoW, supported by the government's strategic priority in cloud computing, and it has been consistently over 50% over the last 7 quarters.\n\n\nSource:China Cloud market 1Q21- China Internet Watch\nIf we zoom out globally, Alibaba cloud ranks No 4 with a 6% market share, right after Amazon, Microsoft (MSFT), and Google (GOOG).\nIt is about 20% the size of Amazon cloud in this $150B global market.\n\nSource:Cloud Market Q3Y20Canalys\nSimilar research from Synergy Research Group in Q1 21 also confirmed the same ranking/market share.\n\nSource: Synergy Research Group on Statista\nUsing a very conservative 10x P/S values Alibaba Cloud at $100B.\nBoth GS (GS) and MS (MS)valuedAlibaba Cloud at $120B+ a year ago after Alibaba disclosed its 1Q21 fiscal data in Aug 2020.\nGiven the above, I value Alibaba Cloud between 100B and 120B.\n3. Digital Media and Entertainment\nIt includes YouKu, AliSports, AliGame, UC\nYouKu has 500M Monthly Active Users, 800M video views, one of China's top video/streaming service platforms, along with iQIYI, and Tencent Video.\nAlibaba spent $4B in 2016 to acquire Youku.\nIts main competitor iQIYI (IQ) is listed in Nasdaq, currently valued at 10.4B.\nDigital media/entertainment reported $4.5B revenue in FY21, with an adjusted Ebitda is 0.9B.\nI value Youku (and the rest of segment assets) between $4.5B (acquisition cost) and 9B (10x Ev/Ebitda).\n4. Innovation Initiatives\nAs I have few visibilities in these innovation initiatives, I take a conservative approach and assign no value.\n5. Ant Group\nAnt Group valuation could certainly be a controversial take.\nIts valuation hit $320B at its peak prior to IPO. Since its IPO halt in Nov 2020, its valuation has declined significantly, the latestanalysisfrom Sanford Bernstein valued it at $120B.\nAt a $120B valuation, BABA's 1/3 stake is worth $40B.\nput aside valuation, a head-to-head comparison between 2 dominating FinTech in China (Ant and Tencent) shows its massive scale in absolute numbers.\n\nsource:TechCrunchchina's top fintech platform Ant vs Tencent\nPut the numbers into perspective, Ant Group's active user is about 2x PayPal (PYPL) size, and roughly the same revenue. PayPal is currently valued at $350B.\n\nsource:SPGlobal\nAn insightful comparison from S&P Global market points out while Ant and PayPal revenue are comparable, Ant has about 20x TPV (Transaction Payment Volume) more than PayPal and Ant's take rate is only 5% of PayPal's.\nNote: PayPal take rate 2.5%, and Ant is at a mere 0.11%.\nAs shown in Chart 1 and 2, PayPal's take rate has been steadily declining since 2018, while Ant increases.\nIn summary, I think Bernstein's $120B valuations is a very conservative number. I consider Ant is on par with PayPal, and even with a 50% discount shall value Ant Group at $175B.\nThus I would value Alibaba's 1/3 stake in Ant Group between $40B and $58B.\n6. Strategic Investments\nReported by Alibaba at $45B valuations as of Jun30, 2020.\n\nSome notable investment includes:\n8% ownership stake in Bilibili (BILI)\nA single-digit ownership stake in DiDi (DIDI)\nDelisting Risk\nNow let us talk about the elephant in the room - its various risks, particularly its delisting risk as discussed frequently among US market participants\nI discussed the general Chinese ADR delisting risk in a recent Tweet thread. For these interested in the details:\n\nIn summary:\n\ndelisting poses an immediate trading liquidity risk, thus short-term volatility.\nStocks are fungible. For dually listed stocks such as Alibaba, there is no/limited long-term material impact to shareholders especially if one is prepared and ready to receive its shares in the other exchange. In BABA's case, that would be its shares listed on Hong Kong Stock Exchange.\nThere are also established tender processes to redeem if the company offers, which was exactly what happened with China Mobile and China Unicom in earlier 2021.\n\nOther Concerns\nAnti-monopoly violation: Alibaba was recently levied a $2.8B fine due to anti-monopoly violation. In relative terms, that fine alone has no material impact as it was less than 0.5% of its market cap. There are legit concerns that BABA could be subject to further regulatory fines in a less predictable manner.\nJack Ma: Jack Ma risk has been talked about a lot. The fact is Jack Ma already stepped down from both chairmanship and CEO role of Alibaba and has gradually detached himself (at least in the public) from the business.\nAnt Group IPO halt: I think Ant Group IPO halt was a big disappointment and shows certain unpredictability in the current environment. However, I think that has been more than priced in.\nConcluding Thoughts\nA conservative sum of all parts values BABA enterprise value between 773B ($299/share) and 965B ($373/share). At the current price of $206/share, it offers 45% to 81% upside potential, and I am increasing my position at the current price.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":142652118,"gmtCreate":1626148223434,"gmtModify":1703754317226,"author":{"id":"4088382134144020","authorId":"4088382134144020","name":"JHew","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":2,"crmLevelSwitch":0,"authorIdStr":"4088382134144020","idStr":"4088382134144020"},"htmlText":"[財迷]","listText":"[財迷]","text":"[財迷]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/142652118","repostId":1171355403,"repostType":2,"repost":{"id":"1171355403","kind":"news","pubTimestamp":1626140399,"share":"https://ttm.financial/m/news/1171355403?lang=&edition=fundamental","pubTime":"2021-07-13 09:39","market":"us","language":"en","title":"Alibaba: An Undervalued Empire With 45%+ Upside","url":"https://stock-news.laohu8.com/highlight/detail?id=1171355403","media":"seekingalpha","summary":"Alibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.I break it down by business units, show its strength and true value, and discuss its delisting risks.Alibaba Group Holding Limitedstock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon was up 101%, its Latin American peer MercadoLibre was up 172%, even the S&P 500 index was up 39%.Alibaba is the largest eCommerce operation in the world. It has over 1B annual act","content":"Summary\n<ul>\n <li>Alibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.</li>\n <li>Its stock price has been under pressure for over a year by perceived political/delisting risk and its recent Ant Financial IPO cancellation.</li>\n <li>I break it down by business units, show its strength and true value, and discuss its delisting risks.</li>\n</ul>\nPrice action deviates from Fundamentals\nAlibaba Group Holding Limited(NYSE:BABA)stock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon (AMZN) was up 101%, its Latin American peer MercadoLibre (MELI) was up 172%, even the S&amp;P 500 index was up 39%.\n<img src=\"https://static.tigerbbs.com/699af948598c5dab55d7ba41931d1944\" tg-width=\"635\" tg-height=\"467\" referrerpolicy=\"no-referrer\">Data by YCharts\nAlibaba is the largest eCommerce operation in the world. It has over 1B annual active consumers, over 1T GMV (gross merchandise volume) in FY21, both numbers larger than any other e-commerce company in the world, Amazon included.\nIn the meantime, Alibaba's core commerce and cloud computing recorded 42% and 50% YoY growth FY21. These are jaw-dropping growth numbers, especially at Alibaba's massive scale.\nAlso worth noting, while its revenue grows at an impressive rate, its Ebitda profit margin continues to show 17% YoY improvement, further demonstrate its superior unit economics, and effective cost control as it scales up.\n<img src=\"https://static.tigerbbs.com/b69f23fbc36af93ba24ecf933c2b4bbe\" tg-width=\"640\" tg-height=\"474\" referrerpolicy=\"no-referrer\">\nSource: 4Q21 AlibabaInvestor presentation\nInvestment Thesis\nMy conservative model values Alibaba between $773B ($299/share) to $967B ($373/share). It offers an upside potential between 45% and 81% to its closing price of $206/share on 7/9/21.\nThe table below provides a summary view of my Sum-of-all-parts valuation, and I discuss them in detail in later sections.\n<img src=\"https://static.tigerbbs.com/1c3b44cb0364f61901a479a1f6948afd\" tg-width=\"640\" tg-height=\"348\" referrerpolicy=\"no-referrer\">\nSource: Excel sheet prepared by Author\nValuation By Segments\nAlibaba has four business segments and two investment segments, they are:\n<ul>\n <li>Core Commerce: Taobao, TMall, Alibaba, AliExpress, Lazada, ele.me, etc.</li>\n <li>Cloud Computing: Alibaba Cloud</li>\n <li>Digital Media: Youku, Ali Sports, AliGame, etc.</li>\n <li>Innovative Initiatives: gmap, AliOS, etc</li>\n <li>Ant Group</li>\n <li>Other strategic Investments: DiDi, bilibili, etc</li>\n</ul>\nLet us dive into them.\n<img src=\"https://static.tigerbbs.com/033f24b75c357021d3d1177cc2e3bbf4\" tg-width=\"640\" tg-height=\"140\" referrerpolicy=\"no-referrer\">\nSource:Alibaba Investor Day2020\n1. Core Commerce\nMarketplace-based core commerceincludes Taobao, TMall, 1688.com, alibaba.com, AliExpress, TMall Market. These are mature and profit-generating marketplaces with steady growth.\nThese are the crown jewels of Alibaba's empire. It composes of No.1 Online retail, No.1 online wholesale, and No 1 B2C Export marketplace in China.\nFY21 adj Ebitda for marketplace-based core commerce is $35B.\nI use a moderate 15x - 20x Ev/Ebitda ratio (e.g. Amazon is 30x+ Ev/Ebitda), values its marketplace-based core commerce between 570B and 700B.\nLazada:international retail marketplace in SEA\nAlibaba, through three rounds of a total $4B investment, is a majority owner of Lazada.\nWhile Shopee (SE) takes the commanding lead in the SEA e-commerce marketplace, Lazada is still a No.2 with 100Mil+ monthly active users, ahead of Tokopedia.\nAlibaba only provides international e-commerce in aggregate (~5B) in FY21, with no revenue breakdown. Lazada and AliExpress are 2 primary contributors in this segment.\nAs a reference, Tokopedia, an e-commerce competitor and No.3 in SEA, was valued at $18B.\nI take a conservative approach and value Lazada between $5B (acquisition cost) and $10B (50% discount to Tokopedia's recent valuation despite Lazada's slightly larger size).\nLocal Services(ele.me, koubei)\nEle.me has about 80% of DoorDash (DASH) revenue, with 8x active customers (40Mil vs 5Mil) in FY21. In food delivery services in China, Meituan leads with 65% market share, ele.me No.2 with 27.4% market share, 3B FY21 revenue.\nIf we use DoorDash valuation at 15x EV/Sales, that would value ele.me at 45B, if we use Grubhub's (GRUB) 8x EV/Sales, it values ele.me at $24B\nAlibaba acquired ele.me in 2018 for $9.5B.\nI take a conservative approach and value ele.me between 9.5B (acquisition cost) and $24B (use Grub Ev/Sales ratio).\nNew Retail(Freshippo)\nKnown as Hema in China, it is similar to Amazon Go, a new retail format store leveraging technology to provide zero human touch shopping experience.\nI consider it as a part of its core commerce strategy to maintain its competitive edge and assign no additional value.\nLogistic(Cainiao)\nCainiao is Alibaba's logistic arm.\nBABA paid 3.3B to increase its Cainiao stake from 51% to 63% in its latestroundin 2019. That values its stake ~18B at cost.\nCross border e-commerece(Kaola)\nKaola is considered to be a TMall extension to improve its core competency and I assign no additional value.\n<img src=\"https://static.tigerbbs.com/80468b018507ac3b52aeec68b0598486\" tg-width=\"640\" tg-height=\"482\" referrerpolicy=\"no-referrer\">Source: FY21 Investorpresentation\n2. Alibaba Cloud\nAlibaba Cloud's YoY revenue growth was 62% and 50% in the last two years. Its FY21 revenue was $9.2B and turned cash flow positive the first time with 47M adjusted Ebitda.\nIn terms of China's cloud market share, Alibaba cloud leads the pack with 39.8% as of Q1 2021.\nAccording to China Internet Watch, cloud infrastructure spending growth in China outpaced the RoW, supported by the government's strategic priority in cloud computing, and it has been consistently over 50% over the last 7 quarters.\n<img src=\"https://static.tigerbbs.com/cb80ade495a99acd13fa3efc4fc3f518\" tg-width=\"640\" tg-height=\"391\" referrerpolicy=\"no-referrer\">\n<img src=\"https://static.tigerbbs.com/b8eb951fb359485adc84747b78e74c71\" tg-width=\"640\" tg-height=\"383\" referrerpolicy=\"no-referrer\">\nSource:China Cloud market 1Q21- China Internet Watch\nIf we zoom out globally, Alibaba cloud ranks No 4 with a 6% market share, right after Amazon, Microsoft (MSFT), and Google (GOOG).\nIt is about 20% the size of Amazon cloud in this $150B global market.\n<img src=\"https://static.tigerbbs.com/5ef9f1797dbfd7d1ca0ad84c3e009923\" tg-width=\"640\" tg-height=\"364\" referrerpolicy=\"no-referrer\">\nSource:Cloud Market Q3Y20Canalys\nSimilar research from Synergy Research Group in Q1 21 also confirmed the same ranking/market share.\n<img src=\"https://static.tigerbbs.com/cb5b1ff4c0cdbf586867d03a369d395e\" tg-width=\"499\" tg-height=\"497\" referrerpolicy=\"no-referrer\">\nSource: Synergy Research Group on Statista\nUsing a very conservative 10x P/S values Alibaba Cloud at $100B.\nBoth GS (GS) and MS (MS)valuedAlibaba Cloud at $120B+ a year ago after Alibaba disclosed its 1Q21 fiscal data in Aug 2020.\nGiven the above, I value Alibaba Cloud between 100B and 120B.\n3. Digital Media and Entertainment\nIt includes YouKu, AliSports, AliGame, UC\nYouKu has 500M Monthly Active Users, 800M video views, one of China's top video/streaming service platforms, along with iQIYI, and Tencent Video.\nAlibaba spent $4B in 2016 to acquire Youku.\nIts main competitor iQIYI (IQ) is listed in Nasdaq, currently valued at 10.4B.\nDigital media/entertainment reported $4.5B revenue in FY21, with an adjusted Ebitda is 0.9B.\nI value Youku (and the rest of segment assets) between $4.5B (acquisition cost) and 9B (10x Ev/Ebitda).\n4. Innovation Initiatives\nAs I have few visibilities in these innovation initiatives, I take a conservative approach and assign no value.\n5. Ant Group\nAnt Group valuation could certainly be a controversial take.\nIts valuation hit $320B at its peak prior to IPO. Since its IPO halt in Nov 2020, its valuation has declined significantly, the latestanalysisfrom Sanford Bernstein valued it at $120B.\nAt a $120B valuation, BABA's 1/3 stake is worth $40B.\nput aside valuation, a head-to-head comparison between 2 dominating FinTech in China (Ant and Tencent) shows its massive scale in absolute numbers.\n<img src=\"https://static.tigerbbs.com/f6ed30632a6897a6c57eca61205d3bc7\" tg-width=\"640\" tg-height=\"353\" referrerpolicy=\"no-referrer\">\nsource:TechCrunchchina's top fintech platform Ant vs Tencent\nPut the numbers into perspective, Ant Group's active user is about 2x PayPal (PYPL) size, and roughly the same revenue. PayPal is currently valued at $350B.\n<img src=\"https://static.tigerbbs.com/3318320d7217809542f5c2516c83cb01\" tg-width=\"640\" tg-height=\"764\" referrerpolicy=\"no-referrer\">\nsource:SPGlobal\nAn insightful comparison from S&amp;P Global market points out while Ant and PayPal revenue are comparable, Ant has about 20x TPV (Transaction Payment Volume) more than PayPal and Ant's take rate is only 5% of PayPal's.\nNote: PayPal take rate 2.5%, and Ant is at a mere 0.11%.\nAs shown in Chart 1 and 2, PayPal's take rate has been steadily declining since 2018, while Ant increases.\nIn summary, I think Bernstein's $120B valuations is a very conservative number. I consider Ant is on par with PayPal, and even with a 50% discount shall value Ant Group at $175B.\nThus I would value Alibaba's 1/3 stake in Ant Group between $40B and $58B.\n6. Strategic Investments\nReported by Alibaba at $45B valuations as of Jun30, 2020.\n<img src=\"https://static.tigerbbs.com/ce0e36c5240ce4a4c741785ea8a9de96\" tg-width=\"207\" tg-height=\"350\" referrerpolicy=\"no-referrer\">\nSome notable investment includes:\n8% ownership stake in Bilibili (BILI)\nA single-digit ownership stake in DiDi (DIDI)\nDelisting Risk\nNow let us talk about the elephant in the room - its various risks, particularly its delisting risk as discussed frequently among US market participants\nI discussed the general Chinese ADR delisting risk in a recent Tweet thread. For these interested in the details:\n<img src=\"https://static.tigerbbs.com/fbfb7535a1b9fc863aa6d492ae17dc3f\" tg-width=\"583\" tg-height=\"432\">\nIn summary:\n<ol>\n <li>delisting poses an immediate trading liquidity risk, thus short-term volatility.</li>\n <li>Stocks are fungible. For dually listed stocks such as Alibaba, there is no/limited long-term material impact to shareholders especially if one is prepared and ready to receive its shares in the other exchange. In BABA's case, that would be its shares listed on Hong Kong Stock Exchange.</li>\n <li>There are also established tender processes to redeem if the company offers, which was exactly what happened with China Mobile and China Unicom in earlier 2021.</li>\n</ol>\nOther Concerns\nAnti-monopoly violation: Alibaba was recently levied a $2.8B fine due to anti-monopoly violation. In relative terms, that fine alone has no material impact as it was less than 0.5% of its market cap. There are legit concerns that BABA could be subject to further regulatory fines in a less predictable manner.\nJack Ma: Jack Ma risk has been talked about a lot. The fact is Jack Ma already stepped down from both chairmanship and CEO role of Alibaba and has gradually detached himself (at least in the public) from the business.\nAnt Group IPO halt: I think Ant Group IPO halt was a big disappointment and shows certain unpredictability in the current environment. However, I think that has been more than priced in.\nConcluding Thoughts\nA conservative sum of all parts values BABA enterprise value between 773B ($299/share) and 965B ($373/share). At the current price of $206/share, it offers 45% to 81% upside potential, and I am increasing my position at the current price.","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Alibaba: An Undervalued Empire With 45%+ Upside</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAlibaba: An Undervalued Empire With 45%+ Upside\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-07-13 09:39 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nAlibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.\nIts stock price has been under pressure for over a year by perceived political/delisting risk ...\n\n<a href=\"https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BABA":"阿里巴巴","09988":"阿里巴巴-W"},"source_url":"https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1171355403","content_text":"Summary\n\nAlibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.\nIts stock price has been under pressure for over a year by perceived political/delisting risk and its recent Ant Financial IPO cancellation.\nI break it down by business units, show its strength and true value, and discuss its delisting risks.\n\nPrice action deviates from Fundamentals\nAlibaba Group Holding Limited(NYSE:BABA)stock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon (AMZN) was up 101%, its Latin American peer MercadoLibre (MELI) was up 172%, even the S&P 500 index was up 39%.\nData by YCharts\nAlibaba is the largest eCommerce operation in the world. It has over 1B annual active consumers, over 1T GMV (gross merchandise volume) in FY21, both numbers larger than any other e-commerce company in the world, Amazon included.\nIn the meantime, Alibaba's core commerce and cloud computing recorded 42% and 50% YoY growth FY21. These are jaw-dropping growth numbers, especially at Alibaba's massive scale.\nAlso worth noting, while its revenue grows at an impressive rate, its Ebitda profit margin continues to show 17% YoY improvement, further demonstrate its superior unit economics, and effective cost control as it scales up.\n\nSource: 4Q21 AlibabaInvestor presentation\nInvestment Thesis\nMy conservative model values Alibaba between $773B ($299/share) to $967B ($373/share). It offers an upside potential between 45% and 81% to its closing price of $206/share on 7/9/21.\nThe table below provides a summary view of my Sum-of-all-parts valuation, and I discuss them in detail in later sections.\n\nSource: Excel sheet prepared by Author\nValuation By Segments\nAlibaba has four business segments and two investment segments, they are:\n\nCore Commerce: Taobao, TMall, Alibaba, AliExpress, Lazada, ele.me, etc.\nCloud Computing: Alibaba Cloud\nDigital Media: Youku, Ali Sports, AliGame, etc.\nInnovative Initiatives: gmap, AliOS, etc\nAnt Group\nOther strategic Investments: DiDi, bilibili, etc\n\nLet us dive into them.\n\nSource:Alibaba Investor Day2020\n1. Core Commerce\nMarketplace-based core commerceincludes Taobao, TMall, 1688.com, alibaba.com, AliExpress, TMall Market. These are mature and profit-generating marketplaces with steady growth.\nThese are the crown jewels of Alibaba's empire. It composes of No.1 Online retail, No.1 online wholesale, and No 1 B2C Export marketplace in China.\nFY21 adj Ebitda for marketplace-based core commerce is $35B.\nI use a moderate 15x - 20x Ev/Ebitda ratio (e.g. Amazon is 30x+ Ev/Ebitda), values its marketplace-based core commerce between 570B and 700B.\nLazada:international retail marketplace in SEA\nAlibaba, through three rounds of a total $4B investment, is a majority owner of Lazada.\nWhile Shopee (SE) takes the commanding lead in the SEA e-commerce marketplace, Lazada is still a No.2 with 100Mil+ monthly active users, ahead of Tokopedia.\nAlibaba only provides international e-commerce in aggregate (~5B) in FY21, with no revenue breakdown. Lazada and AliExpress are 2 primary contributors in this segment.\nAs a reference, Tokopedia, an e-commerce competitor and No.3 in SEA, was valued at $18B.\nI take a conservative approach and value Lazada between $5B (acquisition cost) and $10B (50% discount to Tokopedia's recent valuation despite Lazada's slightly larger size).\nLocal Services(ele.me, koubei)\nEle.me has about 80% of DoorDash (DASH) revenue, with 8x active customers (40Mil vs 5Mil) in FY21. In food delivery services in China, Meituan leads with 65% market share, ele.me No.2 with 27.4% market share, 3B FY21 revenue.\nIf we use DoorDash valuation at 15x EV/Sales, that would value ele.me at 45B, if we use Grubhub's (GRUB) 8x EV/Sales, it values ele.me at $24B\nAlibaba acquired ele.me in 2018 for $9.5B.\nI take a conservative approach and value ele.me between 9.5B (acquisition cost) and $24B (use Grub Ev/Sales ratio).\nNew Retail(Freshippo)\nKnown as Hema in China, it is similar to Amazon Go, a new retail format store leveraging technology to provide zero human touch shopping experience.\nI consider it as a part of its core commerce strategy to maintain its competitive edge and assign no additional value.\nLogistic(Cainiao)\nCainiao is Alibaba's logistic arm.\nBABA paid 3.3B to increase its Cainiao stake from 51% to 63% in its latestroundin 2019. That values its stake ~18B at cost.\nCross border e-commerece(Kaola)\nKaola is considered to be a TMall extension to improve its core competency and I assign no additional value.\nSource: FY21 Investorpresentation\n2. Alibaba Cloud\nAlibaba Cloud's YoY revenue growth was 62% and 50% in the last two years. Its FY21 revenue was $9.2B and turned cash flow positive the first time with 47M adjusted Ebitda.\nIn terms of China's cloud market share, Alibaba cloud leads the pack with 39.8% as of Q1 2021.\nAccording to China Internet Watch, cloud infrastructure spending growth in China outpaced the RoW, supported by the government's strategic priority in cloud computing, and it has been consistently over 50% over the last 7 quarters.\n\n\nSource:China Cloud market 1Q21- China Internet Watch\nIf we zoom out globally, Alibaba cloud ranks No 4 with a 6% market share, right after Amazon, Microsoft (MSFT), and Google (GOOG).\nIt is about 20% the size of Amazon cloud in this $150B global market.\n\nSource:Cloud Market Q3Y20Canalys\nSimilar research from Synergy Research Group in Q1 21 also confirmed the same ranking/market share.\n\nSource: Synergy Research Group on Statista\nUsing a very conservative 10x P/S values Alibaba Cloud at $100B.\nBoth GS (GS) and MS (MS)valuedAlibaba Cloud at $120B+ a year ago after Alibaba disclosed its 1Q21 fiscal data in Aug 2020.\nGiven the above, I value Alibaba Cloud between 100B and 120B.\n3. Digital Media and Entertainment\nIt includes YouKu, AliSports, AliGame, UC\nYouKu has 500M Monthly Active Users, 800M video views, one of China's top video/streaming service platforms, along with iQIYI, and Tencent Video.\nAlibaba spent $4B in 2016 to acquire Youku.\nIts main competitor iQIYI (IQ) is listed in Nasdaq, currently valued at 10.4B.\nDigital media/entertainment reported $4.5B revenue in FY21, with an adjusted Ebitda is 0.9B.\nI value Youku (and the rest of segment assets) between $4.5B (acquisition cost) and 9B (10x Ev/Ebitda).\n4. Innovation Initiatives\nAs I have few visibilities in these innovation initiatives, I take a conservative approach and assign no value.\n5. Ant Group\nAnt Group valuation could certainly be a controversial take.\nIts valuation hit $320B at its peak prior to IPO. Since its IPO halt in Nov 2020, its valuation has declined significantly, the latestanalysisfrom Sanford Bernstein valued it at $120B.\nAt a $120B valuation, BABA's 1/3 stake is worth $40B.\nput aside valuation, a head-to-head comparison between 2 dominating FinTech in China (Ant and Tencent) shows its massive scale in absolute numbers.\n\nsource:TechCrunchchina's top fintech platform Ant vs Tencent\nPut the numbers into perspective, Ant Group's active user is about 2x PayPal (PYPL) size, and roughly the same revenue. PayPal is currently valued at $350B.\n\nsource:SPGlobal\nAn insightful comparison from S&P Global market points out while Ant and PayPal revenue are comparable, Ant has about 20x TPV (Transaction Payment Volume) more than PayPal and Ant's take rate is only 5% of PayPal's.\nNote: PayPal take rate 2.5%, and Ant is at a mere 0.11%.\nAs shown in Chart 1 and 2, PayPal's take rate has been steadily declining since 2018, while Ant increases.\nIn summary, I think Bernstein's $120B valuations is a very conservative number. I consider Ant is on par with PayPal, and even with a 50% discount shall value Ant Group at $175B.\nThus I would value Alibaba's 1/3 stake in Ant Group between $40B and $58B.\n6. Strategic Investments\nReported by Alibaba at $45B valuations as of Jun30, 2020.\n\nSome notable investment includes:\n8% ownership stake in Bilibili (BILI)\nA single-digit ownership stake in DiDi (DIDI)\nDelisting Risk\nNow let us talk about the elephant in the room - its various risks, particularly its delisting risk as discussed frequently among US market participants\nI discussed the general Chinese ADR delisting risk in a recent Tweet thread. For these interested in the details:\n\nIn summary:\n\ndelisting poses an immediate trading liquidity risk, thus short-term volatility.\nStocks are fungible. For dually listed stocks such as Alibaba, there is no/limited long-term material impact to shareholders especially if one is prepared and ready to receive its shares in the other exchange. In BABA's case, that would be its shares listed on Hong Kong Stock Exchange.\nThere are also established tender processes to redeem if the company offers, which was exactly what happened with China Mobile and China Unicom in earlier 2021.\n\nOther Concerns\nAnti-monopoly violation: Alibaba was recently levied a $2.8B fine due to anti-monopoly violation. In relative terms, that fine alone has no material impact as it was less than 0.5% of its market cap. There are legit concerns that BABA could be subject to further regulatory fines in a less predictable manner.\nJack Ma: Jack Ma risk has been talked about a lot. The fact is Jack Ma already stepped down from both chairmanship and CEO role of Alibaba and has gradually detached himself (at least in the public) from the business.\nAnt Group IPO halt: I think Ant Group IPO halt was a big disappointment and shows certain unpredictability in the current environment. However, I think that has been more than priced in.\nConcluding Thoughts\nA conservative sum of all parts values BABA enterprise value between 773B ($299/share) and 965B ($373/share). At the current price of $206/share, it offers 45% to 81% upside potential, and I am increasing my position at the current price.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"CN"},{"id":142620666,"gmtCreate":1626147245055,"gmtModify":1703754294991,"author":{"id":"4087361572396550","authorId":"4087361572396550","name":"ValuInvestor","avatar":"https://static.tigerbbs.com/5a962911d3cd0763a9f0cb01392cacd9","vip":1,"crmLevel":4,"crmLevelSwitch":0,"authorIdStr":"4087361572396550","idStr":"4087361572396550"},"htmlText":"Still too much risk from China regulators","listText":"Still too much risk from China regulators","text":"Still too much risk from China regulators","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/142620666","repostId":1171355403,"repostType":4,"repost":{"id":"1171355403","kind":"news","pubTimestamp":1626140399,"share":"https://ttm.financial/m/news/1171355403?lang=&edition=fundamental","pubTime":"2021-07-13 09:39","market":"us","language":"en","title":"Alibaba: An Undervalued Empire With 45%+ Upside","url":"https://stock-news.laohu8.com/highlight/detail?id=1171355403","media":"seekingalpha","summary":"Alibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.I break it down by business units, show its strength and true value, and discuss its delisting risks.Alibaba Group Holding Limitedstock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon was up 101%, its Latin American peer MercadoLibre was up 172%, even the S&P 500 index was up 39%.Alibaba is the largest eCommerce operation in the world. It has over 1B annual act","content":"Summary\n<ul>\n <li>Alibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.</li>\n <li>Its stock price has been under pressure for over a year by perceived political/delisting risk and its recent Ant Financial IPO cancellation.</li>\n <li>I break it down by business units, show its strength and true value, and discuss its delisting risks.</li>\n</ul>\nPrice action deviates from Fundamentals\nAlibaba Group Holding Limited(NYSE:BABA)stock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon (AMZN) was up 101%, its Latin American peer MercadoLibre (MELI) was up 172%, even the S&amp;P 500 index was up 39%.\n<img src=\"https://static.tigerbbs.com/699af948598c5dab55d7ba41931d1944\" tg-width=\"635\" tg-height=\"467\" referrerpolicy=\"no-referrer\">Data by YCharts\nAlibaba is the largest eCommerce operation in the world. It has over 1B annual active consumers, over 1T GMV (gross merchandise volume) in FY21, both numbers larger than any other e-commerce company in the world, Amazon included.\nIn the meantime, Alibaba's core commerce and cloud computing recorded 42% and 50% YoY growth FY21. These are jaw-dropping growth numbers, especially at Alibaba's massive scale.\nAlso worth noting, while its revenue grows at an impressive rate, its Ebitda profit margin continues to show 17% YoY improvement, further demonstrate its superior unit economics, and effective cost control as it scales up.\n<img src=\"https://static.tigerbbs.com/b69f23fbc36af93ba24ecf933c2b4bbe\" tg-width=\"640\" tg-height=\"474\" referrerpolicy=\"no-referrer\">\nSource: 4Q21 AlibabaInvestor presentation\nInvestment Thesis\nMy conservative model values Alibaba between $773B ($299/share) to $967B ($373/share). It offers an upside potential between 45% and 81% to its closing price of $206/share on 7/9/21.\nThe table below provides a summary view of my Sum-of-all-parts valuation, and I discuss them in detail in later sections.\n<img src=\"https://static.tigerbbs.com/1c3b44cb0364f61901a479a1f6948afd\" tg-width=\"640\" tg-height=\"348\" referrerpolicy=\"no-referrer\">\nSource: Excel sheet prepared by Author\nValuation By Segments\nAlibaba has four business segments and two investment segments, they are:\n<ul>\n <li>Core Commerce: Taobao, TMall, Alibaba, AliExpress, Lazada, ele.me, etc.</li>\n <li>Cloud Computing: Alibaba Cloud</li>\n <li>Digital Media: Youku, Ali Sports, AliGame, etc.</li>\n <li>Innovative Initiatives: gmap, AliOS, etc</li>\n <li>Ant Group</li>\n <li>Other strategic Investments: DiDi, bilibili, etc</li>\n</ul>\nLet us dive into them.\n<img src=\"https://static.tigerbbs.com/033f24b75c357021d3d1177cc2e3bbf4\" tg-width=\"640\" tg-height=\"140\" referrerpolicy=\"no-referrer\">\nSource:Alibaba Investor Day2020\n1. Core Commerce\nMarketplace-based core commerceincludes Taobao, TMall, 1688.com, alibaba.com, AliExpress, TMall Market. These are mature and profit-generating marketplaces with steady growth.\nThese are the crown jewels of Alibaba's empire. It composes of No.1 Online retail, No.1 online wholesale, and No 1 B2C Export marketplace in China.\nFY21 adj Ebitda for marketplace-based core commerce is $35B.\nI use a moderate 15x - 20x Ev/Ebitda ratio (e.g. Amazon is 30x+ Ev/Ebitda), values its marketplace-based core commerce between 570B and 700B.\nLazada:international retail marketplace in SEA\nAlibaba, through three rounds of a total $4B investment, is a majority owner of Lazada.\nWhile Shopee (SE) takes the commanding lead in the SEA e-commerce marketplace, Lazada is still a No.2 with 100Mil+ monthly active users, ahead of Tokopedia.\nAlibaba only provides international e-commerce in aggregate (~5B) in FY21, with no revenue breakdown. Lazada and AliExpress are 2 primary contributors in this segment.\nAs a reference, Tokopedia, an e-commerce competitor and No.3 in SEA, was valued at $18B.\nI take a conservative approach and value Lazada between $5B (acquisition cost) and $10B (50% discount to Tokopedia's recent valuation despite Lazada's slightly larger size).\nLocal Services(ele.me, koubei)\nEle.me has about 80% of DoorDash (DASH) revenue, with 8x active customers (40Mil vs 5Mil) in FY21. In food delivery services in China, Meituan leads with 65% market share, ele.me No.2 with 27.4% market share, 3B FY21 revenue.\nIf we use DoorDash valuation at 15x EV/Sales, that would value ele.me at 45B, if we use Grubhub's (GRUB) 8x EV/Sales, it values ele.me at $24B\nAlibaba acquired ele.me in 2018 for $9.5B.\nI take a conservative approach and value ele.me between 9.5B (acquisition cost) and $24B (use Grub Ev/Sales ratio).\nNew Retail(Freshippo)\nKnown as Hema in China, it is similar to Amazon Go, a new retail format store leveraging technology to provide zero human touch shopping experience.\nI consider it as a part of its core commerce strategy to maintain its competitive edge and assign no additional value.\nLogistic(Cainiao)\nCainiao is Alibaba's logistic arm.\nBABA paid 3.3B to increase its Cainiao stake from 51% to 63% in its latestroundin 2019. That values its stake ~18B at cost.\nCross border e-commerece(Kaola)\nKaola is considered to be a TMall extension to improve its core competency and I assign no additional value.\n<img src=\"https://static.tigerbbs.com/80468b018507ac3b52aeec68b0598486\" tg-width=\"640\" tg-height=\"482\" referrerpolicy=\"no-referrer\">Source: FY21 Investorpresentation\n2. Alibaba Cloud\nAlibaba Cloud's YoY revenue growth was 62% and 50% in the last two years. Its FY21 revenue was $9.2B and turned cash flow positive the first time with 47M adjusted Ebitda.\nIn terms of China's cloud market share, Alibaba cloud leads the pack with 39.8% as of Q1 2021.\nAccording to China Internet Watch, cloud infrastructure spending growth in China outpaced the RoW, supported by the government's strategic priority in cloud computing, and it has been consistently over 50% over the last 7 quarters.\n<img src=\"https://static.tigerbbs.com/cb80ade495a99acd13fa3efc4fc3f518\" tg-width=\"640\" tg-height=\"391\" referrerpolicy=\"no-referrer\">\n<img src=\"https://static.tigerbbs.com/b8eb951fb359485adc84747b78e74c71\" tg-width=\"640\" tg-height=\"383\" referrerpolicy=\"no-referrer\">\nSource:China Cloud market 1Q21- China Internet Watch\nIf we zoom out globally, Alibaba cloud ranks No 4 with a 6% market share, right after Amazon, Microsoft (MSFT), and Google (GOOG).\nIt is about 20% the size of Amazon cloud in this $150B global market.\n<img src=\"https://static.tigerbbs.com/5ef9f1797dbfd7d1ca0ad84c3e009923\" tg-width=\"640\" tg-height=\"364\" referrerpolicy=\"no-referrer\">\nSource:Cloud Market Q3Y20Canalys\nSimilar research from Synergy Research Group in Q1 21 also confirmed the same ranking/market share.\n<img src=\"https://static.tigerbbs.com/cb5b1ff4c0cdbf586867d03a369d395e\" tg-width=\"499\" tg-height=\"497\" referrerpolicy=\"no-referrer\">\nSource: Synergy Research Group on Statista\nUsing a very conservative 10x P/S values Alibaba Cloud at $100B.\nBoth GS (GS) and MS (MS)valuedAlibaba Cloud at $120B+ a year ago after Alibaba disclosed its 1Q21 fiscal data in Aug 2020.\nGiven the above, I value Alibaba Cloud between 100B and 120B.\n3. Digital Media and Entertainment\nIt includes YouKu, AliSports, AliGame, UC\nYouKu has 500M Monthly Active Users, 800M video views, one of China's top video/streaming service platforms, along with iQIYI, and Tencent Video.\nAlibaba spent $4B in 2016 to acquire Youku.\nIts main competitor iQIYI (IQ) is listed in Nasdaq, currently valued at 10.4B.\nDigital media/entertainment reported $4.5B revenue in FY21, with an adjusted Ebitda is 0.9B.\nI value Youku (and the rest of segment assets) between $4.5B (acquisition cost) and 9B (10x Ev/Ebitda).\n4. Innovation Initiatives\nAs I have few visibilities in these innovation initiatives, I take a conservative approach and assign no value.\n5. Ant Group\nAnt Group valuation could certainly be a controversial take.\nIts valuation hit $320B at its peak prior to IPO. Since its IPO halt in Nov 2020, its valuation has declined significantly, the latestanalysisfrom Sanford Bernstein valued it at $120B.\nAt a $120B valuation, BABA's 1/3 stake is worth $40B.\nput aside valuation, a head-to-head comparison between 2 dominating FinTech in China (Ant and Tencent) shows its massive scale in absolute numbers.\n<img src=\"https://static.tigerbbs.com/f6ed30632a6897a6c57eca61205d3bc7\" tg-width=\"640\" tg-height=\"353\" referrerpolicy=\"no-referrer\">\nsource:TechCrunchchina's top fintech platform Ant vs Tencent\nPut the numbers into perspective, Ant Group's active user is about 2x PayPal (PYPL) size, and roughly the same revenue. PayPal is currently valued at $350B.\n<img src=\"https://static.tigerbbs.com/3318320d7217809542f5c2516c83cb01\" tg-width=\"640\" tg-height=\"764\" referrerpolicy=\"no-referrer\">\nsource:SPGlobal\nAn insightful comparison from S&amp;P Global market points out while Ant and PayPal revenue are comparable, Ant has about 20x TPV (Transaction Payment Volume) more than PayPal and Ant's take rate is only 5% of PayPal's.\nNote: PayPal take rate 2.5%, and Ant is at a mere 0.11%.\nAs shown in Chart 1 and 2, PayPal's take rate has been steadily declining since 2018, while Ant increases.\nIn summary, I think Bernstein's $120B valuations is a very conservative number. I consider Ant is on par with PayPal, and even with a 50% discount shall value Ant Group at $175B.\nThus I would value Alibaba's 1/3 stake in Ant Group between $40B and $58B.\n6. Strategic Investments\nReported by Alibaba at $45B valuations as of Jun30, 2020.\n<img src=\"https://static.tigerbbs.com/ce0e36c5240ce4a4c741785ea8a9de96\" tg-width=\"207\" tg-height=\"350\" referrerpolicy=\"no-referrer\">\nSome notable investment includes:\n8% ownership stake in Bilibili (BILI)\nA single-digit ownership stake in DiDi (DIDI)\nDelisting Risk\nNow let us talk about the elephant in the room - its various risks, particularly its delisting risk as discussed frequently among US market participants\nI discussed the general Chinese ADR delisting risk in a recent Tweet thread. For these interested in the details:\n<img src=\"https://static.tigerbbs.com/fbfb7535a1b9fc863aa6d492ae17dc3f\" tg-width=\"583\" tg-height=\"432\">\nIn summary:\n<ol>\n <li>delisting poses an immediate trading liquidity risk, thus short-term volatility.</li>\n <li>Stocks are fungible. For dually listed stocks such as Alibaba, there is no/limited long-term material impact to shareholders especially if one is prepared and ready to receive its shares in the other exchange. In BABA's case, that would be its shares listed on Hong Kong Stock Exchange.</li>\n <li>There are also established tender processes to redeem if the company offers, which was exactly what happened with China Mobile and China Unicom in earlier 2021.</li>\n</ol>\nOther Concerns\nAnti-monopoly violation: Alibaba was recently levied a $2.8B fine due to anti-monopoly violation. In relative terms, that fine alone has no material impact as it was less than 0.5% of its market cap. There are legit concerns that BABA could be subject to further regulatory fines in a less predictable manner.\nJack Ma: Jack Ma risk has been talked about a lot. The fact is Jack Ma already stepped down from both chairmanship and CEO role of Alibaba and has gradually detached himself (at least in the public) from the business.\nAnt Group IPO halt: I think Ant Group IPO halt was a big disappointment and shows certain unpredictability in the current environment. However, I think that has been more than priced in.\nConcluding Thoughts\nA conservative sum of all parts values BABA enterprise value between 773B ($299/share) and 965B ($373/share). At the current price of $206/share, it offers 45% to 81% upside potential, and I am increasing my position at the current price.","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Alibaba: An Undervalued Empire With 45%+ Upside</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAlibaba: An Undervalued Empire With 45%+ Upside\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-07-13 09:39 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nAlibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.\nIts stock price has been under pressure for over a year by perceived political/delisting risk ...\n\n<a href=\"https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BABA":"阿里巴巴","09988":"阿里巴巴-W"},"source_url":"https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1171355403","content_text":"Summary\n\nAlibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.\nIts stock price has been under pressure for over a year by perceived political/delisting risk and its recent Ant Financial IPO cancellation.\nI break it down by business units, show its strength and true value, and discuss its delisting risks.\n\nPrice action deviates from Fundamentals\nAlibaba Group Holding Limited(NYSE:BABA)stock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon (AMZN) was up 101%, its Latin American peer MercadoLibre (MELI) was up 172%, even the S&P 500 index was up 39%.\nData by YCharts\nAlibaba is the largest eCommerce operation in the world. It has over 1B annual active consumers, over 1T GMV (gross merchandise volume) in FY21, both numbers larger than any other e-commerce company in the world, Amazon included.\nIn the meantime, Alibaba's core commerce and cloud computing recorded 42% and 50% YoY growth FY21. These are jaw-dropping growth numbers, especially at Alibaba's massive scale.\nAlso worth noting, while its revenue grows at an impressive rate, its Ebitda profit margin continues to show 17% YoY improvement, further demonstrate its superior unit economics, and effective cost control as it scales up.\n\nSource: 4Q21 AlibabaInvestor presentation\nInvestment Thesis\nMy conservative model values Alibaba between $773B ($299/share) to $967B ($373/share). It offers an upside potential between 45% and 81% to its closing price of $206/share on 7/9/21.\nThe table below provides a summary view of my Sum-of-all-parts valuation, and I discuss them in detail in later sections.\n\nSource: Excel sheet prepared by Author\nValuation By Segments\nAlibaba has four business segments and two investment segments, they are:\n\nCore Commerce: Taobao, TMall, Alibaba, AliExpress, Lazada, ele.me, etc.\nCloud Computing: Alibaba Cloud\nDigital Media: Youku, Ali Sports, AliGame, etc.\nInnovative Initiatives: gmap, AliOS, etc\nAnt Group\nOther strategic Investments: DiDi, bilibili, etc\n\nLet us dive into them.\n\nSource:Alibaba Investor Day2020\n1. Core Commerce\nMarketplace-based core commerceincludes Taobao, TMall, 1688.com, alibaba.com, AliExpress, TMall Market. These are mature and profit-generating marketplaces with steady growth.\nThese are the crown jewels of Alibaba's empire. It composes of No.1 Online retail, No.1 online wholesale, and No 1 B2C Export marketplace in China.\nFY21 adj Ebitda for marketplace-based core commerce is $35B.\nI use a moderate 15x - 20x Ev/Ebitda ratio (e.g. Amazon is 30x+ Ev/Ebitda), values its marketplace-based core commerce between 570B and 700B.\nLazada:international retail marketplace in SEA\nAlibaba, through three rounds of a total $4B investment, is a majority owner of Lazada.\nWhile Shopee (SE) takes the commanding lead in the SEA e-commerce marketplace, Lazada is still a No.2 with 100Mil+ monthly active users, ahead of Tokopedia.\nAlibaba only provides international e-commerce in aggregate (~5B) in FY21, with no revenue breakdown. Lazada and AliExpress are 2 primary contributors in this segment.\nAs a reference, Tokopedia, an e-commerce competitor and No.3 in SEA, was valued at $18B.\nI take a conservative approach and value Lazada between $5B (acquisition cost) and $10B (50% discount to Tokopedia's recent valuation despite Lazada's slightly larger size).\nLocal Services(ele.me, koubei)\nEle.me has about 80% of DoorDash (DASH) revenue, with 8x active customers (40Mil vs 5Mil) in FY21. In food delivery services in China, Meituan leads with 65% market share, ele.me No.2 with 27.4% market share, 3B FY21 revenue.\nIf we use DoorDash valuation at 15x EV/Sales, that would value ele.me at 45B, if we use Grubhub's (GRUB) 8x EV/Sales, it values ele.me at $24B\nAlibaba acquired ele.me in 2018 for $9.5B.\nI take a conservative approach and value ele.me between 9.5B (acquisition cost) and $24B (use Grub Ev/Sales ratio).\nNew Retail(Freshippo)\nKnown as Hema in China, it is similar to Amazon Go, a new retail format store leveraging technology to provide zero human touch shopping experience.\nI consider it as a part of its core commerce strategy to maintain its competitive edge and assign no additional value.\nLogistic(Cainiao)\nCainiao is Alibaba's logistic arm.\nBABA paid 3.3B to increase its Cainiao stake from 51% to 63% in its latestroundin 2019. That values its stake ~18B at cost.\nCross border e-commerece(Kaola)\nKaola is considered to be a TMall extension to improve its core competency and I assign no additional value.\nSource: FY21 Investorpresentation\n2. Alibaba Cloud\nAlibaba Cloud's YoY revenue growth was 62% and 50% in the last two years. Its FY21 revenue was $9.2B and turned cash flow positive the first time with 47M adjusted Ebitda.\nIn terms of China's cloud market share, Alibaba cloud leads the pack with 39.8% as of Q1 2021.\nAccording to China Internet Watch, cloud infrastructure spending growth in China outpaced the RoW, supported by the government's strategic priority in cloud computing, and it has been consistently over 50% over the last 7 quarters.\n\n\nSource:China Cloud market 1Q21- China Internet Watch\nIf we zoom out globally, Alibaba cloud ranks No 4 with a 6% market share, right after Amazon, Microsoft (MSFT), and Google (GOOG).\nIt is about 20% the size of Amazon cloud in this $150B global market.\n\nSource:Cloud Market Q3Y20Canalys\nSimilar research from Synergy Research Group in Q1 21 also confirmed the same ranking/market share.\n\nSource: Synergy Research Group on Statista\nUsing a very conservative 10x P/S values Alibaba Cloud at $100B.\nBoth GS (GS) and MS (MS)valuedAlibaba Cloud at $120B+ a year ago after Alibaba disclosed its 1Q21 fiscal data in Aug 2020.\nGiven the above, I value Alibaba Cloud between 100B and 120B.\n3. Digital Media and Entertainment\nIt includes YouKu, AliSports, AliGame, UC\nYouKu has 500M Monthly Active Users, 800M video views, one of China's top video/streaming service platforms, along with iQIYI, and Tencent Video.\nAlibaba spent $4B in 2016 to acquire Youku.\nIts main competitor iQIYI (IQ) is listed in Nasdaq, currently valued at 10.4B.\nDigital media/entertainment reported $4.5B revenue in FY21, with an adjusted Ebitda is 0.9B.\nI value Youku (and the rest of segment assets) between $4.5B (acquisition cost) and 9B (10x Ev/Ebitda).\n4. Innovation Initiatives\nAs I have few visibilities in these innovation initiatives, I take a conservative approach and assign no value.\n5. Ant Group\nAnt Group valuation could certainly be a controversial take.\nIts valuation hit $320B at its peak prior to IPO. Since its IPO halt in Nov 2020, its valuation has declined significantly, the latestanalysisfrom Sanford Bernstein valued it at $120B.\nAt a $120B valuation, BABA's 1/3 stake is worth $40B.\nput aside valuation, a head-to-head comparison between 2 dominating FinTech in China (Ant and Tencent) shows its massive scale in absolute numbers.\n\nsource:TechCrunchchina's top fintech platform Ant vs Tencent\nPut the numbers into perspective, Ant Group's active user is about 2x PayPal (PYPL) size, and roughly the same revenue. PayPal is currently valued at $350B.\n\nsource:SPGlobal\nAn insightful comparison from S&P Global market points out while Ant and PayPal revenue are comparable, Ant has about 20x TPV (Transaction Payment Volume) more than PayPal and Ant's take rate is only 5% of PayPal's.\nNote: PayPal take rate 2.5%, and Ant is at a mere 0.11%.\nAs shown in Chart 1 and 2, PayPal's take rate has been steadily declining since 2018, while Ant increases.\nIn summary, I think Bernstein's $120B valuations is a very conservative number. I consider Ant is on par with PayPal, and even with a 50% discount shall value Ant Group at $175B.\nThus I would value Alibaba's 1/3 stake in Ant Group between $40B and $58B.\n6. Strategic Investments\nReported by Alibaba at $45B valuations as of Jun30, 2020.\n\nSome notable investment includes:\n8% ownership stake in Bilibili (BILI)\nA single-digit ownership stake in DiDi (DIDI)\nDelisting Risk\nNow let us talk about the elephant in the room - its various risks, particularly its delisting risk as discussed frequently among US market participants\nI discussed the general Chinese ADR delisting risk in a recent Tweet thread. For these interested in the details:\n\nIn summary:\n\ndelisting poses an immediate trading liquidity risk, thus short-term volatility.\nStocks are fungible. For dually listed stocks such as Alibaba, there is no/limited long-term material impact to shareholders especially if one is prepared and ready to receive its shares in the other exchange. In BABA's case, that would be its shares listed on Hong Kong Stock Exchange.\nThere are also established tender processes to redeem if the company offers, which was exactly what happened with China Mobile and China Unicom in earlier 2021.\n\nOther Concerns\nAnti-monopoly violation: Alibaba was recently levied a $2.8B fine due to anti-monopoly violation. In relative terms, that fine alone has no material impact as it was less than 0.5% of its market cap. There are legit concerns that BABA could be subject to further regulatory fines in a less predictable manner.\nJack Ma: Jack Ma risk has been talked about a lot. The fact is Jack Ma already stepped down from both chairmanship and CEO role of Alibaba and has gradually detached himself (at least in the public) from the business.\nAnt Group IPO halt: I think Ant Group IPO halt was a big disappointment and shows certain unpredictability in the current environment. However, I think that has been more than priced in.\nConcluding Thoughts\nA conservative sum of all parts values BABA enterprise value between 773B ($299/share) and 965B ($373/share). At the current price of $206/share, it offers 45% to 81% upside potential, and I am increasing my position at the current price.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":5203884,"gmtCreate":1626151563900,"gmtModify":1663230901131,"authorId":3575011341539105,"author":{"id":3575011341539105,"idStr":"3575011341539105","authorId":3575011341539105,"name":"kuppi","avatar":"https://static.tigerbbs.com/1a1c96e4fc6f6f67de0450751c853214","vip":1,"crmLevel":4,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":142620666,"type":1,"supId":0,"prevId":0,"content":"yes","text":"yes","html":"yes"}],"langContent":"EN"},{"id":142878005,"gmtCreate":1626143170807,"gmtModify":1703754199451,"author":{"id":"3584955097359320","authorId":"3584955097359320","name":"FlareSpark","avatar":"https://static.tigerbbs.com/38942f5d417a8d645800903b08402b4e","vip":1,"crmLevel":1,"crmLevelSwitch":0,"authorIdStr":"3584955097359320","idStr":"3584955097359320"},"htmlText":"?","listText":"?","text":"?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/142878005","repostId":1171355403,"repostType":4,"repost":{"id":"1171355403","kind":"news","pubTimestamp":1626140399,"share":"https://ttm.financial/m/news/1171355403?lang=&edition=fundamental","pubTime":"2021-07-13 09:39","market":"us","language":"en","title":"Alibaba: An Undervalued Empire With 45%+ Upside","url":"https://stock-news.laohu8.com/highlight/detail?id=1171355403","media":"seekingalpha","summary":"Alibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.I break it down by business units, show its strength and true value, and discuss its delisting risks.Alibaba Group Holding Limitedstock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon was up 101%, its Latin American peer MercadoLibre was up 172%, even the S&P 500 index was up 39%.Alibaba is the largest eCommerce operation in the world. It has over 1B annual act","content":"Summary\n<ul>\n <li>Alibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.</li>\n <li>Its stock price has been under pressure for over a year by perceived political/delisting risk and its recent Ant Financial IPO cancellation.</li>\n <li>I break it down by business units, show its strength and true value, and discuss its delisting risks.</li>\n</ul>\nPrice action deviates from Fundamentals\nAlibaba Group Holding Limited(NYSE:BABA)stock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon (AMZN) was up 101%, its Latin American peer MercadoLibre (MELI) was up 172%, even the S&amp;P 500 index was up 39%.\n<img src=\"https://static.tigerbbs.com/699af948598c5dab55d7ba41931d1944\" tg-width=\"635\" tg-height=\"467\" referrerpolicy=\"no-referrer\">Data by YCharts\nAlibaba is the largest eCommerce operation in the world. It has over 1B annual active consumers, over 1T GMV (gross merchandise volume) in FY21, both numbers larger than any other e-commerce company in the world, Amazon included.\nIn the meantime, Alibaba's core commerce and cloud computing recorded 42% and 50% YoY growth FY21. These are jaw-dropping growth numbers, especially at Alibaba's massive scale.\nAlso worth noting, while its revenue grows at an impressive rate, its Ebitda profit margin continues to show 17% YoY improvement, further demonstrate its superior unit economics, and effective cost control as it scales up.\n<img src=\"https://static.tigerbbs.com/b69f23fbc36af93ba24ecf933c2b4bbe\" tg-width=\"640\" tg-height=\"474\" referrerpolicy=\"no-referrer\">\nSource: 4Q21 AlibabaInvestor presentation\nInvestment Thesis\nMy conservative model values Alibaba between $773B ($299/share) to $967B ($373/share). It offers an upside potential between 45% and 81% to its closing price of $206/share on 7/9/21.\nThe table below provides a summary view of my Sum-of-all-parts valuation, and I discuss them in detail in later sections.\n<img src=\"https://static.tigerbbs.com/1c3b44cb0364f61901a479a1f6948afd\" tg-width=\"640\" tg-height=\"348\" referrerpolicy=\"no-referrer\">\nSource: Excel sheet prepared by Author\nValuation By Segments\nAlibaba has four business segments and two investment segments, they are:\n<ul>\n <li>Core Commerce: Taobao, TMall, Alibaba, AliExpress, Lazada, ele.me, etc.</li>\n <li>Cloud Computing: Alibaba Cloud</li>\n <li>Digital Media: Youku, Ali Sports, AliGame, etc.</li>\n <li>Innovative Initiatives: gmap, AliOS, etc</li>\n <li>Ant Group</li>\n <li>Other strategic Investments: DiDi, bilibili, etc</li>\n</ul>\nLet us dive into them.\n<img src=\"https://static.tigerbbs.com/033f24b75c357021d3d1177cc2e3bbf4\" tg-width=\"640\" tg-height=\"140\" referrerpolicy=\"no-referrer\">\nSource:Alibaba Investor Day2020\n1. Core Commerce\nMarketplace-based core commerceincludes Taobao, TMall, 1688.com, alibaba.com, AliExpress, TMall Market. These are mature and profit-generating marketplaces with steady growth.\nThese are the crown jewels of Alibaba's empire. It composes of No.1 Online retail, No.1 online wholesale, and No 1 B2C Export marketplace in China.\nFY21 adj Ebitda for marketplace-based core commerce is $35B.\nI use a moderate 15x - 20x Ev/Ebitda ratio (e.g. Amazon is 30x+ Ev/Ebitda), values its marketplace-based core commerce between 570B and 700B.\nLazada:international retail marketplace in SEA\nAlibaba, through three rounds of a total $4B investment, is a majority owner of Lazada.\nWhile Shopee (SE) takes the commanding lead in the SEA e-commerce marketplace, Lazada is still a No.2 with 100Mil+ monthly active users, ahead of Tokopedia.\nAlibaba only provides international e-commerce in aggregate (~5B) in FY21, with no revenue breakdown. Lazada and AliExpress are 2 primary contributors in this segment.\nAs a reference, Tokopedia, an e-commerce competitor and No.3 in SEA, was valued at $18B.\nI take a conservative approach and value Lazada between $5B (acquisition cost) and $10B (50% discount to Tokopedia's recent valuation despite Lazada's slightly larger size).\nLocal Services(ele.me, koubei)\nEle.me has about 80% of DoorDash (DASH) revenue, with 8x active customers (40Mil vs 5Mil) in FY21. In food delivery services in China, Meituan leads with 65% market share, ele.me No.2 with 27.4% market share, 3B FY21 revenue.\nIf we use DoorDash valuation at 15x EV/Sales, that would value ele.me at 45B, if we use Grubhub's (GRUB) 8x EV/Sales, it values ele.me at $24B\nAlibaba acquired ele.me in 2018 for $9.5B.\nI take a conservative approach and value ele.me between 9.5B (acquisition cost) and $24B (use Grub Ev/Sales ratio).\nNew Retail(Freshippo)\nKnown as Hema in China, it is similar to Amazon Go, a new retail format store leveraging technology to provide zero human touch shopping experience.\nI consider it as a part of its core commerce strategy to maintain its competitive edge and assign no additional value.\nLogistic(Cainiao)\nCainiao is Alibaba's logistic arm.\nBABA paid 3.3B to increase its Cainiao stake from 51% to 63% in its latestroundin 2019. That values its stake ~18B at cost.\nCross border e-commerece(Kaola)\nKaola is considered to be a TMall extension to improve its core competency and I assign no additional value.\n<img src=\"https://static.tigerbbs.com/80468b018507ac3b52aeec68b0598486\" tg-width=\"640\" tg-height=\"482\" referrerpolicy=\"no-referrer\">Source: FY21 Investorpresentation\n2. Alibaba Cloud\nAlibaba Cloud's YoY revenue growth was 62% and 50% in the last two years. Its FY21 revenue was $9.2B and turned cash flow positive the first time with 47M adjusted Ebitda.\nIn terms of China's cloud market share, Alibaba cloud leads the pack with 39.8% as of Q1 2021.\nAccording to China Internet Watch, cloud infrastructure spending growth in China outpaced the RoW, supported by the government's strategic priority in cloud computing, and it has been consistently over 50% over the last 7 quarters.\n<img src=\"https://static.tigerbbs.com/cb80ade495a99acd13fa3efc4fc3f518\" tg-width=\"640\" tg-height=\"391\" referrerpolicy=\"no-referrer\">\n<img src=\"https://static.tigerbbs.com/b8eb951fb359485adc84747b78e74c71\" tg-width=\"640\" tg-height=\"383\" referrerpolicy=\"no-referrer\">\nSource:China Cloud market 1Q21- China Internet Watch\nIf we zoom out globally, Alibaba cloud ranks No 4 with a 6% market share, right after Amazon, Microsoft (MSFT), and Google (GOOG).\nIt is about 20% the size of Amazon cloud in this $150B global market.\n<img src=\"https://static.tigerbbs.com/5ef9f1797dbfd7d1ca0ad84c3e009923\" tg-width=\"640\" tg-height=\"364\" referrerpolicy=\"no-referrer\">\nSource:Cloud Market Q3Y20Canalys\nSimilar research from Synergy Research Group in Q1 21 also confirmed the same ranking/market share.\n<img src=\"https://static.tigerbbs.com/cb5b1ff4c0cdbf586867d03a369d395e\" tg-width=\"499\" tg-height=\"497\" referrerpolicy=\"no-referrer\">\nSource: Synergy Research Group on Statista\nUsing a very conservative 10x P/S values Alibaba Cloud at $100B.\nBoth GS (GS) and MS (MS)valuedAlibaba Cloud at $120B+ a year ago after Alibaba disclosed its 1Q21 fiscal data in Aug 2020.\nGiven the above, I value Alibaba Cloud between 100B and 120B.\n3. Digital Media and Entertainment\nIt includes YouKu, AliSports, AliGame, UC\nYouKu has 500M Monthly Active Users, 800M video views, one of China's top video/streaming service platforms, along with iQIYI, and Tencent Video.\nAlibaba spent $4B in 2016 to acquire Youku.\nIts main competitor iQIYI (IQ) is listed in Nasdaq, currently valued at 10.4B.\nDigital media/entertainment reported $4.5B revenue in FY21, with an adjusted Ebitda is 0.9B.\nI value Youku (and the rest of segment assets) between $4.5B (acquisition cost) and 9B (10x Ev/Ebitda).\n4. Innovation Initiatives\nAs I have few visibilities in these innovation initiatives, I take a conservative approach and assign no value.\n5. Ant Group\nAnt Group valuation could certainly be a controversial take.\nIts valuation hit $320B at its peak prior to IPO. Since its IPO halt in Nov 2020, its valuation has declined significantly, the latestanalysisfrom Sanford Bernstein valued it at $120B.\nAt a $120B valuation, BABA's 1/3 stake is worth $40B.\nput aside valuation, a head-to-head comparison between 2 dominating FinTech in China (Ant and Tencent) shows its massive scale in absolute numbers.\n<img src=\"https://static.tigerbbs.com/f6ed30632a6897a6c57eca61205d3bc7\" tg-width=\"640\" tg-height=\"353\" referrerpolicy=\"no-referrer\">\nsource:TechCrunchchina's top fintech platform Ant vs Tencent\nPut the numbers into perspective, Ant Group's active user is about 2x PayPal (PYPL) size, and roughly the same revenue. PayPal is currently valued at $350B.\n<img src=\"https://static.tigerbbs.com/3318320d7217809542f5c2516c83cb01\" tg-width=\"640\" tg-height=\"764\" referrerpolicy=\"no-referrer\">\nsource:SPGlobal\nAn insightful comparison from S&amp;P Global market points out while Ant and PayPal revenue are comparable, Ant has about 20x TPV (Transaction Payment Volume) more than PayPal and Ant's take rate is only 5% of PayPal's.\nNote: PayPal take rate 2.5%, and Ant is at a mere 0.11%.\nAs shown in Chart 1 and 2, PayPal's take rate has been steadily declining since 2018, while Ant increases.\nIn summary, I think Bernstein's $120B valuations is a very conservative number. I consider Ant is on par with PayPal, and even with a 50% discount shall value Ant Group at $175B.\nThus I would value Alibaba's 1/3 stake in Ant Group between $40B and $58B.\n6. Strategic Investments\nReported by Alibaba at $45B valuations as of Jun30, 2020.\n<img src=\"https://static.tigerbbs.com/ce0e36c5240ce4a4c741785ea8a9de96\" tg-width=\"207\" tg-height=\"350\" referrerpolicy=\"no-referrer\">\nSome notable investment includes:\n8% ownership stake in Bilibili (BILI)\nA single-digit ownership stake in DiDi (DIDI)\nDelisting Risk\nNow let us talk about the elephant in the room - its various risks, particularly its delisting risk as discussed frequently among US market participants\nI discussed the general Chinese ADR delisting risk in a recent Tweet thread. For these interested in the details:\n<img src=\"https://static.tigerbbs.com/fbfb7535a1b9fc863aa6d492ae17dc3f\" tg-width=\"583\" tg-height=\"432\">\nIn summary:\n<ol>\n <li>delisting poses an immediate trading liquidity risk, thus short-term volatility.</li>\n <li>Stocks are fungible. For dually listed stocks such as Alibaba, there is no/limited long-term material impact to shareholders especially if one is prepared and ready to receive its shares in the other exchange. In BABA's case, that would be its shares listed on Hong Kong Stock Exchange.</li>\n <li>There are also established tender processes to redeem if the company offers, which was exactly what happened with China Mobile and China Unicom in earlier 2021.</li>\n</ol>\nOther Concerns\nAnti-monopoly violation: Alibaba was recently levied a $2.8B fine due to anti-monopoly violation. In relative terms, that fine alone has no material impact as it was less than 0.5% of its market cap. There are legit concerns that BABA could be subject to further regulatory fines in a less predictable manner.\nJack Ma: Jack Ma risk has been talked about a lot. The fact is Jack Ma already stepped down from both chairmanship and CEO role of Alibaba and has gradually detached himself (at least in the public) from the business.\nAnt Group IPO halt: I think Ant Group IPO halt was a big disappointment and shows certain unpredictability in the current environment. However, I think that has been more than priced in.\nConcluding Thoughts\nA conservative sum of all parts values BABA enterprise value between 773B ($299/share) and 965B ($373/share). At the current price of $206/share, it offers 45% to 81% upside potential, and I am increasing my position at the current price.","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Alibaba: An Undervalued Empire With 45%+ Upside</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAlibaba: An Undervalued Empire With 45%+ Upside\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-07-13 09:39 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nAlibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.\nIts stock price has been under pressure for over a year by perceived political/delisting risk ...\n\n<a href=\"https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BABA":"阿里巴巴","09988":"阿里巴巴-W"},"source_url":"https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1171355403","content_text":"Summary\n\nAlibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.\nIts stock price has been under pressure for over a year by perceived political/delisting risk and its recent Ant Financial IPO cancellation.\nI break it down by business units, show its strength and true value, and discuss its delisting risks.\n\nPrice action deviates from Fundamentals\nAlibaba Group Holding Limited(NYSE:BABA)stock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon (AMZN) was up 101%, its Latin American peer MercadoLibre (MELI) was up 172%, even the S&P 500 index was up 39%.\nData by YCharts\nAlibaba is the largest eCommerce operation in the world. It has over 1B annual active consumers, over 1T GMV (gross merchandise volume) in FY21, both numbers larger than any other e-commerce company in the world, Amazon included.\nIn the meantime, Alibaba's core commerce and cloud computing recorded 42% and 50% YoY growth FY21. These are jaw-dropping growth numbers, especially at Alibaba's massive scale.\nAlso worth noting, while its revenue grows at an impressive rate, its Ebitda profit margin continues to show 17% YoY improvement, further demonstrate its superior unit economics, and effective cost control as it scales up.\n\nSource: 4Q21 AlibabaInvestor presentation\nInvestment Thesis\nMy conservative model values Alibaba between $773B ($299/share) to $967B ($373/share). It offers an upside potential between 45% and 81% to its closing price of $206/share on 7/9/21.\nThe table below provides a summary view of my Sum-of-all-parts valuation, and I discuss them in detail in later sections.\n\nSource: Excel sheet prepared by Author\nValuation By Segments\nAlibaba has four business segments and two investment segments, they are:\n\nCore Commerce: Taobao, TMall, Alibaba, AliExpress, Lazada, ele.me, etc.\nCloud Computing: Alibaba Cloud\nDigital Media: Youku, Ali Sports, AliGame, etc.\nInnovative Initiatives: gmap, AliOS, etc\nAnt Group\nOther strategic Investments: DiDi, bilibili, etc\n\nLet us dive into them.\n\nSource:Alibaba Investor Day2020\n1. Core Commerce\nMarketplace-based core commerceincludes Taobao, TMall, 1688.com, alibaba.com, AliExpress, TMall Market. These are mature and profit-generating marketplaces with steady growth.\nThese are the crown jewels of Alibaba's empire. It composes of No.1 Online retail, No.1 online wholesale, and No 1 B2C Export marketplace in China.\nFY21 adj Ebitda for marketplace-based core commerce is $35B.\nI use a moderate 15x - 20x Ev/Ebitda ratio (e.g. Amazon is 30x+ Ev/Ebitda), values its marketplace-based core commerce between 570B and 700B.\nLazada:international retail marketplace in SEA\nAlibaba, through three rounds of a total $4B investment, is a majority owner of Lazada.\nWhile Shopee (SE) takes the commanding lead in the SEA e-commerce marketplace, Lazada is still a No.2 with 100Mil+ monthly active users, ahead of Tokopedia.\nAlibaba only provides international e-commerce in aggregate (~5B) in FY21, with no revenue breakdown. Lazada and AliExpress are 2 primary contributors in this segment.\nAs a reference, Tokopedia, an e-commerce competitor and No.3 in SEA, was valued at $18B.\nI take a conservative approach and value Lazada between $5B (acquisition cost) and $10B (50% discount to Tokopedia's recent valuation despite Lazada's slightly larger size).\nLocal Services(ele.me, koubei)\nEle.me has about 80% of DoorDash (DASH) revenue, with 8x active customers (40Mil vs 5Mil) in FY21. In food delivery services in China, Meituan leads with 65% market share, ele.me No.2 with 27.4% market share, 3B FY21 revenue.\nIf we use DoorDash valuation at 15x EV/Sales, that would value ele.me at 45B, if we use Grubhub's (GRUB) 8x EV/Sales, it values ele.me at $24B\nAlibaba acquired ele.me in 2018 for $9.5B.\nI take a conservative approach and value ele.me between 9.5B (acquisition cost) and $24B (use Grub Ev/Sales ratio).\nNew Retail(Freshippo)\nKnown as Hema in China, it is similar to Amazon Go, a new retail format store leveraging technology to provide zero human touch shopping experience.\nI consider it as a part of its core commerce strategy to maintain its competitive edge and assign no additional value.\nLogistic(Cainiao)\nCainiao is Alibaba's logistic arm.\nBABA paid 3.3B to increase its Cainiao stake from 51% to 63% in its latestroundin 2019. That values its stake ~18B at cost.\nCross border e-commerece(Kaola)\nKaola is considered to be a TMall extension to improve its core competency and I assign no additional value.\nSource: FY21 Investorpresentation\n2. Alibaba Cloud\nAlibaba Cloud's YoY revenue growth was 62% and 50% in the last two years. Its FY21 revenue was $9.2B and turned cash flow positive the first time with 47M adjusted Ebitda.\nIn terms of China's cloud market share, Alibaba cloud leads the pack with 39.8% as of Q1 2021.\nAccording to China Internet Watch, cloud infrastructure spending growth in China outpaced the RoW, supported by the government's strategic priority in cloud computing, and it has been consistently over 50% over the last 7 quarters.\n\n\nSource:China Cloud market 1Q21- China Internet Watch\nIf we zoom out globally, Alibaba cloud ranks No 4 with a 6% market share, right after Amazon, Microsoft (MSFT), and Google (GOOG).\nIt is about 20% the size of Amazon cloud in this $150B global market.\n\nSource:Cloud Market Q3Y20Canalys\nSimilar research from Synergy Research Group in Q1 21 also confirmed the same ranking/market share.\n\nSource: Synergy Research Group on Statista\nUsing a very conservative 10x P/S values Alibaba Cloud at $100B.\nBoth GS (GS) and MS (MS)valuedAlibaba Cloud at $120B+ a year ago after Alibaba disclosed its 1Q21 fiscal data in Aug 2020.\nGiven the above, I value Alibaba Cloud between 100B and 120B.\n3. Digital Media and Entertainment\nIt includes YouKu, AliSports, AliGame, UC\nYouKu has 500M Monthly Active Users, 800M video views, one of China's top video/streaming service platforms, along with iQIYI, and Tencent Video.\nAlibaba spent $4B in 2016 to acquire Youku.\nIts main competitor iQIYI (IQ) is listed in Nasdaq, currently valued at 10.4B.\nDigital media/entertainment reported $4.5B revenue in FY21, with an adjusted Ebitda is 0.9B.\nI value Youku (and the rest of segment assets) between $4.5B (acquisition cost) and 9B (10x Ev/Ebitda).\n4. Innovation Initiatives\nAs I have few visibilities in these innovation initiatives, I take a conservative approach and assign no value.\n5. Ant Group\nAnt Group valuation could certainly be a controversial take.\nIts valuation hit $320B at its peak prior to IPO. Since its IPO halt in Nov 2020, its valuation has declined significantly, the latestanalysisfrom Sanford Bernstein valued it at $120B.\nAt a $120B valuation, BABA's 1/3 stake is worth $40B.\nput aside valuation, a head-to-head comparison between 2 dominating FinTech in China (Ant and Tencent) shows its massive scale in absolute numbers.\n\nsource:TechCrunchchina's top fintech platform Ant vs Tencent\nPut the numbers into perspective, Ant Group's active user is about 2x PayPal (PYPL) size, and roughly the same revenue. PayPal is currently valued at $350B.\n\nsource:SPGlobal\nAn insightful comparison from S&P Global market points out while Ant and PayPal revenue are comparable, Ant has about 20x TPV (Transaction Payment Volume) more than PayPal and Ant's take rate is only 5% of PayPal's.\nNote: PayPal take rate 2.5%, and Ant is at a mere 0.11%.\nAs shown in Chart 1 and 2, PayPal's take rate has been steadily declining since 2018, while Ant increases.\nIn summary, I think Bernstein's $120B valuations is a very conservative number. I consider Ant is on par with PayPal, and even with a 50% discount shall value Ant Group at $175B.\nThus I would value Alibaba's 1/3 stake in Ant Group between $40B and $58B.\n6. Strategic Investments\nReported by Alibaba at $45B valuations as of Jun30, 2020.\n\nSome notable investment includes:\n8% ownership stake in Bilibili (BILI)\nA single-digit ownership stake in DiDi (DIDI)\nDelisting Risk\nNow let us talk about the elephant in the room - its various risks, particularly its delisting risk as discussed frequently among US market participants\nI discussed the general Chinese ADR delisting risk in a recent Tweet thread. For these interested in the details:\n\nIn summary:\n\ndelisting poses an immediate trading liquidity risk, thus short-term volatility.\nStocks are fungible. For dually listed stocks such as Alibaba, there is no/limited long-term material impact to shareholders especially if one is prepared and ready to receive its shares in the other exchange. In BABA's case, that would be its shares listed on Hong Kong Stock Exchange.\nThere are also established tender processes to redeem if the company offers, which was exactly what happened with China Mobile and China Unicom in earlier 2021.\n\nOther Concerns\nAnti-monopoly violation: Alibaba was recently levied a $2.8B fine due to anti-monopoly violation. In relative terms, that fine alone has no material impact as it was less than 0.5% of its market cap. There are legit concerns that BABA could be subject to further regulatory fines in a less predictable manner.\nJack Ma: Jack Ma risk has been talked about a lot. The fact is Jack Ma already stepped down from both chairmanship and CEO role of Alibaba and has gradually detached himself (at least in the public) from the business.\nAnt Group IPO halt: I think Ant Group IPO halt was a big disappointment and shows certain unpredictability in the current environment. However, I think that has been more than priced in.\nConcluding Thoughts\nA conservative sum of all parts values BABA enterprise value between 773B ($299/share) and 965B ($373/share). At the current price of $206/share, it offers 45% to 81% upside potential, and I am increasing my position at the current price.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":5202797,"gmtCreate":1626143797545,"gmtModify":1663230892728,"authorId":3579096500575753,"author":{"id":3579096500575753,"idStr":"3579096500575753","authorId":3579096500575753,"name":"Milankaka","avatar":"https://static.tigerbbs.com/288ce834db4366c3536976047323d1ce","vip":1,"crmLevel":7,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":142878005,"type":1,"supId":0,"prevId":0,"content":"[Miser]","text":"[Miser]","html":"[Miser]"}],"langContent":"EN"},{"id":142844747,"gmtCreate":1626143028789,"gmtModify":1703754191497,"author":{"id":"3577608661218389","authorId":"3577608661218389","name":"DansonYong","avatar":"https://static.tigerbbs.com/d847e6b2cafe58e68ceb1d9adcb8038f","vip":1,"crmLevel":4,"crmLevelSwitch":0,"authorIdStr":"3577608661218389","idStr":"3577608661218389"},"htmlText":"Yes exactly","listText":"Yes exactly","text":"Yes exactly","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/142844747","repostId":1171355403,"repostType":2,"repost":{"id":"1171355403","kind":"news","pubTimestamp":1626140399,"share":"https://ttm.financial/m/news/1171355403?lang=&edition=fundamental","pubTime":"2021-07-13 09:39","market":"us","language":"en","title":"Alibaba: An Undervalued Empire With 45%+ Upside","url":"https://stock-news.laohu8.com/highlight/detail?id=1171355403","media":"seekingalpha","summary":"Alibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.I break it down by business units, show its strength and true value, and discuss its delisting risks.Alibaba Group Holding Limitedstock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon was up 101%, its Latin American peer MercadoLibre was up 172%, even the S&P 500 index was up 39%.Alibaba is the largest eCommerce operation in the world. It has over 1B annual act","content":"Summary\n<ul>\n <li>Alibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.</li>\n <li>Its stock price has been under pressure for over a year by perceived political/delisting risk and its recent Ant Financial IPO cancellation.</li>\n <li>I break it down by business units, show its strength and true value, and discuss its delisting risks.</li>\n</ul>\nPrice action deviates from Fundamentals\nAlibaba Group Holding Limited(NYSE:BABA)stock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon (AMZN) was up 101%, its Latin American peer MercadoLibre (MELI) was up 172%, even the S&amp;P 500 index was up 39%.\n<img src=\"https://static.tigerbbs.com/699af948598c5dab55d7ba41931d1944\" tg-width=\"635\" tg-height=\"467\" referrerpolicy=\"no-referrer\">Data by YCharts\nAlibaba is the largest eCommerce operation in the world. It has over 1B annual active consumers, over 1T GMV (gross merchandise volume) in FY21, both numbers larger than any other e-commerce company in the world, Amazon included.\nIn the meantime, Alibaba's core commerce and cloud computing recorded 42% and 50% YoY growth FY21. These are jaw-dropping growth numbers, especially at Alibaba's massive scale.\nAlso worth noting, while its revenue grows at an impressive rate, its Ebitda profit margin continues to show 17% YoY improvement, further demonstrate its superior unit economics, and effective cost control as it scales up.\n<img src=\"https://static.tigerbbs.com/b69f23fbc36af93ba24ecf933c2b4bbe\" tg-width=\"640\" tg-height=\"474\" referrerpolicy=\"no-referrer\">\nSource: 4Q21 AlibabaInvestor presentation\nInvestment Thesis\nMy conservative model values Alibaba between $773B ($299/share) to $967B ($373/share). It offers an upside potential between 45% and 81% to its closing price of $206/share on 7/9/21.\nThe table below provides a summary view of my Sum-of-all-parts valuation, and I discuss them in detail in later sections.\n<img src=\"https://static.tigerbbs.com/1c3b44cb0364f61901a479a1f6948afd\" tg-width=\"640\" tg-height=\"348\" referrerpolicy=\"no-referrer\">\nSource: Excel sheet prepared by Author\nValuation By Segments\nAlibaba has four business segments and two investment segments, they are:\n<ul>\n <li>Core Commerce: Taobao, TMall, Alibaba, AliExpress, Lazada, ele.me, etc.</li>\n <li>Cloud Computing: Alibaba Cloud</li>\n <li>Digital Media: Youku, Ali Sports, AliGame, etc.</li>\n <li>Innovative Initiatives: gmap, AliOS, etc</li>\n <li>Ant Group</li>\n <li>Other strategic Investments: DiDi, bilibili, etc</li>\n</ul>\nLet us dive into them.\n<img src=\"https://static.tigerbbs.com/033f24b75c357021d3d1177cc2e3bbf4\" tg-width=\"640\" tg-height=\"140\" referrerpolicy=\"no-referrer\">\nSource:Alibaba Investor Day2020\n1. Core Commerce\nMarketplace-based core commerceincludes Taobao, TMall, 1688.com, alibaba.com, AliExpress, TMall Market. These are mature and profit-generating marketplaces with steady growth.\nThese are the crown jewels of Alibaba's empire. It composes of No.1 Online retail, No.1 online wholesale, and No 1 B2C Export marketplace in China.\nFY21 adj Ebitda for marketplace-based core commerce is $35B.\nI use a moderate 15x - 20x Ev/Ebitda ratio (e.g. Amazon is 30x+ Ev/Ebitda), values its marketplace-based core commerce between 570B and 700B.\nLazada:international retail marketplace in SEA\nAlibaba, through three rounds of a total $4B investment, is a majority owner of Lazada.\nWhile Shopee (SE) takes the commanding lead in the SEA e-commerce marketplace, Lazada is still a No.2 with 100Mil+ monthly active users, ahead of Tokopedia.\nAlibaba only provides international e-commerce in aggregate (~5B) in FY21, with no revenue breakdown. Lazada and AliExpress are 2 primary contributors in this segment.\nAs a reference, Tokopedia, an e-commerce competitor and No.3 in SEA, was valued at $18B.\nI take a conservative approach and value Lazada between $5B (acquisition cost) and $10B (50% discount to Tokopedia's recent valuation despite Lazada's slightly larger size).\nLocal Services(ele.me, koubei)\nEle.me has about 80% of DoorDash (DASH) revenue, with 8x active customers (40Mil vs 5Mil) in FY21. In food delivery services in China, Meituan leads with 65% market share, ele.me No.2 with 27.4% market share, 3B FY21 revenue.\nIf we use DoorDash valuation at 15x EV/Sales, that would value ele.me at 45B, if we use Grubhub's (GRUB) 8x EV/Sales, it values ele.me at $24B\nAlibaba acquired ele.me in 2018 for $9.5B.\nI take a conservative approach and value ele.me between 9.5B (acquisition cost) and $24B (use Grub Ev/Sales ratio).\nNew Retail(Freshippo)\nKnown as Hema in China, it is similar to Amazon Go, a new retail format store leveraging technology to provide zero human touch shopping experience.\nI consider it as a part of its core commerce strategy to maintain its competitive edge and assign no additional value.\nLogistic(Cainiao)\nCainiao is Alibaba's logistic arm.\nBABA paid 3.3B to increase its Cainiao stake from 51% to 63% in its latestroundin 2019. That values its stake ~18B at cost.\nCross border e-commerece(Kaola)\nKaola is considered to be a TMall extension to improve its core competency and I assign no additional value.\n<img src=\"https://static.tigerbbs.com/80468b018507ac3b52aeec68b0598486\" tg-width=\"640\" tg-height=\"482\" referrerpolicy=\"no-referrer\">Source: FY21 Investorpresentation\n2. Alibaba Cloud\nAlibaba Cloud's YoY revenue growth was 62% and 50% in the last two years. Its FY21 revenue was $9.2B and turned cash flow positive the first time with 47M adjusted Ebitda.\nIn terms of China's cloud market share, Alibaba cloud leads the pack with 39.8% as of Q1 2021.\nAccording to China Internet Watch, cloud infrastructure spending growth in China outpaced the RoW, supported by the government's strategic priority in cloud computing, and it has been consistently over 50% over the last 7 quarters.\n<img src=\"https://static.tigerbbs.com/cb80ade495a99acd13fa3efc4fc3f518\" tg-width=\"640\" tg-height=\"391\" referrerpolicy=\"no-referrer\">\n<img src=\"https://static.tigerbbs.com/b8eb951fb359485adc84747b78e74c71\" tg-width=\"640\" tg-height=\"383\" referrerpolicy=\"no-referrer\">\nSource:China Cloud market 1Q21- China Internet Watch\nIf we zoom out globally, Alibaba cloud ranks No 4 with a 6% market share, right after Amazon, Microsoft (MSFT), and Google (GOOG).\nIt is about 20% the size of Amazon cloud in this $150B global market.\n<img src=\"https://static.tigerbbs.com/5ef9f1797dbfd7d1ca0ad84c3e009923\" tg-width=\"640\" tg-height=\"364\" referrerpolicy=\"no-referrer\">\nSource:Cloud Market Q3Y20Canalys\nSimilar research from Synergy Research Group in Q1 21 also confirmed the same ranking/market share.\n<img src=\"https://static.tigerbbs.com/cb5b1ff4c0cdbf586867d03a369d395e\" tg-width=\"499\" tg-height=\"497\" referrerpolicy=\"no-referrer\">\nSource: Synergy Research Group on Statista\nUsing a very conservative 10x P/S values Alibaba Cloud at $100B.\nBoth GS (GS) and MS (MS)valuedAlibaba Cloud at $120B+ a year ago after Alibaba disclosed its 1Q21 fiscal data in Aug 2020.\nGiven the above, I value Alibaba Cloud between 100B and 120B.\n3. Digital Media and Entertainment\nIt includes YouKu, AliSports, AliGame, UC\nYouKu has 500M Monthly Active Users, 800M video views, one of China's top video/streaming service platforms, along with iQIYI, and Tencent Video.\nAlibaba spent $4B in 2016 to acquire Youku.\nIts main competitor iQIYI (IQ) is listed in Nasdaq, currently valued at 10.4B.\nDigital media/entertainment reported $4.5B revenue in FY21, with an adjusted Ebitda is 0.9B.\nI value Youku (and the rest of segment assets) between $4.5B (acquisition cost) and 9B (10x Ev/Ebitda).\n4. Innovation Initiatives\nAs I have few visibilities in these innovation initiatives, I take a conservative approach and assign no value.\n5. Ant Group\nAnt Group valuation could certainly be a controversial take.\nIts valuation hit $320B at its peak prior to IPO. Since its IPO halt in Nov 2020, its valuation has declined significantly, the latestanalysisfrom Sanford Bernstein valued it at $120B.\nAt a $120B valuation, BABA's 1/3 stake is worth $40B.\nput aside valuation, a head-to-head comparison between 2 dominating FinTech in China (Ant and Tencent) shows its massive scale in absolute numbers.\n<img src=\"https://static.tigerbbs.com/f6ed30632a6897a6c57eca61205d3bc7\" tg-width=\"640\" tg-height=\"353\" referrerpolicy=\"no-referrer\">\nsource:TechCrunchchina's top fintech platform Ant vs Tencent\nPut the numbers into perspective, Ant Group's active user is about 2x PayPal (PYPL) size, and roughly the same revenue. PayPal is currently valued at $350B.\n<img src=\"https://static.tigerbbs.com/3318320d7217809542f5c2516c83cb01\" tg-width=\"640\" tg-height=\"764\" referrerpolicy=\"no-referrer\">\nsource:SPGlobal\nAn insightful comparison from S&amp;P Global market points out while Ant and PayPal revenue are comparable, Ant has about 20x TPV (Transaction Payment Volume) more than PayPal and Ant's take rate is only 5% of PayPal's.\nNote: PayPal take rate 2.5%, and Ant is at a mere 0.11%.\nAs shown in Chart 1 and 2, PayPal's take rate has been steadily declining since 2018, while Ant increases.\nIn summary, I think Bernstein's $120B valuations is a very conservative number. I consider Ant is on par with PayPal, and even with a 50% discount shall value Ant Group at $175B.\nThus I would value Alibaba's 1/3 stake in Ant Group between $40B and $58B.\n6. Strategic Investments\nReported by Alibaba at $45B valuations as of Jun30, 2020.\n<img src=\"https://static.tigerbbs.com/ce0e36c5240ce4a4c741785ea8a9de96\" tg-width=\"207\" tg-height=\"350\" referrerpolicy=\"no-referrer\">\nSome notable investment includes:\n8% ownership stake in Bilibili (BILI)\nA single-digit ownership stake in DiDi (DIDI)\nDelisting Risk\nNow let us talk about the elephant in the room - its various risks, particularly its delisting risk as discussed frequently among US market participants\nI discussed the general Chinese ADR delisting risk in a recent Tweet thread. For these interested in the details:\n<img src=\"https://static.tigerbbs.com/fbfb7535a1b9fc863aa6d492ae17dc3f\" tg-width=\"583\" tg-height=\"432\">\nIn summary:\n<ol>\n <li>delisting poses an immediate trading liquidity risk, thus short-term volatility.</li>\n <li>Stocks are fungible. For dually listed stocks such as Alibaba, there is no/limited long-term material impact to shareholders especially if one is prepared and ready to receive its shares in the other exchange. In BABA's case, that would be its shares listed on Hong Kong Stock Exchange.</li>\n <li>There are also established tender processes to redeem if the company offers, which was exactly what happened with China Mobile and China Unicom in earlier 2021.</li>\n</ol>\nOther Concerns\nAnti-monopoly violation: Alibaba was recently levied a $2.8B fine due to anti-monopoly violation. In relative terms, that fine alone has no material impact as it was less than 0.5% of its market cap. There are legit concerns that BABA could be subject to further regulatory fines in a less predictable manner.\nJack Ma: Jack Ma risk has been talked about a lot. The fact is Jack Ma already stepped down from both chairmanship and CEO role of Alibaba and has gradually detached himself (at least in the public) from the business.\nAnt Group IPO halt: I think Ant Group IPO halt was a big disappointment and shows certain unpredictability in the current environment. However, I think that has been more than priced in.\nConcluding Thoughts\nA conservative sum of all parts values BABA enterprise value between 773B ($299/share) and 965B ($373/share). At the current price of $206/share, it offers 45% to 81% upside potential, and I am increasing my position at the current price.","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Alibaba: An Undervalued Empire With 45%+ Upside</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAlibaba: An Undervalued Empire With 45%+ Upside\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-07-13 09:39 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nAlibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.\nIts stock price has been under pressure for over a year by perceived political/delisting risk ...\n\n<a href=\"https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BABA":"阿里巴巴","09988":"阿里巴巴-W"},"source_url":"https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1171355403","content_text":"Summary\n\nAlibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.\nIts stock price has been under pressure for over a year by perceived political/delisting risk and its recent Ant Financial IPO cancellation.\nI break it down by business units, show its strength and true value, and discuss its delisting risks.\n\nPrice action deviates from Fundamentals\nAlibaba Group Holding Limited(NYSE:BABA)stock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon (AMZN) was up 101%, its Latin American peer MercadoLibre (MELI) was up 172%, even the S&P 500 index was up 39%.\nData by YCharts\nAlibaba is the largest eCommerce operation in the world. It has over 1B annual active consumers, over 1T GMV (gross merchandise volume) in FY21, both numbers larger than any other e-commerce company in the world, Amazon included.\nIn the meantime, Alibaba's core commerce and cloud computing recorded 42% and 50% YoY growth FY21. These are jaw-dropping growth numbers, especially at Alibaba's massive scale.\nAlso worth noting, while its revenue grows at an impressive rate, its Ebitda profit margin continues to show 17% YoY improvement, further demonstrate its superior unit economics, and effective cost control as it scales up.\n\nSource: 4Q21 AlibabaInvestor presentation\nInvestment Thesis\nMy conservative model values Alibaba between $773B ($299/share) to $967B ($373/share). It offers an upside potential between 45% and 81% to its closing price of $206/share on 7/9/21.\nThe table below provides a summary view of my Sum-of-all-parts valuation, and I discuss them in detail in later sections.\n\nSource: Excel sheet prepared by Author\nValuation By Segments\nAlibaba has four business segments and two investment segments, they are:\n\nCore Commerce: Taobao, TMall, Alibaba, AliExpress, Lazada, ele.me, etc.\nCloud Computing: Alibaba Cloud\nDigital Media: Youku, Ali Sports, AliGame, etc.\nInnovative Initiatives: gmap, AliOS, etc\nAnt Group\nOther strategic Investments: DiDi, bilibili, etc\n\nLet us dive into them.\n\nSource:Alibaba Investor Day2020\n1. Core Commerce\nMarketplace-based core commerceincludes Taobao, TMall, 1688.com, alibaba.com, AliExpress, TMall Market. These are mature and profit-generating marketplaces with steady growth.\nThese are the crown jewels of Alibaba's empire. It composes of No.1 Online retail, No.1 online wholesale, and No 1 B2C Export marketplace in China.\nFY21 adj Ebitda for marketplace-based core commerce is $35B.\nI use a moderate 15x - 20x Ev/Ebitda ratio (e.g. Amazon is 30x+ Ev/Ebitda), values its marketplace-based core commerce between 570B and 700B.\nLazada:international retail marketplace in SEA\nAlibaba, through three rounds of a total $4B investment, is a majority owner of Lazada.\nWhile Shopee (SE) takes the commanding lead in the SEA e-commerce marketplace, Lazada is still a No.2 with 100Mil+ monthly active users, ahead of Tokopedia.\nAlibaba only provides international e-commerce in aggregate (~5B) in FY21, with no revenue breakdown. Lazada and AliExpress are 2 primary contributors in this segment.\nAs a reference, Tokopedia, an e-commerce competitor and No.3 in SEA, was valued at $18B.\nI take a conservative approach and value Lazada between $5B (acquisition cost) and $10B (50% discount to Tokopedia's recent valuation despite Lazada's slightly larger size).\nLocal Services(ele.me, koubei)\nEle.me has about 80% of DoorDash (DASH) revenue, with 8x active customers (40Mil vs 5Mil) in FY21. In food delivery services in China, Meituan leads with 65% market share, ele.me No.2 with 27.4% market share, 3B FY21 revenue.\nIf we use DoorDash valuation at 15x EV/Sales, that would value ele.me at 45B, if we use Grubhub's (GRUB) 8x EV/Sales, it values ele.me at $24B\nAlibaba acquired ele.me in 2018 for $9.5B.\nI take a conservative approach and value ele.me between 9.5B (acquisition cost) and $24B (use Grub Ev/Sales ratio).\nNew Retail(Freshippo)\nKnown as Hema in China, it is similar to Amazon Go, a new retail format store leveraging technology to provide zero human touch shopping experience.\nI consider it as a part of its core commerce strategy to maintain its competitive edge and assign no additional value.\nLogistic(Cainiao)\nCainiao is Alibaba's logistic arm.\nBABA paid 3.3B to increase its Cainiao stake from 51% to 63% in its latestroundin 2019. That values its stake ~18B at cost.\nCross border e-commerece(Kaola)\nKaola is considered to be a TMall extension to improve its core competency and I assign no additional value.\nSource: FY21 Investorpresentation\n2. Alibaba Cloud\nAlibaba Cloud's YoY revenue growth was 62% and 50% in the last two years. Its FY21 revenue was $9.2B and turned cash flow positive the first time with 47M adjusted Ebitda.\nIn terms of China's cloud market share, Alibaba cloud leads the pack with 39.8% as of Q1 2021.\nAccording to China Internet Watch, cloud infrastructure spending growth in China outpaced the RoW, supported by the government's strategic priority in cloud computing, and it has been consistently over 50% over the last 7 quarters.\n\n\nSource:China Cloud market 1Q21- China Internet Watch\nIf we zoom out globally, Alibaba cloud ranks No 4 with a 6% market share, right after Amazon, Microsoft (MSFT), and Google (GOOG).\nIt is about 20% the size of Amazon cloud in this $150B global market.\n\nSource:Cloud Market Q3Y20Canalys\nSimilar research from Synergy Research Group in Q1 21 also confirmed the same ranking/market share.\n\nSource: Synergy Research Group on Statista\nUsing a very conservative 10x P/S values Alibaba Cloud at $100B.\nBoth GS (GS) and MS (MS)valuedAlibaba Cloud at $120B+ a year ago after Alibaba disclosed its 1Q21 fiscal data in Aug 2020.\nGiven the above, I value Alibaba Cloud between 100B and 120B.\n3. Digital Media and Entertainment\nIt includes YouKu, AliSports, AliGame, UC\nYouKu has 500M Monthly Active Users, 800M video views, one of China's top video/streaming service platforms, along with iQIYI, and Tencent Video.\nAlibaba spent $4B in 2016 to acquire Youku.\nIts main competitor iQIYI (IQ) is listed in Nasdaq, currently valued at 10.4B.\nDigital media/entertainment reported $4.5B revenue in FY21, with an adjusted Ebitda is 0.9B.\nI value Youku (and the rest of segment assets) between $4.5B (acquisition cost) and 9B (10x Ev/Ebitda).\n4. Innovation Initiatives\nAs I have few visibilities in these innovation initiatives, I take a conservative approach and assign no value.\n5. Ant Group\nAnt Group valuation could certainly be a controversial take.\nIts valuation hit $320B at its peak prior to IPO. Since its IPO halt in Nov 2020, its valuation has declined significantly, the latestanalysisfrom Sanford Bernstein valued it at $120B.\nAt a $120B valuation, BABA's 1/3 stake is worth $40B.\nput aside valuation, a head-to-head comparison between 2 dominating FinTech in China (Ant and Tencent) shows its massive scale in absolute numbers.\n\nsource:TechCrunchchina's top fintech platform Ant vs Tencent\nPut the numbers into perspective, Ant Group's active user is about 2x PayPal (PYPL) size, and roughly the same revenue. PayPal is currently valued at $350B.\n\nsource:SPGlobal\nAn insightful comparison from S&P Global market points out while Ant and PayPal revenue are comparable, Ant has about 20x TPV (Transaction Payment Volume) more than PayPal and Ant's take rate is only 5% of PayPal's.\nNote: PayPal take rate 2.5%, and Ant is at a mere 0.11%.\nAs shown in Chart 1 and 2, PayPal's take rate has been steadily declining since 2018, while Ant increases.\nIn summary, I think Bernstein's $120B valuations is a very conservative number. I consider Ant is on par with PayPal, and even with a 50% discount shall value Ant Group at $175B.\nThus I would value Alibaba's 1/3 stake in Ant Group between $40B and $58B.\n6. Strategic Investments\nReported by Alibaba at $45B valuations as of Jun30, 2020.\n\nSome notable investment includes:\n8% ownership stake in Bilibili (BILI)\nA single-digit ownership stake in DiDi (DIDI)\nDelisting Risk\nNow let us talk about the elephant in the room - its various risks, particularly its delisting risk as discussed frequently among US market participants\nI discussed the general Chinese ADR delisting risk in a recent Tweet thread. For these interested in the details:\n\nIn summary:\n\ndelisting poses an immediate trading liquidity risk, thus short-term volatility.\nStocks are fungible. For dually listed stocks such as Alibaba, there is no/limited long-term material impact to shareholders especially if one is prepared and ready to receive its shares in the other exchange. In BABA's case, that would be its shares listed on Hong Kong Stock Exchange.\nThere are also established tender processes to redeem if the company offers, which was exactly what happened with China Mobile and China Unicom in earlier 2021.\n\nOther Concerns\nAnti-monopoly violation: Alibaba was recently levied a $2.8B fine due to anti-monopoly violation. In relative terms, that fine alone has no material impact as it was less than 0.5% of its market cap. There are legit concerns that BABA could be subject to further regulatory fines in a less predictable manner.\nJack Ma: Jack Ma risk has been talked about a lot. The fact is Jack Ma already stepped down from both chairmanship and CEO role of Alibaba and has gradually detached himself (at least in the public) from the business.\nAnt Group IPO halt: I think Ant Group IPO halt was a big disappointment and shows certain unpredictability in the current environment. However, I think that has been more than priced in.\nConcluding Thoughts\nA conservative sum of all parts values BABA enterprise value between 773B ($299/share) and 965B ($373/share). At the current price of $206/share, it offers 45% to 81% upside potential, and I am increasing my position at the current price.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":142842627,"gmtCreate":1626142915569,"gmtModify":1703754188098,"author":{"id":"3586451610703869","authorId":"3586451610703869","name":"KH321","avatar":"https://static.tigerbbs.com/c1bb8bd7d6d5df5f9732871fe60999ea","vip":1,"crmLevel":2,"crmLevelSwitch":0,"authorIdStr":"3586451610703869","idStr":"3586451610703869"},"htmlText":"Everyone says good, but price not rising.&nbsp;","listText":"Everyone says good, but price not rising.&nbsp;","text":"Everyone says good, but price not rising.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/142842627","repostId":1171355403,"repostType":4,"repost":{"id":"1171355403","kind":"news","pubTimestamp":1626140399,"share":"https://ttm.financial/m/news/1171355403?lang=&edition=fundamental","pubTime":"2021-07-13 09:39","market":"us","language":"en","title":"Alibaba: An Undervalued Empire With 45%+ Upside","url":"https://stock-news.laohu8.com/highlight/detail?id=1171355403","media":"seekingalpha","summary":"Alibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.I break it down by business units, show its strength and true value, and discuss its delisting risks.Alibaba Group Holding Limitedstock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon was up 101%, its Latin American peer MercadoLibre was up 172%, even the S&P 500 index was up 39%.Alibaba is the largest eCommerce operation in the world. It has over 1B annual act","content":"Summary\n<ul>\n <li>Alibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.</li>\n <li>Its stock price has been under pressure for over a year by perceived political/delisting risk and its recent Ant Financial IPO cancellation.</li>\n <li>I break it down by business units, show its strength and true value, and discuss its delisting risks.</li>\n</ul>\nPrice action deviates from Fundamentals\nAlibaba Group Holding Limited(NYSE:BABA)stock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon (AMZN) was up 101%, its Latin American peer MercadoLibre (MELI) was up 172%, even the S&amp;P 500 index was up 39%.\n<img src=\"https://static.tigerbbs.com/699af948598c5dab55d7ba41931d1944\" tg-width=\"635\" tg-height=\"467\" referrerpolicy=\"no-referrer\">Data by YCharts\nAlibaba is the largest eCommerce operation in the world. It has over 1B annual active consumers, over 1T GMV (gross merchandise volume) in FY21, both numbers larger than any other e-commerce company in the world, Amazon included.\nIn the meantime, Alibaba's core commerce and cloud computing recorded 42% and 50% YoY growth FY21. These are jaw-dropping growth numbers, especially at Alibaba's massive scale.\nAlso worth noting, while its revenue grows at an impressive rate, its Ebitda profit margin continues to show 17% YoY improvement, further demonstrate its superior unit economics, and effective cost control as it scales up.\n<img src=\"https://static.tigerbbs.com/b69f23fbc36af93ba24ecf933c2b4bbe\" tg-width=\"640\" tg-height=\"474\" referrerpolicy=\"no-referrer\">\nSource: 4Q21 AlibabaInvestor presentation\nInvestment Thesis\nMy conservative model values Alibaba between $773B ($299/share) to $967B ($373/share). It offers an upside potential between 45% and 81% to its closing price of $206/share on 7/9/21.\nThe table below provides a summary view of my Sum-of-all-parts valuation, and I discuss them in detail in later sections.\n<img src=\"https://static.tigerbbs.com/1c3b44cb0364f61901a479a1f6948afd\" tg-width=\"640\" tg-height=\"348\" referrerpolicy=\"no-referrer\">\nSource: Excel sheet prepared by Author\nValuation By Segments\nAlibaba has four business segments and two investment segments, they are:\n<ul>\n <li>Core Commerce: Taobao, TMall, Alibaba, AliExpress, Lazada, ele.me, etc.</li>\n <li>Cloud Computing: Alibaba Cloud</li>\n <li>Digital Media: Youku, Ali Sports, AliGame, etc.</li>\n <li>Innovative Initiatives: gmap, AliOS, etc</li>\n <li>Ant Group</li>\n <li>Other strategic Investments: DiDi, bilibili, etc</li>\n</ul>\nLet us dive into them.\n<img src=\"https://static.tigerbbs.com/033f24b75c357021d3d1177cc2e3bbf4\" tg-width=\"640\" tg-height=\"140\" referrerpolicy=\"no-referrer\">\nSource:Alibaba Investor Day2020\n1. Core Commerce\nMarketplace-based core commerceincludes Taobao, TMall, 1688.com, alibaba.com, AliExpress, TMall Market. These are mature and profit-generating marketplaces with steady growth.\nThese are the crown jewels of Alibaba's empire. It composes of No.1 Online retail, No.1 online wholesale, and No 1 B2C Export marketplace in China.\nFY21 adj Ebitda for marketplace-based core commerce is $35B.\nI use a moderate 15x - 20x Ev/Ebitda ratio (e.g. Amazon is 30x+ Ev/Ebitda), values its marketplace-based core commerce between 570B and 700B.\nLazada:international retail marketplace in SEA\nAlibaba, through three rounds of a total $4B investment, is a majority owner of Lazada.\nWhile Shopee (SE) takes the commanding lead in the SEA e-commerce marketplace, Lazada is still a No.2 with 100Mil+ monthly active users, ahead of Tokopedia.\nAlibaba only provides international e-commerce in aggregate (~5B) in FY21, with no revenue breakdown. Lazada and AliExpress are 2 primary contributors in this segment.\nAs a reference, Tokopedia, an e-commerce competitor and No.3 in SEA, was valued at $18B.\nI take a conservative approach and value Lazada between $5B (acquisition cost) and $10B (50% discount to Tokopedia's recent valuation despite Lazada's slightly larger size).\nLocal Services(ele.me, koubei)\nEle.me has about 80% of DoorDash (DASH) revenue, with 8x active customers (40Mil vs 5Mil) in FY21. In food delivery services in China, Meituan leads with 65% market share, ele.me No.2 with 27.4% market share, 3B FY21 revenue.\nIf we use DoorDash valuation at 15x EV/Sales, that would value ele.me at 45B, if we use Grubhub's (GRUB) 8x EV/Sales, it values ele.me at $24B\nAlibaba acquired ele.me in 2018 for $9.5B.\nI take a conservative approach and value ele.me between 9.5B (acquisition cost) and $24B (use Grub Ev/Sales ratio).\nNew Retail(Freshippo)\nKnown as Hema in China, it is similar to Amazon Go, a new retail format store leveraging technology to provide zero human touch shopping experience.\nI consider it as a part of its core commerce strategy to maintain its competitive edge and assign no additional value.\nLogistic(Cainiao)\nCainiao is Alibaba's logistic arm.\nBABA paid 3.3B to increase its Cainiao stake from 51% to 63% in its latestroundin 2019. That values its stake ~18B at cost.\nCross border e-commerece(Kaola)\nKaola is considered to be a TMall extension to improve its core competency and I assign no additional value.\n<img src=\"https://static.tigerbbs.com/80468b018507ac3b52aeec68b0598486\" tg-width=\"640\" tg-height=\"482\" referrerpolicy=\"no-referrer\">Source: FY21 Investorpresentation\n2. Alibaba Cloud\nAlibaba Cloud's YoY revenue growth was 62% and 50% in the last two years. Its FY21 revenue was $9.2B and turned cash flow positive the first time with 47M adjusted Ebitda.\nIn terms of China's cloud market share, Alibaba cloud leads the pack with 39.8% as of Q1 2021.\nAccording to China Internet Watch, cloud infrastructure spending growth in China outpaced the RoW, supported by the government's strategic priority in cloud computing, and it has been consistently over 50% over the last 7 quarters.\n<img src=\"https://static.tigerbbs.com/cb80ade495a99acd13fa3efc4fc3f518\" tg-width=\"640\" tg-height=\"391\" referrerpolicy=\"no-referrer\">\n<img src=\"https://static.tigerbbs.com/b8eb951fb359485adc84747b78e74c71\" tg-width=\"640\" tg-height=\"383\" referrerpolicy=\"no-referrer\">\nSource:China Cloud market 1Q21- China Internet Watch\nIf we zoom out globally, Alibaba cloud ranks No 4 with a 6% market share, right after Amazon, Microsoft (MSFT), and Google (GOOG).\nIt is about 20% the size of Amazon cloud in this $150B global market.\n<img src=\"https://static.tigerbbs.com/5ef9f1797dbfd7d1ca0ad84c3e009923\" tg-width=\"640\" tg-height=\"364\" referrerpolicy=\"no-referrer\">\nSource:Cloud Market Q3Y20Canalys\nSimilar research from Synergy Research Group in Q1 21 also confirmed the same ranking/market share.\n<img src=\"https://static.tigerbbs.com/cb5b1ff4c0cdbf586867d03a369d395e\" tg-width=\"499\" tg-height=\"497\" referrerpolicy=\"no-referrer\">\nSource: Synergy Research Group on Statista\nUsing a very conservative 10x P/S values Alibaba Cloud at $100B.\nBoth GS (GS) and MS (MS)valuedAlibaba Cloud at $120B+ a year ago after Alibaba disclosed its 1Q21 fiscal data in Aug 2020.\nGiven the above, I value Alibaba Cloud between 100B and 120B.\n3. Digital Media and Entertainment\nIt includes YouKu, AliSports, AliGame, UC\nYouKu has 500M Monthly Active Users, 800M video views, one of China's top video/streaming service platforms, along with iQIYI, and Tencent Video.\nAlibaba spent $4B in 2016 to acquire Youku.\nIts main competitor iQIYI (IQ) is listed in Nasdaq, currently valued at 10.4B.\nDigital media/entertainment reported $4.5B revenue in FY21, with an adjusted Ebitda is 0.9B.\nI value Youku (and the rest of segment assets) between $4.5B (acquisition cost) and 9B (10x Ev/Ebitda).\n4. Innovation Initiatives\nAs I have few visibilities in these innovation initiatives, I take a conservative approach and assign no value.\n5. Ant Group\nAnt Group valuation could certainly be a controversial take.\nIts valuation hit $320B at its peak prior to IPO. Since its IPO halt in Nov 2020, its valuation has declined significantly, the latestanalysisfrom Sanford Bernstein valued it at $120B.\nAt a $120B valuation, BABA's 1/3 stake is worth $40B.\nput aside valuation, a head-to-head comparison between 2 dominating FinTech in China (Ant and Tencent) shows its massive scale in absolute numbers.\n<img src=\"https://static.tigerbbs.com/f6ed30632a6897a6c57eca61205d3bc7\" tg-width=\"640\" tg-height=\"353\" referrerpolicy=\"no-referrer\">\nsource:TechCrunchchina's top fintech platform Ant vs Tencent\nPut the numbers into perspective, Ant Group's active user is about 2x PayPal (PYPL) size, and roughly the same revenue. PayPal is currently valued at $350B.\n<img src=\"https://static.tigerbbs.com/3318320d7217809542f5c2516c83cb01\" tg-width=\"640\" tg-height=\"764\" referrerpolicy=\"no-referrer\">\nsource:SPGlobal\nAn insightful comparison from S&amp;P Global market points out while Ant and PayPal revenue are comparable, Ant has about 20x TPV (Transaction Payment Volume) more than PayPal and Ant's take rate is only 5% of PayPal's.\nNote: PayPal take rate 2.5%, and Ant is at a mere 0.11%.\nAs shown in Chart 1 and 2, PayPal's take rate has been steadily declining since 2018, while Ant increases.\nIn summary, I think Bernstein's $120B valuations is a very conservative number. I consider Ant is on par with PayPal, and even with a 50% discount shall value Ant Group at $175B.\nThus I would value Alibaba's 1/3 stake in Ant Group between $40B and $58B.\n6. Strategic Investments\nReported by Alibaba at $45B valuations as of Jun30, 2020.\n<img src=\"https://static.tigerbbs.com/ce0e36c5240ce4a4c741785ea8a9de96\" tg-width=\"207\" tg-height=\"350\" referrerpolicy=\"no-referrer\">\nSome notable investment includes:\n8% ownership stake in Bilibili (BILI)\nA single-digit ownership stake in DiDi (DIDI)\nDelisting Risk\nNow let us talk about the elephant in the room - its various risks, particularly its delisting risk as discussed frequently among US market participants\nI discussed the general Chinese ADR delisting risk in a recent Tweet thread. For these interested in the details:\n<img src=\"https://static.tigerbbs.com/fbfb7535a1b9fc863aa6d492ae17dc3f\" tg-width=\"583\" tg-height=\"432\">\nIn summary:\n<ol>\n <li>delisting poses an immediate trading liquidity risk, thus short-term volatility.</li>\n <li>Stocks are fungible. For dually listed stocks such as Alibaba, there is no/limited long-term material impact to shareholders especially if one is prepared and ready to receive its shares in the other exchange. In BABA's case, that would be its shares listed on Hong Kong Stock Exchange.</li>\n <li>There are also established tender processes to redeem if the company offers, which was exactly what happened with China Mobile and China Unicom in earlier 2021.</li>\n</ol>\nOther Concerns\nAnti-monopoly violation: Alibaba was recently levied a $2.8B fine due to anti-monopoly violation. In relative terms, that fine alone has no material impact as it was less than 0.5% of its market cap. There are legit concerns that BABA could be subject to further regulatory fines in a less predictable manner.\nJack Ma: Jack Ma risk has been talked about a lot. The fact is Jack Ma already stepped down from both chairmanship and CEO role of Alibaba and has gradually detached himself (at least in the public) from the business.\nAnt Group IPO halt: I think Ant Group IPO halt was a big disappointment and shows certain unpredictability in the current environment. However, I think that has been more than priced in.\nConcluding Thoughts\nA conservative sum of all parts values BABA enterprise value between 773B ($299/share) and 965B ($373/share). At the current price of $206/share, it offers 45% to 81% upside potential, and I am increasing my position at the current price.","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Alibaba: An Undervalued Empire With 45%+ Upside</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAlibaba: An Undervalued Empire With 45%+ Upside\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-07-13 09:39 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nAlibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.\nIts stock price has been under pressure for over a year by perceived political/delisting risk ...\n\n<a href=\"https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BABA":"阿里巴巴","09988":"阿里巴巴-W"},"source_url":"https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1171355403","content_text":"Summary\n\nAlibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.\nIts stock price has been under pressure for over a year by perceived political/delisting risk and its recent Ant Financial IPO cancellation.\nI break it down by business units, show its strength and true value, and discuss its delisting risks.\n\nPrice action deviates from Fundamentals\nAlibaba Group Holding Limited(NYSE:BABA)stock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon (AMZN) was up 101%, its Latin American peer MercadoLibre (MELI) was up 172%, even the S&P 500 index was up 39%.\nData by YCharts\nAlibaba is the largest eCommerce operation in the world. It has over 1B annual active consumers, over 1T GMV (gross merchandise volume) in FY21, both numbers larger than any other e-commerce company in the world, Amazon included.\nIn the meantime, Alibaba's core commerce and cloud computing recorded 42% and 50% YoY growth FY21. These are jaw-dropping growth numbers, especially at Alibaba's massive scale.\nAlso worth noting, while its revenue grows at an impressive rate, its Ebitda profit margin continues to show 17% YoY improvement, further demonstrate its superior unit economics, and effective cost control as it scales up.\n\nSource: 4Q21 AlibabaInvestor presentation\nInvestment Thesis\nMy conservative model values Alibaba between $773B ($299/share) to $967B ($373/share). It offers an upside potential between 45% and 81% to its closing price of $206/share on 7/9/21.\nThe table below provides a summary view of my Sum-of-all-parts valuation, and I discuss them in detail in later sections.\n\nSource: Excel sheet prepared by Author\nValuation By Segments\nAlibaba has four business segments and two investment segments, they are:\n\nCore Commerce: Taobao, TMall, Alibaba, AliExpress, Lazada, ele.me, etc.\nCloud Computing: Alibaba Cloud\nDigital Media: Youku, Ali Sports, AliGame, etc.\nInnovative Initiatives: gmap, AliOS, etc\nAnt Group\nOther strategic Investments: DiDi, bilibili, etc\n\nLet us dive into them.\n\nSource:Alibaba Investor Day2020\n1. Core Commerce\nMarketplace-based core commerceincludes Taobao, TMall, 1688.com, alibaba.com, AliExpress, TMall Market. These are mature and profit-generating marketplaces with steady growth.\nThese are the crown jewels of Alibaba's empire. It composes of No.1 Online retail, No.1 online wholesale, and No 1 B2C Export marketplace in China.\nFY21 adj Ebitda for marketplace-based core commerce is $35B.\nI use a moderate 15x - 20x Ev/Ebitda ratio (e.g. Amazon is 30x+ Ev/Ebitda), values its marketplace-based core commerce between 570B and 700B.\nLazada:international retail marketplace in SEA\nAlibaba, through three rounds of a total $4B investment, is a majority owner of Lazada.\nWhile Shopee (SE) takes the commanding lead in the SEA e-commerce marketplace, Lazada is still a No.2 with 100Mil+ monthly active users, ahead of Tokopedia.\nAlibaba only provides international e-commerce in aggregate (~5B) in FY21, with no revenue breakdown. Lazada and AliExpress are 2 primary contributors in this segment.\nAs a reference, Tokopedia, an e-commerce competitor and No.3 in SEA, was valued at $18B.\nI take a conservative approach and value Lazada between $5B (acquisition cost) and $10B (50% discount to Tokopedia's recent valuation despite Lazada's slightly larger size).\nLocal Services(ele.me, koubei)\nEle.me has about 80% of DoorDash (DASH) revenue, with 8x active customers (40Mil vs 5Mil) in FY21. In food delivery services in China, Meituan leads with 65% market share, ele.me No.2 with 27.4% market share, 3B FY21 revenue.\nIf we use DoorDash valuation at 15x EV/Sales, that would value ele.me at 45B, if we use Grubhub's (GRUB) 8x EV/Sales, it values ele.me at $24B\nAlibaba acquired ele.me in 2018 for $9.5B.\nI take a conservative approach and value ele.me between 9.5B (acquisition cost) and $24B (use Grub Ev/Sales ratio).\nNew Retail(Freshippo)\nKnown as Hema in China, it is similar to Amazon Go, a new retail format store leveraging technology to provide zero human touch shopping experience.\nI consider it as a part of its core commerce strategy to maintain its competitive edge and assign no additional value.\nLogistic(Cainiao)\nCainiao is Alibaba's logistic arm.\nBABA paid 3.3B to increase its Cainiao stake from 51% to 63% in its latestroundin 2019. That values its stake ~18B at cost.\nCross border e-commerece(Kaola)\nKaola is considered to be a TMall extension to improve its core competency and I assign no additional value.\nSource: FY21 Investorpresentation\n2. Alibaba Cloud\nAlibaba Cloud's YoY revenue growth was 62% and 50% in the last two years. Its FY21 revenue was $9.2B and turned cash flow positive the first time with 47M adjusted Ebitda.\nIn terms of China's cloud market share, Alibaba cloud leads the pack with 39.8% as of Q1 2021.\nAccording to China Internet Watch, cloud infrastructure spending growth in China outpaced the RoW, supported by the government's strategic priority in cloud computing, and it has been consistently over 50% over the last 7 quarters.\n\n\nSource:China Cloud market 1Q21- China Internet Watch\nIf we zoom out globally, Alibaba cloud ranks No 4 with a 6% market share, right after Amazon, Microsoft (MSFT), and Google (GOOG).\nIt is about 20% the size of Amazon cloud in this $150B global market.\n\nSource:Cloud Market Q3Y20Canalys\nSimilar research from Synergy Research Group in Q1 21 also confirmed the same ranking/market share.\n\nSource: Synergy Research Group on Statista\nUsing a very conservative 10x P/S values Alibaba Cloud at $100B.\nBoth GS (GS) and MS (MS)valuedAlibaba Cloud at $120B+ a year ago after Alibaba disclosed its 1Q21 fiscal data in Aug 2020.\nGiven the above, I value Alibaba Cloud between 100B and 120B.\n3. Digital Media and Entertainment\nIt includes YouKu, AliSports, AliGame, UC\nYouKu has 500M Monthly Active Users, 800M video views, one of China's top video/streaming service platforms, along with iQIYI, and Tencent Video.\nAlibaba spent $4B in 2016 to acquire Youku.\nIts main competitor iQIYI (IQ) is listed in Nasdaq, currently valued at 10.4B.\nDigital media/entertainment reported $4.5B revenue in FY21, with an adjusted Ebitda is 0.9B.\nI value Youku (and the rest of segment assets) between $4.5B (acquisition cost) and 9B (10x Ev/Ebitda).\n4. Innovation Initiatives\nAs I have few visibilities in these innovation initiatives, I take a conservative approach and assign no value.\n5. Ant Group\nAnt Group valuation could certainly be a controversial take.\nIts valuation hit $320B at its peak prior to IPO. Since its IPO halt in Nov 2020, its valuation has declined significantly, the latestanalysisfrom Sanford Bernstein valued it at $120B.\nAt a $120B valuation, BABA's 1/3 stake is worth $40B.\nput aside valuation, a head-to-head comparison between 2 dominating FinTech in China (Ant and Tencent) shows its massive scale in absolute numbers.\n\nsource:TechCrunchchina's top fintech platform Ant vs Tencent\nPut the numbers into perspective, Ant Group's active user is about 2x PayPal (PYPL) size, and roughly the same revenue. PayPal is currently valued at $350B.\n\nsource:SPGlobal\nAn insightful comparison from S&P Global market points out while Ant and PayPal revenue are comparable, Ant has about 20x TPV (Transaction Payment Volume) more than PayPal and Ant's take rate is only 5% of PayPal's.\nNote: PayPal take rate 2.5%, and Ant is at a mere 0.11%.\nAs shown in Chart 1 and 2, PayPal's take rate has been steadily declining since 2018, while Ant increases.\nIn summary, I think Bernstein's $120B valuations is a very conservative number. I consider Ant is on par with PayPal, and even with a 50% discount shall value Ant Group at $175B.\nThus I would value Alibaba's 1/3 stake in Ant Group between $40B and $58B.\n6. Strategic Investments\nReported by Alibaba at $45B valuations as of Jun30, 2020.\n\nSome notable investment includes:\n8% ownership stake in Bilibili (BILI)\nA single-digit ownership stake in DiDi (DIDI)\nDelisting Risk\nNow let us talk about the elephant in the room - its various risks, particularly its delisting risk as discussed frequently among US market participants\nI discussed the general Chinese ADR delisting risk in a recent Tweet thread. For these interested in the details:\n\nIn summary:\n\ndelisting poses an immediate trading liquidity risk, thus short-term volatility.\nStocks are fungible. For dually listed stocks such as Alibaba, there is no/limited long-term material impact to shareholders especially if one is prepared and ready to receive its shares in the other exchange. In BABA's case, that would be its shares listed on Hong Kong Stock Exchange.\nThere are also established tender processes to redeem if the company offers, which was exactly what happened with China Mobile and China Unicom in earlier 2021.\n\nOther Concerns\nAnti-monopoly violation: Alibaba was recently levied a $2.8B fine due to anti-monopoly violation. In relative terms, that fine alone has no material impact as it was less than 0.5% of its market cap. There are legit concerns that BABA could be subject to further regulatory fines in a less predictable manner.\nJack Ma: Jack Ma risk has been talked about a lot. The fact is Jack Ma already stepped down from both chairmanship and CEO role of Alibaba and has gradually detached himself (at least in the public) from the business.\nAnt Group IPO halt: I think Ant Group IPO halt was a big disappointment and shows certain unpredictability in the current environment. However, I think that has been more than priced in.\nConcluding Thoughts\nA conservative sum of all parts values BABA enterprise value between 773B ($299/share) and 965B ($373/share). At the current price of $206/share, it offers 45% to 81% upside potential, and I am increasing my position at the current price.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":5204539,"gmtCreate":1626158796145,"gmtModify":1663230899838,"authorId":3583224908052547,"author":{"id":3583224908052547,"idStr":"3583224908052547","authorId":3583224908052547,"name":"rachelswl","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":1,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":142842627,"type":1,"supId":0,"prevId":0,"content":"need to wait long term","text":"need to wait long term","html":"need to wait long term"}],"langContent":"EN"},{"id":142862364,"gmtCreate":1626141535658,"gmtModify":1703754143768,"author":{"id":"3555029210216042","authorId":"3555029210216042","name":"Reallyreal","avatar":"https://static.tigerbbs.com/b2c08578ed3ba3c70779c4e8e0d93b7c","vip":1,"crmLevel":2,"crmLevelSwitch":0,"authorIdStr":"3555029210216042","idStr":"3555029210216042"},"htmlText":"Yeaa","listText":"Yeaa","text":"Yeaa","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/142862364","repostId":1171355403,"repostType":4,"repost":{"id":"1171355403","kind":"news","pubTimestamp":1626140399,"share":"https://ttm.financial/m/news/1171355403?lang=&edition=fundamental","pubTime":"2021-07-13 09:39","market":"us","language":"en","title":"Alibaba: An Undervalued Empire With 45%+ Upside","url":"https://stock-news.laohu8.com/highlight/detail?id=1171355403","media":"seekingalpha","summary":"Alibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.I break it down by business units, show its strength and true value, and discuss its delisting risks.Alibaba Group Holding Limitedstock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon was up 101%, its Latin American peer MercadoLibre was up 172%, even the S&P 500 index was up 39%.Alibaba is the largest eCommerce operation in the world. It has over 1B annual act","content":"Summary\n<ul>\n <li>Alibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.</li>\n <li>Its stock price has been under pressure for over a year by perceived political/delisting risk and its recent Ant Financial IPO cancellation.</li>\n <li>I break it down by business units, show its strength and true value, and discuss its delisting risks.</li>\n</ul>\nPrice action deviates from Fundamentals\nAlibaba Group Holding Limited(NYSE:BABA)stock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon (AMZN) was up 101%, its Latin American peer MercadoLibre (MELI) was up 172%, even the S&amp;P 500 index was up 39%.\n<img src=\"https://static.tigerbbs.com/699af948598c5dab55d7ba41931d1944\" tg-width=\"635\" tg-height=\"467\" referrerpolicy=\"no-referrer\">Data by YCharts\nAlibaba is the largest eCommerce operation in the world. It has over 1B annual active consumers, over 1T GMV (gross merchandise volume) in FY21, both numbers larger than any other e-commerce company in the world, Amazon included.\nIn the meantime, Alibaba's core commerce and cloud computing recorded 42% and 50% YoY growth FY21. These are jaw-dropping growth numbers, especially at Alibaba's massive scale.\nAlso worth noting, while its revenue grows at an impressive rate, its Ebitda profit margin continues to show 17% YoY improvement, further demonstrate its superior unit economics, and effective cost control as it scales up.\n<img src=\"https://static.tigerbbs.com/b69f23fbc36af93ba24ecf933c2b4bbe\" tg-width=\"640\" tg-height=\"474\" referrerpolicy=\"no-referrer\">\nSource: 4Q21 AlibabaInvestor presentation\nInvestment Thesis\nMy conservative model values Alibaba between $773B ($299/share) to $967B ($373/share). It offers an upside potential between 45% and 81% to its closing price of $206/share on 7/9/21.\nThe table below provides a summary view of my Sum-of-all-parts valuation, and I discuss them in detail in later sections.\n<img src=\"https://static.tigerbbs.com/1c3b44cb0364f61901a479a1f6948afd\" tg-width=\"640\" tg-height=\"348\" referrerpolicy=\"no-referrer\">\nSource: Excel sheet prepared by Author\nValuation By Segments\nAlibaba has four business segments and two investment segments, they are:\n<ul>\n <li>Core Commerce: Taobao, TMall, Alibaba, AliExpress, Lazada, ele.me, etc.</li>\n <li>Cloud Computing: Alibaba Cloud</li>\n <li>Digital Media: Youku, Ali Sports, AliGame, etc.</li>\n <li>Innovative Initiatives: gmap, AliOS, etc</li>\n <li>Ant Group</li>\n <li>Other strategic Investments: DiDi, bilibili, etc</li>\n</ul>\nLet us dive into them.\n<img src=\"https://static.tigerbbs.com/033f24b75c357021d3d1177cc2e3bbf4\" tg-width=\"640\" tg-height=\"140\" referrerpolicy=\"no-referrer\">\nSource:Alibaba Investor Day2020\n1. Core Commerce\nMarketplace-based core commerceincludes Taobao, TMall, 1688.com, alibaba.com, AliExpress, TMall Market. These are mature and profit-generating marketplaces with steady growth.\nThese are the crown jewels of Alibaba's empire. It composes of No.1 Online retail, No.1 online wholesale, and No 1 B2C Export marketplace in China.\nFY21 adj Ebitda for marketplace-based core commerce is $35B.\nI use a moderate 15x - 20x Ev/Ebitda ratio (e.g. Amazon is 30x+ Ev/Ebitda), values its marketplace-based core commerce between 570B and 700B.\nLazada:international retail marketplace in SEA\nAlibaba, through three rounds of a total $4B investment, is a majority owner of Lazada.\nWhile Shopee (SE) takes the commanding lead in the SEA e-commerce marketplace, Lazada is still a No.2 with 100Mil+ monthly active users, ahead of Tokopedia.\nAlibaba only provides international e-commerce in aggregate (~5B) in FY21, with no revenue breakdown. Lazada and AliExpress are 2 primary contributors in this segment.\nAs a reference, Tokopedia, an e-commerce competitor and No.3 in SEA, was valued at $18B.\nI take a conservative approach and value Lazada between $5B (acquisition cost) and $10B (50% discount to Tokopedia's recent valuation despite Lazada's slightly larger size).\nLocal Services(ele.me, koubei)\nEle.me has about 80% of DoorDash (DASH) revenue, with 8x active customers (40Mil vs 5Mil) in FY21. In food delivery services in China, Meituan leads with 65% market share, ele.me No.2 with 27.4% market share, 3B FY21 revenue.\nIf we use DoorDash valuation at 15x EV/Sales, that would value ele.me at 45B, if we use Grubhub's (GRUB) 8x EV/Sales, it values ele.me at $24B\nAlibaba acquired ele.me in 2018 for $9.5B.\nI take a conservative approach and value ele.me between 9.5B (acquisition cost) and $24B (use Grub Ev/Sales ratio).\nNew Retail(Freshippo)\nKnown as Hema in China, it is similar to Amazon Go, a new retail format store leveraging technology to provide zero human touch shopping experience.\nI consider it as a part of its core commerce strategy to maintain its competitive edge and assign no additional value.\nLogistic(Cainiao)\nCainiao is Alibaba's logistic arm.\nBABA paid 3.3B to increase its Cainiao stake from 51% to 63% in its latestroundin 2019. That values its stake ~18B at cost.\nCross border e-commerece(Kaola)\nKaola is considered to be a TMall extension to improve its core competency and I assign no additional value.\n<img src=\"https://static.tigerbbs.com/80468b018507ac3b52aeec68b0598486\" tg-width=\"640\" tg-height=\"482\" referrerpolicy=\"no-referrer\">Source: FY21 Investorpresentation\n2. Alibaba Cloud\nAlibaba Cloud's YoY revenue growth was 62% and 50% in the last two years. Its FY21 revenue was $9.2B and turned cash flow positive the first time with 47M adjusted Ebitda.\nIn terms of China's cloud market share, Alibaba cloud leads the pack with 39.8% as of Q1 2021.\nAccording to China Internet Watch, cloud infrastructure spending growth in China outpaced the RoW, supported by the government's strategic priority in cloud computing, and it has been consistently over 50% over the last 7 quarters.\n<img src=\"https://static.tigerbbs.com/cb80ade495a99acd13fa3efc4fc3f518\" tg-width=\"640\" tg-height=\"391\" referrerpolicy=\"no-referrer\">\n<img src=\"https://static.tigerbbs.com/b8eb951fb359485adc84747b78e74c71\" tg-width=\"640\" tg-height=\"383\" referrerpolicy=\"no-referrer\">\nSource:China Cloud market 1Q21- China Internet Watch\nIf we zoom out globally, Alibaba cloud ranks No 4 with a 6% market share, right after Amazon, Microsoft (MSFT), and Google (GOOG).\nIt is about 20% the size of Amazon cloud in this $150B global market.\n<img src=\"https://static.tigerbbs.com/5ef9f1797dbfd7d1ca0ad84c3e009923\" tg-width=\"640\" tg-height=\"364\" referrerpolicy=\"no-referrer\">\nSource:Cloud Market Q3Y20Canalys\nSimilar research from Synergy Research Group in Q1 21 also confirmed the same ranking/market share.\n<img src=\"https://static.tigerbbs.com/cb5b1ff4c0cdbf586867d03a369d395e\" tg-width=\"499\" tg-height=\"497\" referrerpolicy=\"no-referrer\">\nSource: Synergy Research Group on Statista\nUsing a very conservative 10x P/S values Alibaba Cloud at $100B.\nBoth GS (GS) and MS (MS)valuedAlibaba Cloud at $120B+ a year ago after Alibaba disclosed its 1Q21 fiscal data in Aug 2020.\nGiven the above, I value Alibaba Cloud between 100B and 120B.\n3. Digital Media and Entertainment\nIt includes YouKu, AliSports, AliGame, UC\nYouKu has 500M Monthly Active Users, 800M video views, one of China's top video/streaming service platforms, along with iQIYI, and Tencent Video.\nAlibaba spent $4B in 2016 to acquire Youku.\nIts main competitor iQIYI (IQ) is listed in Nasdaq, currently valued at 10.4B.\nDigital media/entertainment reported $4.5B revenue in FY21, with an adjusted Ebitda is 0.9B.\nI value Youku (and the rest of segment assets) between $4.5B (acquisition cost) and 9B (10x Ev/Ebitda).\n4. Innovation Initiatives\nAs I have few visibilities in these innovation initiatives, I take a conservative approach and assign no value.\n5. Ant Group\nAnt Group valuation could certainly be a controversial take.\nIts valuation hit $320B at its peak prior to IPO. Since its IPO halt in Nov 2020, its valuation has declined significantly, the latestanalysisfrom Sanford Bernstein valued it at $120B.\nAt a $120B valuation, BABA's 1/3 stake is worth $40B.\nput aside valuation, a head-to-head comparison between 2 dominating FinTech in China (Ant and Tencent) shows its massive scale in absolute numbers.\n<img src=\"https://static.tigerbbs.com/f6ed30632a6897a6c57eca61205d3bc7\" tg-width=\"640\" tg-height=\"353\" referrerpolicy=\"no-referrer\">\nsource:TechCrunchchina's top fintech platform Ant vs Tencent\nPut the numbers into perspective, Ant Group's active user is about 2x PayPal (PYPL) size, and roughly the same revenue. PayPal is currently valued at $350B.\n<img src=\"https://static.tigerbbs.com/3318320d7217809542f5c2516c83cb01\" tg-width=\"640\" tg-height=\"764\" referrerpolicy=\"no-referrer\">\nsource:SPGlobal\nAn insightful comparison from S&amp;P Global market points out while Ant and PayPal revenue are comparable, Ant has about 20x TPV (Transaction Payment Volume) more than PayPal and Ant's take rate is only 5% of PayPal's.\nNote: PayPal take rate 2.5%, and Ant is at a mere 0.11%.\nAs shown in Chart 1 and 2, PayPal's take rate has been steadily declining since 2018, while Ant increases.\nIn summary, I think Bernstein's $120B valuations is a very conservative number. I consider Ant is on par with PayPal, and even with a 50% discount shall value Ant Group at $175B.\nThus I would value Alibaba's 1/3 stake in Ant Group between $40B and $58B.\n6. Strategic Investments\nReported by Alibaba at $45B valuations as of Jun30, 2020.\n<img src=\"https://static.tigerbbs.com/ce0e36c5240ce4a4c741785ea8a9de96\" tg-width=\"207\" tg-height=\"350\" referrerpolicy=\"no-referrer\">\nSome notable investment includes:\n8% ownership stake in Bilibili (BILI)\nA single-digit ownership stake in DiDi (DIDI)\nDelisting Risk\nNow let us talk about the elephant in the room - its various risks, particularly its delisting risk as discussed frequently among US market participants\nI discussed the general Chinese ADR delisting risk in a recent Tweet thread. For these interested in the details:\n<img src=\"https://static.tigerbbs.com/fbfb7535a1b9fc863aa6d492ae17dc3f\" tg-width=\"583\" tg-height=\"432\">\nIn summary:\n<ol>\n <li>delisting poses an immediate trading liquidity risk, thus short-term volatility.</li>\n <li>Stocks are fungible. For dually listed stocks such as Alibaba, there is no/limited long-term material impact to shareholders especially if one is prepared and ready to receive its shares in the other exchange. In BABA's case, that would be its shares listed on Hong Kong Stock Exchange.</li>\n <li>There are also established tender processes to redeem if the company offers, which was exactly what happened with China Mobile and China Unicom in earlier 2021.</li>\n</ol>\nOther Concerns\nAnti-monopoly violation: Alibaba was recently levied a $2.8B fine due to anti-monopoly violation. In relative terms, that fine alone has no material impact as it was less than 0.5% of its market cap. There are legit concerns that BABA could be subject to further regulatory fines in a less predictable manner.\nJack Ma: Jack Ma risk has been talked about a lot. The fact is Jack Ma already stepped down from both chairmanship and CEO role of Alibaba and has gradually detached himself (at least in the public) from the business.\nAnt Group IPO halt: I think Ant Group IPO halt was a big disappointment and shows certain unpredictability in the current environment. However, I think that has been more than priced in.\nConcluding Thoughts\nA conservative sum of all parts values BABA enterprise value between 773B ($299/share) and 965B ($373/share). At the current price of $206/share, it offers 45% to 81% upside potential, and I am increasing my position at the current price.","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Alibaba: An Undervalued Empire With 45%+ Upside</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAlibaba: An Undervalued Empire With 45%+ Upside\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-07-13 09:39 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nAlibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.\nIts stock price has been under pressure for over a year by perceived political/delisting risk ...\n\n<a href=\"https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BABA":"阿里巴巴","09988":"阿里巴巴-W"},"source_url":"https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1171355403","content_text":"Summary\n\nAlibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.\nIts stock price has been under pressure for over a year by perceived political/delisting risk and its recent Ant Financial IPO cancellation.\nI break it down by business units, show its strength and true value, and discuss its delisting risks.\n\nPrice action deviates from Fundamentals\nAlibaba Group Holding Limited(NYSE:BABA)stock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon (AMZN) was up 101%, its Latin American peer MercadoLibre (MELI) was up 172%, even the S&P 500 index was up 39%.\nData by YCharts\nAlibaba is the largest eCommerce operation in the world. It has over 1B annual active consumers, over 1T GMV (gross merchandise volume) in FY21, both numbers larger than any other e-commerce company in the world, Amazon included.\nIn the meantime, Alibaba's core commerce and cloud computing recorded 42% and 50% YoY growth FY21. These are jaw-dropping growth numbers, especially at Alibaba's massive scale.\nAlso worth noting, while its revenue grows at an impressive rate, its Ebitda profit margin continues to show 17% YoY improvement, further demonstrate its superior unit economics, and effective cost control as it scales up.\n\nSource: 4Q21 AlibabaInvestor presentation\nInvestment Thesis\nMy conservative model values Alibaba between $773B ($299/share) to $967B ($373/share). It offers an upside potential between 45% and 81% to its closing price of $206/share on 7/9/21.\nThe table below provides a summary view of my Sum-of-all-parts valuation, and I discuss them in detail in later sections.\n\nSource: Excel sheet prepared by Author\nValuation By Segments\nAlibaba has four business segments and two investment segments, they are:\n\nCore Commerce: Taobao, TMall, Alibaba, AliExpress, Lazada, ele.me, etc.\nCloud Computing: Alibaba Cloud\nDigital Media: Youku, Ali Sports, AliGame, etc.\nInnovative Initiatives: gmap, AliOS, etc\nAnt Group\nOther strategic Investments: DiDi, bilibili, etc\n\nLet us dive into them.\n\nSource:Alibaba Investor Day2020\n1. Core Commerce\nMarketplace-based core commerceincludes Taobao, TMall, 1688.com, alibaba.com, AliExpress, TMall Market. These are mature and profit-generating marketplaces with steady growth.\nThese are the crown jewels of Alibaba's empire. It composes of No.1 Online retail, No.1 online wholesale, and No 1 B2C Export marketplace in China.\nFY21 adj Ebitda for marketplace-based core commerce is $35B.\nI use a moderate 15x - 20x Ev/Ebitda ratio (e.g. Amazon is 30x+ Ev/Ebitda), values its marketplace-based core commerce between 570B and 700B.\nLazada:international retail marketplace in SEA\nAlibaba, through three rounds of a total $4B investment, is a majority owner of Lazada.\nWhile Shopee (SE) takes the commanding lead in the SEA e-commerce marketplace, Lazada is still a No.2 with 100Mil+ monthly active users, ahead of Tokopedia.\nAlibaba only provides international e-commerce in aggregate (~5B) in FY21, with no revenue breakdown. Lazada and AliExpress are 2 primary contributors in this segment.\nAs a reference, Tokopedia, an e-commerce competitor and No.3 in SEA, was valued at $18B.\nI take a conservative approach and value Lazada between $5B (acquisition cost) and $10B (50% discount to Tokopedia's recent valuation despite Lazada's slightly larger size).\nLocal Services(ele.me, koubei)\nEle.me has about 80% of DoorDash (DASH) revenue, with 8x active customers (40Mil vs 5Mil) in FY21. In food delivery services in China, Meituan leads with 65% market share, ele.me No.2 with 27.4% market share, 3B FY21 revenue.\nIf we use DoorDash valuation at 15x EV/Sales, that would value ele.me at 45B, if we use Grubhub's (GRUB) 8x EV/Sales, it values ele.me at $24B\nAlibaba acquired ele.me in 2018 for $9.5B.\nI take a conservative approach and value ele.me between 9.5B (acquisition cost) and $24B (use Grub Ev/Sales ratio).\nNew Retail(Freshippo)\nKnown as Hema in China, it is similar to Amazon Go, a new retail format store leveraging technology to provide zero human touch shopping experience.\nI consider it as a part of its core commerce strategy to maintain its competitive edge and assign no additional value.\nLogistic(Cainiao)\nCainiao is Alibaba's logistic arm.\nBABA paid 3.3B to increase its Cainiao stake from 51% to 63% in its latestroundin 2019. That values its stake ~18B at cost.\nCross border e-commerece(Kaola)\nKaola is considered to be a TMall extension to improve its core competency and I assign no additional value.\nSource: FY21 Investorpresentation\n2. Alibaba Cloud\nAlibaba Cloud's YoY revenue growth was 62% and 50% in the last two years. Its FY21 revenue was $9.2B and turned cash flow positive the first time with 47M adjusted Ebitda.\nIn terms of China's cloud market share, Alibaba cloud leads the pack with 39.8% as of Q1 2021.\nAccording to China Internet Watch, cloud infrastructure spending growth in China outpaced the RoW, supported by the government's strategic priority in cloud computing, and it has been consistently over 50% over the last 7 quarters.\n\n\nSource:China Cloud market 1Q21- China Internet Watch\nIf we zoom out globally, Alibaba cloud ranks No 4 with a 6% market share, right after Amazon, Microsoft (MSFT), and Google (GOOG).\nIt is about 20% the size of Amazon cloud in this $150B global market.\n\nSource:Cloud Market Q3Y20Canalys\nSimilar research from Synergy Research Group in Q1 21 also confirmed the same ranking/market share.\n\nSource: Synergy Research Group on Statista\nUsing a very conservative 10x P/S values Alibaba Cloud at $100B.\nBoth GS (GS) and MS (MS)valuedAlibaba Cloud at $120B+ a year ago after Alibaba disclosed its 1Q21 fiscal data in Aug 2020.\nGiven the above, I value Alibaba Cloud between 100B and 120B.\n3. Digital Media and Entertainment\nIt includes YouKu, AliSports, AliGame, UC\nYouKu has 500M Monthly Active Users, 800M video views, one of China's top video/streaming service platforms, along with iQIYI, and Tencent Video.\nAlibaba spent $4B in 2016 to acquire Youku.\nIts main competitor iQIYI (IQ) is listed in Nasdaq, currently valued at 10.4B.\nDigital media/entertainment reported $4.5B revenue in FY21, with an adjusted Ebitda is 0.9B.\nI value Youku (and the rest of segment assets) between $4.5B (acquisition cost) and 9B (10x Ev/Ebitda).\n4. Innovation Initiatives\nAs I have few visibilities in these innovation initiatives, I take a conservative approach and assign no value.\n5. Ant Group\nAnt Group valuation could certainly be a controversial take.\nIts valuation hit $320B at its peak prior to IPO. Since its IPO halt in Nov 2020, its valuation has declined significantly, the latestanalysisfrom Sanford Bernstein valued it at $120B.\nAt a $120B valuation, BABA's 1/3 stake is worth $40B.\nput aside valuation, a head-to-head comparison between 2 dominating FinTech in China (Ant and Tencent) shows its massive scale in absolute numbers.\n\nsource:TechCrunchchina's top fintech platform Ant vs Tencent\nPut the numbers into perspective, Ant Group's active user is about 2x PayPal (PYPL) size, and roughly the same revenue. PayPal is currently valued at $350B.\n\nsource:SPGlobal\nAn insightful comparison from S&P Global market points out while Ant and PayPal revenue are comparable, Ant has about 20x TPV (Transaction Payment Volume) more than PayPal and Ant's take rate is only 5% of PayPal's.\nNote: PayPal take rate 2.5%, and Ant is at a mere 0.11%.\nAs shown in Chart 1 and 2, PayPal's take rate has been steadily declining since 2018, while Ant increases.\nIn summary, I think Bernstein's $120B valuations is a very conservative number. I consider Ant is on par with PayPal, and even with a 50% discount shall value Ant Group at $175B.\nThus I would value Alibaba's 1/3 stake in Ant Group between $40B and $58B.\n6. Strategic Investments\nReported by Alibaba at $45B valuations as of Jun30, 2020.\n\nSome notable investment includes:\n8% ownership stake in Bilibili (BILI)\nA single-digit ownership stake in DiDi (DIDI)\nDelisting Risk\nNow let us talk about the elephant in the room - its various risks, particularly its delisting risk as discussed frequently among US market participants\nI discussed the general Chinese ADR delisting risk in a recent Tweet thread. For these interested in the details:\n\nIn summary:\n\ndelisting poses an immediate trading liquidity risk, thus short-term volatility.\nStocks are fungible. For dually listed stocks such as Alibaba, there is no/limited long-term material impact to shareholders especially if one is prepared and ready to receive its shares in the other exchange. In BABA's case, that would be its shares listed on Hong Kong Stock Exchange.\nThere are also established tender processes to redeem if the company offers, which was exactly what happened with China Mobile and China Unicom in earlier 2021.\n\nOther Concerns\nAnti-monopoly violation: Alibaba was recently levied a $2.8B fine due to anti-monopoly violation. In relative terms, that fine alone has no material impact as it was less than 0.5% of its market cap. There are legit concerns that BABA could be subject to further regulatory fines in a less predictable manner.\nJack Ma: Jack Ma risk has been talked about a lot. The fact is Jack Ma already stepped down from both chairmanship and CEO role of Alibaba and has gradually detached himself (at least in the public) from the business.\nAnt Group IPO halt: I think Ant Group IPO halt was a big disappointment and shows certain unpredictability in the current environment. However, I think that has been more than priced in.\nConcluding Thoughts\nA conservative sum of all parts values BABA enterprise value between 773B ($299/share) and 965B ($373/share). At the current price of $206/share, it offers 45% to 81% upside potential, and I am increasing my position at the current price.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":142868459,"gmtCreate":1626141470071,"gmtModify":1703754141974,"author":{"id":"3585352116267703","authorId":"3585352116267703","name":"ac1887","avatar":"https://static.tigerbbs.com/a4f5865f79452e7da123e88ff35959e5","vip":1,"crmLevel":1,"crmLevelSwitch":0,"authorIdStr":"3585352116267703","idStr":"3585352116267703"},"htmlText":"Good.&nbsp;","listText":"Good.&nbsp;","text":"Good.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":6,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/142868459","repostId":1171355403,"repostType":4,"repost":{"id":"1171355403","kind":"news","pubTimestamp":1626140399,"share":"https://ttm.financial/m/news/1171355403?lang=&edition=fundamental","pubTime":"2021-07-13 09:39","market":"us","language":"en","title":"Alibaba: An Undervalued Empire With 45%+ Upside","url":"https://stock-news.laohu8.com/highlight/detail?id=1171355403","media":"seekingalpha","summary":"Alibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.I break it down by business units, show its strength and true value, and discuss its delisting risks.Alibaba Group Holding Limitedstock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon was up 101%, its Latin American peer MercadoLibre was up 172%, even the S&P 500 index was up 39%.Alibaba is the largest eCommerce operation in the world. It has over 1B annual act","content":"Summary\n<ul>\n <li>Alibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.</li>\n <li>Its stock price has been under pressure for over a year by perceived political/delisting risk and its recent Ant Financial IPO cancellation.</li>\n <li>I break it down by business units, show its strength and true value, and discuss its delisting risks.</li>\n</ul>\nPrice action deviates from Fundamentals\nAlibaba Group Holding Limited(NYSE:BABA)stock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon (AMZN) was up 101%, its Latin American peer MercadoLibre (MELI) was up 172%, even the S&amp;P 500 index was up 39%.\n<img src=\"https://static.tigerbbs.com/699af948598c5dab55d7ba41931d1944\" tg-width=\"635\" tg-height=\"467\" referrerpolicy=\"no-referrer\">Data by YCharts\nAlibaba is the largest eCommerce operation in the world. It has over 1B annual active consumers, over 1T GMV (gross merchandise volume) in FY21, both numbers larger than any other e-commerce company in the world, Amazon included.\nIn the meantime, Alibaba's core commerce and cloud computing recorded 42% and 50% YoY growth FY21. These are jaw-dropping growth numbers, especially at Alibaba's massive scale.\nAlso worth noting, while its revenue grows at an impressive rate, its Ebitda profit margin continues to show 17% YoY improvement, further demonstrate its superior unit economics, and effective cost control as it scales up.\n<img src=\"https://static.tigerbbs.com/b69f23fbc36af93ba24ecf933c2b4bbe\" tg-width=\"640\" tg-height=\"474\" referrerpolicy=\"no-referrer\">\nSource: 4Q21 AlibabaInvestor presentation\nInvestment Thesis\nMy conservative model values Alibaba between $773B ($299/share) to $967B ($373/share). It offers an upside potential between 45% and 81% to its closing price of $206/share on 7/9/21.\nThe table below provides a summary view of my Sum-of-all-parts valuation, and I discuss them in detail in later sections.\n<img src=\"https://static.tigerbbs.com/1c3b44cb0364f61901a479a1f6948afd\" tg-width=\"640\" tg-height=\"348\" referrerpolicy=\"no-referrer\">\nSource: Excel sheet prepared by Author\nValuation By Segments\nAlibaba has four business segments and two investment segments, they are:\n<ul>\n <li>Core Commerce: Taobao, TMall, Alibaba, AliExpress, Lazada, ele.me, etc.</li>\n <li>Cloud Computing: Alibaba Cloud</li>\n <li>Digital Media: Youku, Ali Sports, AliGame, etc.</li>\n <li>Innovative Initiatives: gmap, AliOS, etc</li>\n <li>Ant Group</li>\n <li>Other strategic Investments: DiDi, bilibili, etc</li>\n</ul>\nLet us dive into them.\n<img src=\"https://static.tigerbbs.com/033f24b75c357021d3d1177cc2e3bbf4\" tg-width=\"640\" tg-height=\"140\" referrerpolicy=\"no-referrer\">\nSource:Alibaba Investor Day2020\n1. Core Commerce\nMarketplace-based core commerceincludes Taobao, TMall, 1688.com, alibaba.com, AliExpress, TMall Market. These are mature and profit-generating marketplaces with steady growth.\nThese are the crown jewels of Alibaba's empire. It composes of No.1 Online retail, No.1 online wholesale, and No 1 B2C Export marketplace in China.\nFY21 adj Ebitda for marketplace-based core commerce is $35B.\nI use a moderate 15x - 20x Ev/Ebitda ratio (e.g. Amazon is 30x+ Ev/Ebitda), values its marketplace-based core commerce between 570B and 700B.\nLazada:international retail marketplace in SEA\nAlibaba, through three rounds of a total $4B investment, is a majority owner of Lazada.\nWhile Shopee (SE) takes the commanding lead in the SEA e-commerce marketplace, Lazada is still a No.2 with 100Mil+ monthly active users, ahead of Tokopedia.\nAlibaba only provides international e-commerce in aggregate (~5B) in FY21, with no revenue breakdown. Lazada and AliExpress are 2 primary contributors in this segment.\nAs a reference, Tokopedia, an e-commerce competitor and No.3 in SEA, was valued at $18B.\nI take a conservative approach and value Lazada between $5B (acquisition cost) and $10B (50% discount to Tokopedia's recent valuation despite Lazada's slightly larger size).\nLocal Services(ele.me, koubei)\nEle.me has about 80% of DoorDash (DASH) revenue, with 8x active customers (40Mil vs 5Mil) in FY21. In food delivery services in China, Meituan leads with 65% market share, ele.me No.2 with 27.4% market share, 3B FY21 revenue.\nIf we use DoorDash valuation at 15x EV/Sales, that would value ele.me at 45B, if we use Grubhub's (GRUB) 8x EV/Sales, it values ele.me at $24B\nAlibaba acquired ele.me in 2018 for $9.5B.\nI take a conservative approach and value ele.me between 9.5B (acquisition cost) and $24B (use Grub Ev/Sales ratio).\nNew Retail(Freshippo)\nKnown as Hema in China, it is similar to Amazon Go, a new retail format store leveraging technology to provide zero human touch shopping experience.\nI consider it as a part of its core commerce strategy to maintain its competitive edge and assign no additional value.\nLogistic(Cainiao)\nCainiao is Alibaba's logistic arm.\nBABA paid 3.3B to increase its Cainiao stake from 51% to 63% in its latestroundin 2019. That values its stake ~18B at cost.\nCross border e-commerece(Kaola)\nKaola is considered to be a TMall extension to improve its core competency and I assign no additional value.\n<img src=\"https://static.tigerbbs.com/80468b018507ac3b52aeec68b0598486\" tg-width=\"640\" tg-height=\"482\" referrerpolicy=\"no-referrer\">Source: FY21 Investorpresentation\n2. Alibaba Cloud\nAlibaba Cloud's YoY revenue growth was 62% and 50% in the last two years. Its FY21 revenue was $9.2B and turned cash flow positive the first time with 47M adjusted Ebitda.\nIn terms of China's cloud market share, Alibaba cloud leads the pack with 39.8% as of Q1 2021.\nAccording to China Internet Watch, cloud infrastructure spending growth in China outpaced the RoW, supported by the government's strategic priority in cloud computing, and it has been consistently over 50% over the last 7 quarters.\n<img src=\"https://static.tigerbbs.com/cb80ade495a99acd13fa3efc4fc3f518\" tg-width=\"640\" tg-height=\"391\" referrerpolicy=\"no-referrer\">\n<img src=\"https://static.tigerbbs.com/b8eb951fb359485adc84747b78e74c71\" tg-width=\"640\" tg-height=\"383\" referrerpolicy=\"no-referrer\">\nSource:China Cloud market 1Q21- China Internet Watch\nIf we zoom out globally, Alibaba cloud ranks No 4 with a 6% market share, right after Amazon, Microsoft (MSFT), and Google (GOOG).\nIt is about 20% the size of Amazon cloud in this $150B global market.\n<img src=\"https://static.tigerbbs.com/5ef9f1797dbfd7d1ca0ad84c3e009923\" tg-width=\"640\" tg-height=\"364\" referrerpolicy=\"no-referrer\">\nSource:Cloud Market Q3Y20Canalys\nSimilar research from Synergy Research Group in Q1 21 also confirmed the same ranking/market share.\n<img src=\"https://static.tigerbbs.com/cb5b1ff4c0cdbf586867d03a369d395e\" tg-width=\"499\" tg-height=\"497\" referrerpolicy=\"no-referrer\">\nSource: Synergy Research Group on Statista\nUsing a very conservative 10x P/S values Alibaba Cloud at $100B.\nBoth GS (GS) and MS (MS)valuedAlibaba Cloud at $120B+ a year ago after Alibaba disclosed its 1Q21 fiscal data in Aug 2020.\nGiven the above, I value Alibaba Cloud between 100B and 120B.\n3. Digital Media and Entertainment\nIt includes YouKu, AliSports, AliGame, UC\nYouKu has 500M Monthly Active Users, 800M video views, one of China's top video/streaming service platforms, along with iQIYI, and Tencent Video.\nAlibaba spent $4B in 2016 to acquire Youku.\nIts main competitor iQIYI (IQ) is listed in Nasdaq, currently valued at 10.4B.\nDigital media/entertainment reported $4.5B revenue in FY21, with an adjusted Ebitda is 0.9B.\nI value Youku (and the rest of segment assets) between $4.5B (acquisition cost) and 9B (10x Ev/Ebitda).\n4. Innovation Initiatives\nAs I have few visibilities in these innovation initiatives, I take a conservative approach and assign no value.\n5. Ant Group\nAnt Group valuation could certainly be a controversial take.\nIts valuation hit $320B at its peak prior to IPO. Since its IPO halt in Nov 2020, its valuation has declined significantly, the latestanalysisfrom Sanford Bernstein valued it at $120B.\nAt a $120B valuation, BABA's 1/3 stake is worth $40B.\nput aside valuation, a head-to-head comparison between 2 dominating FinTech in China (Ant and Tencent) shows its massive scale in absolute numbers.\n<img src=\"https://static.tigerbbs.com/f6ed30632a6897a6c57eca61205d3bc7\" tg-width=\"640\" tg-height=\"353\" referrerpolicy=\"no-referrer\">\nsource:TechCrunchchina's top fintech platform Ant vs Tencent\nPut the numbers into perspective, Ant Group's active user is about 2x PayPal (PYPL) size, and roughly the same revenue. PayPal is currently valued at $350B.\n<img src=\"https://static.tigerbbs.com/3318320d7217809542f5c2516c83cb01\" tg-width=\"640\" tg-height=\"764\" referrerpolicy=\"no-referrer\">\nsource:SPGlobal\nAn insightful comparison from S&amp;P Global market points out while Ant and PayPal revenue are comparable, Ant has about 20x TPV (Transaction Payment Volume) more than PayPal and Ant's take rate is only 5% of PayPal's.\nNote: PayPal take rate 2.5%, and Ant is at a mere 0.11%.\nAs shown in Chart 1 and 2, PayPal's take rate has been steadily declining since 2018, while Ant increases.\nIn summary, I think Bernstein's $120B valuations is a very conservative number. I consider Ant is on par with PayPal, and even with a 50% discount shall value Ant Group at $175B.\nThus I would value Alibaba's 1/3 stake in Ant Group between $40B and $58B.\n6. Strategic Investments\nReported by Alibaba at $45B valuations as of Jun30, 2020.\n<img src=\"https://static.tigerbbs.com/ce0e36c5240ce4a4c741785ea8a9de96\" tg-width=\"207\" tg-height=\"350\" referrerpolicy=\"no-referrer\">\nSome notable investment includes:\n8% ownership stake in Bilibili (BILI)\nA single-digit ownership stake in DiDi (DIDI)\nDelisting Risk\nNow let us talk about the elephant in the room - its various risks, particularly its delisting risk as discussed frequently among US market participants\nI discussed the general Chinese ADR delisting risk in a recent Tweet thread. For these interested in the details:\n<img src=\"https://static.tigerbbs.com/fbfb7535a1b9fc863aa6d492ae17dc3f\" tg-width=\"583\" tg-height=\"432\">\nIn summary:\n<ol>\n <li>delisting poses an immediate trading liquidity risk, thus short-term volatility.</li>\n <li>Stocks are fungible. For dually listed stocks such as Alibaba, there is no/limited long-term material impact to shareholders especially if one is prepared and ready to receive its shares in the other exchange. In BABA's case, that would be its shares listed on Hong Kong Stock Exchange.</li>\n <li>There are also established tender processes to redeem if the company offers, which was exactly what happened with China Mobile and China Unicom in earlier 2021.</li>\n</ol>\nOther Concerns\nAnti-monopoly violation: Alibaba was recently levied a $2.8B fine due to anti-monopoly violation. In relative terms, that fine alone has no material impact as it was less than 0.5% of its market cap. There are legit concerns that BABA could be subject to further regulatory fines in a less predictable manner.\nJack Ma: Jack Ma risk has been talked about a lot. The fact is Jack Ma already stepped down from both chairmanship and CEO role of Alibaba and has gradually detached himself (at least in the public) from the business.\nAnt Group IPO halt: I think Ant Group IPO halt was a big disappointment and shows certain unpredictability in the current environment. However, I think that has been more than priced in.\nConcluding Thoughts\nA conservative sum of all parts values BABA enterprise value between 773B ($299/share) and 965B ($373/share). At the current price of $206/share, it offers 45% to 81% upside potential, and I am increasing my position at the current price.","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Alibaba: An Undervalued Empire With 45%+ Upside</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAlibaba: An Undervalued Empire With 45%+ Upside\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-07-13 09:39 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nAlibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.\nIts stock price has been under pressure for over a year by perceived political/delisting risk ...\n\n<a href=\"https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BABA":"阿里巴巴","09988":"阿里巴巴-W"},"source_url":"https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1171355403","content_text":"Summary\n\nAlibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.\nIts stock price has been under pressure for over a year by perceived political/delisting risk and its recent Ant Financial IPO cancellation.\nI break it down by business units, show its strength and true value, and discuss its delisting risks.\n\nPrice action deviates from Fundamentals\nAlibaba Group Holding Limited(NYSE:BABA)stock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon (AMZN) was up 101%, its Latin American peer MercadoLibre (MELI) was up 172%, even the S&P 500 index was up 39%.\nData by YCharts\nAlibaba is the largest eCommerce operation in the world. It has over 1B annual active consumers, over 1T GMV (gross merchandise volume) in FY21, both numbers larger than any other e-commerce company in the world, Amazon included.\nIn the meantime, Alibaba's core commerce and cloud computing recorded 42% and 50% YoY growth FY21. These are jaw-dropping growth numbers, especially at Alibaba's massive scale.\nAlso worth noting, while its revenue grows at an impressive rate, its Ebitda profit margin continues to show 17% YoY improvement, further demonstrate its superior unit economics, and effective cost control as it scales up.\n\nSource: 4Q21 AlibabaInvestor presentation\nInvestment Thesis\nMy conservative model values Alibaba between $773B ($299/share) to $967B ($373/share). It offers an upside potential between 45% and 81% to its closing price of $206/share on 7/9/21.\nThe table below provides a summary view of my Sum-of-all-parts valuation, and I discuss them in detail in later sections.\n\nSource: Excel sheet prepared by Author\nValuation By Segments\nAlibaba has four business segments and two investment segments, they are:\n\nCore Commerce: Taobao, TMall, Alibaba, AliExpress, Lazada, ele.me, etc.\nCloud Computing: Alibaba Cloud\nDigital Media: Youku, Ali Sports, AliGame, etc.\nInnovative Initiatives: gmap, AliOS, etc\nAnt Group\nOther strategic Investments: DiDi, bilibili, etc\n\nLet us dive into them.\n\nSource:Alibaba Investor Day2020\n1. Core Commerce\nMarketplace-based core commerceincludes Taobao, TMall, 1688.com, alibaba.com, AliExpress, TMall Market. These are mature and profit-generating marketplaces with steady growth.\nThese are the crown jewels of Alibaba's empire. It composes of No.1 Online retail, No.1 online wholesale, and No 1 B2C Export marketplace in China.\nFY21 adj Ebitda for marketplace-based core commerce is $35B.\nI use a moderate 15x - 20x Ev/Ebitda ratio (e.g. Amazon is 30x+ Ev/Ebitda), values its marketplace-based core commerce between 570B and 700B.\nLazada:international retail marketplace in SEA\nAlibaba, through three rounds of a total $4B investment, is a majority owner of Lazada.\nWhile Shopee (SE) takes the commanding lead in the SEA e-commerce marketplace, Lazada is still a No.2 with 100Mil+ monthly active users, ahead of Tokopedia.\nAlibaba only provides international e-commerce in aggregate (~5B) in FY21, with no revenue breakdown. Lazada and AliExpress are 2 primary contributors in this segment.\nAs a reference, Tokopedia, an e-commerce competitor and No.3 in SEA, was valued at $18B.\nI take a conservative approach and value Lazada between $5B (acquisition cost) and $10B (50% discount to Tokopedia's recent valuation despite Lazada's slightly larger size).\nLocal Services(ele.me, koubei)\nEle.me has about 80% of DoorDash (DASH) revenue, with 8x active customers (40Mil vs 5Mil) in FY21. In food delivery services in China, Meituan leads with 65% market share, ele.me No.2 with 27.4% market share, 3B FY21 revenue.\nIf we use DoorDash valuation at 15x EV/Sales, that would value ele.me at 45B, if we use Grubhub's (GRUB) 8x EV/Sales, it values ele.me at $24B\nAlibaba acquired ele.me in 2018 for $9.5B.\nI take a conservative approach and value ele.me between 9.5B (acquisition cost) and $24B (use Grub Ev/Sales ratio).\nNew Retail(Freshippo)\nKnown as Hema in China, it is similar to Amazon Go, a new retail format store leveraging technology to provide zero human touch shopping experience.\nI consider it as a part of its core commerce strategy to maintain its competitive edge and assign no additional value.\nLogistic(Cainiao)\nCainiao is Alibaba's logistic arm.\nBABA paid 3.3B to increase its Cainiao stake from 51% to 63% in its latestroundin 2019. That values its stake ~18B at cost.\nCross border e-commerece(Kaola)\nKaola is considered to be a TMall extension to improve its core competency and I assign no additional value.\nSource: FY21 Investorpresentation\n2. Alibaba Cloud\nAlibaba Cloud's YoY revenue growth was 62% and 50% in the last two years. Its FY21 revenue was $9.2B and turned cash flow positive the first time with 47M adjusted Ebitda.\nIn terms of China's cloud market share, Alibaba cloud leads the pack with 39.8% as of Q1 2021.\nAccording to China Internet Watch, cloud infrastructure spending growth in China outpaced the RoW, supported by the government's strategic priority in cloud computing, and it has been consistently over 50% over the last 7 quarters.\n\n\nSource:China Cloud market 1Q21- China Internet Watch\nIf we zoom out globally, Alibaba cloud ranks No 4 with a 6% market share, right after Amazon, Microsoft (MSFT), and Google (GOOG).\nIt is about 20% the size of Amazon cloud in this $150B global market.\n\nSource:Cloud Market Q3Y20Canalys\nSimilar research from Synergy Research Group in Q1 21 also confirmed the same ranking/market share.\n\nSource: Synergy Research Group on Statista\nUsing a very conservative 10x P/S values Alibaba Cloud at $100B.\nBoth GS (GS) and MS (MS)valuedAlibaba Cloud at $120B+ a year ago after Alibaba disclosed its 1Q21 fiscal data in Aug 2020.\nGiven the above, I value Alibaba Cloud between 100B and 120B.\n3. Digital Media and Entertainment\nIt includes YouKu, AliSports, AliGame, UC\nYouKu has 500M Monthly Active Users, 800M video views, one of China's top video/streaming service platforms, along with iQIYI, and Tencent Video.\nAlibaba spent $4B in 2016 to acquire Youku.\nIts main competitor iQIYI (IQ) is listed in Nasdaq, currently valued at 10.4B.\nDigital media/entertainment reported $4.5B revenue in FY21, with an adjusted Ebitda is 0.9B.\nI value Youku (and the rest of segment assets) between $4.5B (acquisition cost) and 9B (10x Ev/Ebitda).\n4. Innovation Initiatives\nAs I have few visibilities in these innovation initiatives, I take a conservative approach and assign no value.\n5. Ant Group\nAnt Group valuation could certainly be a controversial take.\nIts valuation hit $320B at its peak prior to IPO. Since its IPO halt in Nov 2020, its valuation has declined significantly, the latestanalysisfrom Sanford Bernstein valued it at $120B.\nAt a $120B valuation, BABA's 1/3 stake is worth $40B.\nput aside valuation, a head-to-head comparison between 2 dominating FinTech in China (Ant and Tencent) shows its massive scale in absolute numbers.\n\nsource:TechCrunchchina's top fintech platform Ant vs Tencent\nPut the numbers into perspective, Ant Group's active user is about 2x PayPal (PYPL) size, and roughly the same revenue. PayPal is currently valued at $350B.\n\nsource:SPGlobal\nAn insightful comparison from S&P Global market points out while Ant and PayPal revenue are comparable, Ant has about 20x TPV (Transaction Payment Volume) more than PayPal and Ant's take rate is only 5% of PayPal's.\nNote: PayPal take rate 2.5%, and Ant is at a mere 0.11%.\nAs shown in Chart 1 and 2, PayPal's take rate has been steadily declining since 2018, while Ant increases.\nIn summary, I think Bernstein's $120B valuations is a very conservative number. I consider Ant is on par with PayPal, and even with a 50% discount shall value Ant Group at $175B.\nThus I would value Alibaba's 1/3 stake in Ant Group between $40B and $58B.\n6. Strategic Investments\nReported by Alibaba at $45B valuations as of Jun30, 2020.\n\nSome notable investment includes:\n8% ownership stake in Bilibili (BILI)\nA single-digit ownership stake in DiDi (DIDI)\nDelisting Risk\nNow let us talk about the elephant in the room - its various risks, particularly its delisting risk as discussed frequently among US market participants\nI discussed the general Chinese ADR delisting risk in a recent Tweet thread. For these interested in the details:\n\nIn summary:\n\ndelisting poses an immediate trading liquidity risk, thus short-term volatility.\nStocks are fungible. For dually listed stocks such as Alibaba, there is no/limited long-term material impact to shareholders especially if one is prepared and ready to receive its shares in the other exchange. In BABA's case, that would be its shares listed on Hong Kong Stock Exchange.\nThere are also established tender processes to redeem if the company offers, which was exactly what happened with China Mobile and China Unicom in earlier 2021.\n\nOther Concerns\nAnti-monopoly violation: Alibaba was recently levied a $2.8B fine due to anti-monopoly violation. In relative terms, that fine alone has no material impact as it was less than 0.5% of its market cap. There are legit concerns that BABA could be subject to further regulatory fines in a less predictable manner.\nJack Ma: Jack Ma risk has been talked about a lot. The fact is Jack Ma already stepped down from both chairmanship and CEO role of Alibaba and has gradually detached himself (at least in the public) from the business.\nAnt Group IPO halt: I think Ant Group IPO halt was a big disappointment and shows certain unpredictability in the current environment. However, I think that has been more than priced in.\nConcluding Thoughts\nA conservative sum of all parts values BABA enterprise value between 773B ($299/share) and 965B ($373/share). At the current price of $206/share, it offers 45% to 81% upside potential, and I am increasing my position at the current price.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":5202428,"gmtCreate":1626141547208,"gmtModify":1663230891547,"authorId":3555029210216042,"author":{"id":3555029210216042,"idStr":"3555029210216042","authorId":3555029210216042,"name":"Reallyreal","avatar":"https://static.tigerbbs.com/b2c08578ed3ba3c70779c4e8e0d93b7c","vip":1,"currentWearingBadge":{"badgeId":"1026c425416b44e0aac28c11a0848493-2","templateUuid":"1026c425416b44e0aac28c11a0848493","name":"Senior Tiger","description":"Join the tiger community for 1000 days","bigImgUrl":"https://static.tigerbbs.com/0063fb68ea29c9ae6858c58630e182d5","smallImgUrl":"https://static.tigerbbs.com/96c699a93be4214d4b49aea6a5a5d1a4","grayImgUrl":"https://static.tigerbbs.com/35b0e542a9ff77046ed69ef602bc105d","redirectLinkEnabled":0,"hasAllocated":1,"isWearing":1,"stampPosition":0,"hasStamp":0,"allocationCount":1,"allocatedDate":"2023.03.09","individualDisplayEnabled":0,"individualDisplaySort":0,"categoryType":1001},"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":142868459,"type":1,"supId":0,"prevId":0,"content":"Yup!","text":"Yup!","html":"Yup!"}],"langContent":"EN"},{"id":142863793,"gmtCreate":1626141369912,"gmtModify":1703754139546,"author":{"id":"3575499836282295","authorId":"3575499836282295","name":"JackFruuud","avatar":"https://static.tigerbbs.com/4b7319ef4a1189825c613eb4c4756d41","vip":1,"crmLevel":3,"crmLevelSwitch":0,"authorIdStr":"3575499836282295","idStr":"3575499836282295"},"htmlText":"?","listText":"?","text":"?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/142863793","repostId":1171355403,"repostType":4,"repost":{"id":"1171355403","kind":"news","pubTimestamp":1626140399,"share":"https://ttm.financial/m/news/1171355403?lang=&edition=fundamental","pubTime":"2021-07-13 09:39","market":"us","language":"en","title":"Alibaba: An Undervalued Empire With 45%+ Upside","url":"https://stock-news.laohu8.com/highlight/detail?id=1171355403","media":"seekingalpha","summary":"Alibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.I break it down by business units, show its strength and true value, and discuss its delisting risks.Alibaba Group Holding Limitedstock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon was up 101%, its Latin American peer MercadoLibre was up 172%, even the S&P 500 index was up 39%.Alibaba is the largest eCommerce operation in the world. It has over 1B annual act","content":"Summary\n<ul>\n <li>Alibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.</li>\n <li>Its stock price has been under pressure for over a year by perceived political/delisting risk and its recent Ant Financial IPO cancellation.</li>\n <li>I break it down by business units, show its strength and true value, and discuss its delisting risks.</li>\n</ul>\nPrice action deviates from Fundamentals\nAlibaba Group Holding Limited(NYSE:BABA)stock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon (AMZN) was up 101%, its Latin American peer MercadoLibre (MELI) was up 172%, even the S&amp;P 500 index was up 39%.\n<img src=\"https://static.tigerbbs.com/699af948598c5dab55d7ba41931d1944\" tg-width=\"635\" tg-height=\"467\" referrerpolicy=\"no-referrer\">Data by YCharts\nAlibaba is the largest eCommerce operation in the world. It has over 1B annual active consumers, over 1T GMV (gross merchandise volume) in FY21, both numbers larger than any other e-commerce company in the world, Amazon included.\nIn the meantime, Alibaba's core commerce and cloud computing recorded 42% and 50% YoY growth FY21. These are jaw-dropping growth numbers, especially at Alibaba's massive scale.\nAlso worth noting, while its revenue grows at an impressive rate, its Ebitda profit margin continues to show 17% YoY improvement, further demonstrate its superior unit economics, and effective cost control as it scales up.\n<img src=\"https://static.tigerbbs.com/b69f23fbc36af93ba24ecf933c2b4bbe\" tg-width=\"640\" tg-height=\"474\" referrerpolicy=\"no-referrer\">\nSource: 4Q21 AlibabaInvestor presentation\nInvestment Thesis\nMy conservative model values Alibaba between $773B ($299/share) to $967B ($373/share). It offers an upside potential between 45% and 81% to its closing price of $206/share on 7/9/21.\nThe table below provides a summary view of my Sum-of-all-parts valuation, and I discuss them in detail in later sections.\n<img src=\"https://static.tigerbbs.com/1c3b44cb0364f61901a479a1f6948afd\" tg-width=\"640\" tg-height=\"348\" referrerpolicy=\"no-referrer\">\nSource: Excel sheet prepared by Author\nValuation By Segments\nAlibaba has four business segments and two investment segments, they are:\n<ul>\n <li>Core Commerce: Taobao, TMall, Alibaba, AliExpress, Lazada, ele.me, etc.</li>\n <li>Cloud Computing: Alibaba Cloud</li>\n <li>Digital Media: Youku, Ali Sports, AliGame, etc.</li>\n <li>Innovative Initiatives: gmap, AliOS, etc</li>\n <li>Ant Group</li>\n <li>Other strategic Investments: DiDi, bilibili, etc</li>\n</ul>\nLet us dive into them.\n<img src=\"https://static.tigerbbs.com/033f24b75c357021d3d1177cc2e3bbf4\" tg-width=\"640\" tg-height=\"140\" referrerpolicy=\"no-referrer\">\nSource:Alibaba Investor Day2020\n1. Core Commerce\nMarketplace-based core commerceincludes Taobao, TMall, 1688.com, alibaba.com, AliExpress, TMall Market. These are mature and profit-generating marketplaces with steady growth.\nThese are the crown jewels of Alibaba's empire. It composes of No.1 Online retail, No.1 online wholesale, and No 1 B2C Export marketplace in China.\nFY21 adj Ebitda for marketplace-based core commerce is $35B.\nI use a moderate 15x - 20x Ev/Ebitda ratio (e.g. Amazon is 30x+ Ev/Ebitda), values its marketplace-based core commerce between 570B and 700B.\nLazada:international retail marketplace in SEA\nAlibaba, through three rounds of a total $4B investment, is a majority owner of Lazada.\nWhile Shopee (SE) takes the commanding lead in the SEA e-commerce marketplace, Lazada is still a No.2 with 100Mil+ monthly active users, ahead of Tokopedia.\nAlibaba only provides international e-commerce in aggregate (~5B) in FY21, with no revenue breakdown. Lazada and AliExpress are 2 primary contributors in this segment.\nAs a reference, Tokopedia, an e-commerce competitor and No.3 in SEA, was valued at $18B.\nI take a conservative approach and value Lazada between $5B (acquisition cost) and $10B (50% discount to Tokopedia's recent valuation despite Lazada's slightly larger size).\nLocal Services(ele.me, koubei)\nEle.me has about 80% of DoorDash (DASH) revenue, with 8x active customers (40Mil vs 5Mil) in FY21. In food delivery services in China, Meituan leads with 65% market share, ele.me No.2 with 27.4% market share, 3B FY21 revenue.\nIf we use DoorDash valuation at 15x EV/Sales, that would value ele.me at 45B, if we use Grubhub's (GRUB) 8x EV/Sales, it values ele.me at $24B\nAlibaba acquired ele.me in 2018 for $9.5B.\nI take a conservative approach and value ele.me between 9.5B (acquisition cost) and $24B (use Grub Ev/Sales ratio).\nNew Retail(Freshippo)\nKnown as Hema in China, it is similar to Amazon Go, a new retail format store leveraging technology to provide zero human touch shopping experience.\nI consider it as a part of its core commerce strategy to maintain its competitive edge and assign no additional value.\nLogistic(Cainiao)\nCainiao is Alibaba's logistic arm.\nBABA paid 3.3B to increase its Cainiao stake from 51% to 63% in its latestroundin 2019. That values its stake ~18B at cost.\nCross border e-commerece(Kaola)\nKaola is considered to be a TMall extension to improve its core competency and I assign no additional value.\n<img src=\"https://static.tigerbbs.com/80468b018507ac3b52aeec68b0598486\" tg-width=\"640\" tg-height=\"482\" referrerpolicy=\"no-referrer\">Source: FY21 Investorpresentation\n2. Alibaba Cloud\nAlibaba Cloud's YoY revenue growth was 62% and 50% in the last two years. Its FY21 revenue was $9.2B and turned cash flow positive the first time with 47M adjusted Ebitda.\nIn terms of China's cloud market share, Alibaba cloud leads the pack with 39.8% as of Q1 2021.\nAccording to China Internet Watch, cloud infrastructure spending growth in China outpaced the RoW, supported by the government's strategic priority in cloud computing, and it has been consistently over 50% over the last 7 quarters.\n<img src=\"https://static.tigerbbs.com/cb80ade495a99acd13fa3efc4fc3f518\" tg-width=\"640\" tg-height=\"391\" referrerpolicy=\"no-referrer\">\n<img src=\"https://static.tigerbbs.com/b8eb951fb359485adc84747b78e74c71\" tg-width=\"640\" tg-height=\"383\" referrerpolicy=\"no-referrer\">\nSource:China Cloud market 1Q21- China Internet Watch\nIf we zoom out globally, Alibaba cloud ranks No 4 with a 6% market share, right after Amazon, Microsoft (MSFT), and Google (GOOG).\nIt is about 20% the size of Amazon cloud in this $150B global market.\n<img src=\"https://static.tigerbbs.com/5ef9f1797dbfd7d1ca0ad84c3e009923\" tg-width=\"640\" tg-height=\"364\" referrerpolicy=\"no-referrer\">\nSource:Cloud Market Q3Y20Canalys\nSimilar research from Synergy Research Group in Q1 21 also confirmed the same ranking/market share.\n<img src=\"https://static.tigerbbs.com/cb5b1ff4c0cdbf586867d03a369d395e\" tg-width=\"499\" tg-height=\"497\" referrerpolicy=\"no-referrer\">\nSource: Synergy Research Group on Statista\nUsing a very conservative 10x P/S values Alibaba Cloud at $100B.\nBoth GS (GS) and MS (MS)valuedAlibaba Cloud at $120B+ a year ago after Alibaba disclosed its 1Q21 fiscal data in Aug 2020.\nGiven the above, I value Alibaba Cloud between 100B and 120B.\n3. Digital Media and Entertainment\nIt includes YouKu, AliSports, AliGame, UC\nYouKu has 500M Monthly Active Users, 800M video views, one of China's top video/streaming service platforms, along with iQIYI, and Tencent Video.\nAlibaba spent $4B in 2016 to acquire Youku.\nIts main competitor iQIYI (IQ) is listed in Nasdaq, currently valued at 10.4B.\nDigital media/entertainment reported $4.5B revenue in FY21, with an adjusted Ebitda is 0.9B.\nI value Youku (and the rest of segment assets) between $4.5B (acquisition cost) and 9B (10x Ev/Ebitda).\n4. Innovation Initiatives\nAs I have few visibilities in these innovation initiatives, I take a conservative approach and assign no value.\n5. Ant Group\nAnt Group valuation could certainly be a controversial take.\nIts valuation hit $320B at its peak prior to IPO. Since its IPO halt in Nov 2020, its valuation has declined significantly, the latestanalysisfrom Sanford Bernstein valued it at $120B.\nAt a $120B valuation, BABA's 1/3 stake is worth $40B.\nput aside valuation, a head-to-head comparison between 2 dominating FinTech in China (Ant and Tencent) shows its massive scale in absolute numbers.\n<img src=\"https://static.tigerbbs.com/f6ed30632a6897a6c57eca61205d3bc7\" tg-width=\"640\" tg-height=\"353\" referrerpolicy=\"no-referrer\">\nsource:TechCrunchchina's top fintech platform Ant vs Tencent\nPut the numbers into perspective, Ant Group's active user is about 2x PayPal (PYPL) size, and roughly the same revenue. PayPal is currently valued at $350B.\n<img src=\"https://static.tigerbbs.com/3318320d7217809542f5c2516c83cb01\" tg-width=\"640\" tg-height=\"764\" referrerpolicy=\"no-referrer\">\nsource:SPGlobal\nAn insightful comparison from S&amp;P Global market points out while Ant and PayPal revenue are comparable, Ant has about 20x TPV (Transaction Payment Volume) more than PayPal and Ant's take rate is only 5% of PayPal's.\nNote: PayPal take rate 2.5%, and Ant is at a mere 0.11%.\nAs shown in Chart 1 and 2, PayPal's take rate has been steadily declining since 2018, while Ant increases.\nIn summary, I think Bernstein's $120B valuations is a very conservative number. I consider Ant is on par with PayPal, and even with a 50% discount shall value Ant Group at $175B.\nThus I would value Alibaba's 1/3 stake in Ant Group between $40B and $58B.\n6. Strategic Investments\nReported by Alibaba at $45B valuations as of Jun30, 2020.\n<img src=\"https://static.tigerbbs.com/ce0e36c5240ce4a4c741785ea8a9de96\" tg-width=\"207\" tg-height=\"350\" referrerpolicy=\"no-referrer\">\nSome notable investment includes:\n8% ownership stake in Bilibili (BILI)\nA single-digit ownership stake in DiDi (DIDI)\nDelisting Risk\nNow let us talk about the elephant in the room - its various risks, particularly its delisting risk as discussed frequently among US market participants\nI discussed the general Chinese ADR delisting risk in a recent Tweet thread. For these interested in the details:\n<img src=\"https://static.tigerbbs.com/fbfb7535a1b9fc863aa6d492ae17dc3f\" tg-width=\"583\" tg-height=\"432\">\nIn summary:\n<ol>\n <li>delisting poses an immediate trading liquidity risk, thus short-term volatility.</li>\n <li>Stocks are fungible. For dually listed stocks such as Alibaba, there is no/limited long-term material impact to shareholders especially if one is prepared and ready to receive its shares in the other exchange. In BABA's case, that would be its shares listed on Hong Kong Stock Exchange.</li>\n <li>There are also established tender processes to redeem if the company offers, which was exactly what happened with China Mobile and China Unicom in earlier 2021.</li>\n</ol>\nOther Concerns\nAnti-monopoly violation: Alibaba was recently levied a $2.8B fine due to anti-monopoly violation. In relative terms, that fine alone has no material impact as it was less than 0.5% of its market cap. There are legit concerns that BABA could be subject to further regulatory fines in a less predictable manner.\nJack Ma: Jack Ma risk has been talked about a lot. The fact is Jack Ma already stepped down from both chairmanship and CEO role of Alibaba and has gradually detached himself (at least in the public) from the business.\nAnt Group IPO halt: I think Ant Group IPO halt was a big disappointment and shows certain unpredictability in the current environment. However, I think that has been more than priced in.\nConcluding Thoughts\nA conservative sum of all parts values BABA enterprise value between 773B ($299/share) and 965B ($373/share). At the current price of $206/share, it offers 45% to 81% upside potential, and I am increasing my position at the current price.","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Alibaba: An Undervalued Empire With 45%+ Upside</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAlibaba: An Undervalued Empire With 45%+ Upside\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-07-13 09:39 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nAlibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.\nIts stock price has been under pressure for over a year by perceived political/delisting risk ...\n\n<a href=\"https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BABA":"阿里巴巴","09988":"阿里巴巴-W"},"source_url":"https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1171355403","content_text":"Summary\n\nAlibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.\nIts stock price has been under pressure for over a year by perceived political/delisting risk and its recent Ant Financial IPO cancellation.\nI break it down by business units, show its strength and true value, and discuss its delisting risks.\n\nPrice action deviates from Fundamentals\nAlibaba Group Holding Limited(NYSE:BABA)stock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon (AMZN) was up 101%, its Latin American peer MercadoLibre (MELI) was up 172%, even the S&P 500 index was up 39%.\nData by YCharts\nAlibaba is the largest eCommerce operation in the world. It has over 1B annual active consumers, over 1T GMV (gross merchandise volume) in FY21, both numbers larger than any other e-commerce company in the world, Amazon included.\nIn the meantime, Alibaba's core commerce and cloud computing recorded 42% and 50% YoY growth FY21. These are jaw-dropping growth numbers, especially at Alibaba's massive scale.\nAlso worth noting, while its revenue grows at an impressive rate, its Ebitda profit margin continues to show 17% YoY improvement, further demonstrate its superior unit economics, and effective cost control as it scales up.\n\nSource: 4Q21 AlibabaInvestor presentation\nInvestment Thesis\nMy conservative model values Alibaba between $773B ($299/share) to $967B ($373/share). It offers an upside potential between 45% and 81% to its closing price of $206/share on 7/9/21.\nThe table below provides a summary view of my Sum-of-all-parts valuation, and I discuss them in detail in later sections.\n\nSource: Excel sheet prepared by Author\nValuation By Segments\nAlibaba has four business segments and two investment segments, they are:\n\nCore Commerce: Taobao, TMall, Alibaba, AliExpress, Lazada, ele.me, etc.\nCloud Computing: Alibaba Cloud\nDigital Media: Youku, Ali Sports, AliGame, etc.\nInnovative Initiatives: gmap, AliOS, etc\nAnt Group\nOther strategic Investments: DiDi, bilibili, etc\n\nLet us dive into them.\n\nSource:Alibaba Investor Day2020\n1. Core Commerce\nMarketplace-based core commerceincludes Taobao, TMall, 1688.com, alibaba.com, AliExpress, TMall Market. These are mature and profit-generating marketplaces with steady growth.\nThese are the crown jewels of Alibaba's empire. It composes of No.1 Online retail, No.1 online wholesale, and No 1 B2C Export marketplace in China.\nFY21 adj Ebitda for marketplace-based core commerce is $35B.\nI use a moderate 15x - 20x Ev/Ebitda ratio (e.g. Amazon is 30x+ Ev/Ebitda), values its marketplace-based core commerce between 570B and 700B.\nLazada:international retail marketplace in SEA\nAlibaba, through three rounds of a total $4B investment, is a majority owner of Lazada.\nWhile Shopee (SE) takes the commanding lead in the SEA e-commerce marketplace, Lazada is still a No.2 with 100Mil+ monthly active users, ahead of Tokopedia.\nAlibaba only provides international e-commerce in aggregate (~5B) in FY21, with no revenue breakdown. Lazada and AliExpress are 2 primary contributors in this segment.\nAs a reference, Tokopedia, an e-commerce competitor and No.3 in SEA, was valued at $18B.\nI take a conservative approach and value Lazada between $5B (acquisition cost) and $10B (50% discount to Tokopedia's recent valuation despite Lazada's slightly larger size).\nLocal Services(ele.me, koubei)\nEle.me has about 80% of DoorDash (DASH) revenue, with 8x active customers (40Mil vs 5Mil) in FY21. In food delivery services in China, Meituan leads with 65% market share, ele.me No.2 with 27.4% market share, 3B FY21 revenue.\nIf we use DoorDash valuation at 15x EV/Sales, that would value ele.me at 45B, if we use Grubhub's (GRUB) 8x EV/Sales, it values ele.me at $24B\nAlibaba acquired ele.me in 2018 for $9.5B.\nI take a conservative approach and value ele.me between 9.5B (acquisition cost) and $24B (use Grub Ev/Sales ratio).\nNew Retail(Freshippo)\nKnown as Hema in China, it is similar to Amazon Go, a new retail format store leveraging technology to provide zero human touch shopping experience.\nI consider it as a part of its core commerce strategy to maintain its competitive edge and assign no additional value.\nLogistic(Cainiao)\nCainiao is Alibaba's logistic arm.\nBABA paid 3.3B to increase its Cainiao stake from 51% to 63% in its latestroundin 2019. That values its stake ~18B at cost.\nCross border e-commerece(Kaola)\nKaola is considered to be a TMall extension to improve its core competency and I assign no additional value.\nSource: FY21 Investorpresentation\n2. Alibaba Cloud\nAlibaba Cloud's YoY revenue growth was 62% and 50% in the last two years. Its FY21 revenue was $9.2B and turned cash flow positive the first time with 47M adjusted Ebitda.\nIn terms of China's cloud market share, Alibaba cloud leads the pack with 39.8% as of Q1 2021.\nAccording to China Internet Watch, cloud infrastructure spending growth in China outpaced the RoW, supported by the government's strategic priority in cloud computing, and it has been consistently over 50% over the last 7 quarters.\n\n\nSource:China Cloud market 1Q21- China Internet Watch\nIf we zoom out globally, Alibaba cloud ranks No 4 with a 6% market share, right after Amazon, Microsoft (MSFT), and Google (GOOG).\nIt is about 20% the size of Amazon cloud in this $150B global market.\n\nSource:Cloud Market Q3Y20Canalys\nSimilar research from Synergy Research Group in Q1 21 also confirmed the same ranking/market share.\n\nSource: Synergy Research Group on Statista\nUsing a very conservative 10x P/S values Alibaba Cloud at $100B.\nBoth GS (GS) and MS (MS)valuedAlibaba Cloud at $120B+ a year ago after Alibaba disclosed its 1Q21 fiscal data in Aug 2020.\nGiven the above, I value Alibaba Cloud between 100B and 120B.\n3. Digital Media and Entertainment\nIt includes YouKu, AliSports, AliGame, UC\nYouKu has 500M Monthly Active Users, 800M video views, one of China's top video/streaming service platforms, along with iQIYI, and Tencent Video.\nAlibaba spent $4B in 2016 to acquire Youku.\nIts main competitor iQIYI (IQ) is listed in Nasdaq, currently valued at 10.4B.\nDigital media/entertainment reported $4.5B revenue in FY21, with an adjusted Ebitda is 0.9B.\nI value Youku (and the rest of segment assets) between $4.5B (acquisition cost) and 9B (10x Ev/Ebitda).\n4. Innovation Initiatives\nAs I have few visibilities in these innovation initiatives, I take a conservative approach and assign no value.\n5. Ant Group\nAnt Group valuation could certainly be a controversial take.\nIts valuation hit $320B at its peak prior to IPO. Since its IPO halt in Nov 2020, its valuation has declined significantly, the latestanalysisfrom Sanford Bernstein valued it at $120B.\nAt a $120B valuation, BABA's 1/3 stake is worth $40B.\nput aside valuation, a head-to-head comparison between 2 dominating FinTech in China (Ant and Tencent) shows its massive scale in absolute numbers.\n\nsource:TechCrunchchina's top fintech platform Ant vs Tencent\nPut the numbers into perspective, Ant Group's active user is about 2x PayPal (PYPL) size, and roughly the same revenue. PayPal is currently valued at $350B.\n\nsource:SPGlobal\nAn insightful comparison from S&P Global market points out while Ant and PayPal revenue are comparable, Ant has about 20x TPV (Transaction Payment Volume) more than PayPal and Ant's take rate is only 5% of PayPal's.\nNote: PayPal take rate 2.5%, and Ant is at a mere 0.11%.\nAs shown in Chart 1 and 2, PayPal's take rate has been steadily declining since 2018, while Ant increases.\nIn summary, I think Bernstein's $120B valuations is a very conservative number. I consider Ant is on par with PayPal, and even with a 50% discount shall value Ant Group at $175B.\nThus I would value Alibaba's 1/3 stake in Ant Group between $40B and $58B.\n6. Strategic Investments\nReported by Alibaba at $45B valuations as of Jun30, 2020.\n\nSome notable investment includes:\n8% ownership stake in Bilibili (BILI)\nA single-digit ownership stake in DiDi (DIDI)\nDelisting Risk\nNow let us talk about the elephant in the room - its various risks, particularly its delisting risk as discussed frequently among US market participants\nI discussed the general Chinese ADR delisting risk in a recent Tweet thread. For these interested in the details:\n\nIn summary:\n\ndelisting poses an immediate trading liquidity risk, thus short-term volatility.\nStocks are fungible. For dually listed stocks such as Alibaba, there is no/limited long-term material impact to shareholders especially if one is prepared and ready to receive its shares in the other exchange. In BABA's case, that would be its shares listed on Hong Kong Stock Exchange.\nThere are also established tender processes to redeem if the company offers, which was exactly what happened with China Mobile and China Unicom in earlier 2021.\n\nOther Concerns\nAnti-monopoly violation: Alibaba was recently levied a $2.8B fine due to anti-monopoly violation. In relative terms, that fine alone has no material impact as it was less than 0.5% of its market cap. There are legit concerns that BABA could be subject to further regulatory fines in a less predictable manner.\nJack Ma: Jack Ma risk has been talked about a lot. The fact is Jack Ma already stepped down from both chairmanship and CEO role of Alibaba and has gradually detached himself (at least in the public) from the business.\nAnt Group IPO halt: I think Ant Group IPO halt was a big disappointment and shows certain unpredictability in the current environment. However, I think that has been more than priced in.\nConcluding Thoughts\nA conservative sum of all parts values BABA enterprise value between 773B ($299/share) and 965B ($373/share). At the current price of $206/share, it offers 45% to 81% upside potential, and I am increasing my position at the current price.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":5202603,"gmtCreate":1626142545101,"gmtModify":1663230891731,"authorId":3575957490964285,"author":{"id":3575957490964285,"idStr":"3575957490964285","authorId":3575957490964285,"name":"angieee","avatar":"https://static.tigerbbs.com/967f7f6ae6a869c2fcd0362a75de7cf4","vip":1,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":142863793,"type":1,"supId":0,"prevId":0,"content":"waiting for quite a while :,))","text":"waiting for quite a while :,))","html":"waiting for quite a while :,))"}],"langContent":"EN"},{"id":142887444,"gmtCreate":1626141157088,"gmtModify":1703754134468,"author":{"id":"3575075648382709","authorId":"3575075648382709","name":"humansharkk","avatar":"https://static.tigerbbs.com/0c78c492b5dbbc667632dc44456f118d","vip":1,"crmLevel":3,"crmLevelSwitch":0,"authorIdStr":"3575075648382709","idStr":"3575075648382709"},"htmlText":"Wow insightful!!!","listText":"Wow insightful!!!","text":"Wow insightful!!!","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":3,"repostSize":0,"link":"https://ttm.financial/post/142887444","repostId":1171355403,"repostType":4,"repost":{"id":"1171355403","kind":"news","pubTimestamp":1626140399,"share":"https://ttm.financial/m/news/1171355403?lang=&edition=fundamental","pubTime":"2021-07-13 09:39","market":"us","language":"en","title":"Alibaba: An Undervalued Empire With 45%+ Upside","url":"https://stock-news.laohu8.com/highlight/detail?id=1171355403","media":"seekingalpha","summary":"Alibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.I break it down by business units, show its strength and true value, and discuss its delisting risks.Alibaba Group Holding Limitedstock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon was up 101%, its Latin American peer MercadoLibre was up 172%, even the S&P 500 index was up 39%.Alibaba is the largest eCommerce operation in the world. It has over 1B annual act","content":"Summary\n<ul>\n <li>Alibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.</li>\n <li>Its stock price has been under pressure for over a year by perceived political/delisting risk and its recent Ant Financial IPO cancellation.</li>\n <li>I break it down by business units, show its strength and true value, and discuss its delisting risks.</li>\n</ul>\nPrice action deviates from Fundamentals\nAlibaba Group Holding Limited(NYSE:BABA)stock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon (AMZN) was up 101%, its Latin American peer MercadoLibre (MELI) was up 172%, even the S&amp;P 500 index was up 39%.\n<img src=\"https://static.tigerbbs.com/699af948598c5dab55d7ba41931d1944\" tg-width=\"635\" tg-height=\"467\" referrerpolicy=\"no-referrer\">Data by YCharts\nAlibaba is the largest eCommerce operation in the world. It has over 1B annual active consumers, over 1T GMV (gross merchandise volume) in FY21, both numbers larger than any other e-commerce company in the world, Amazon included.\nIn the meantime, Alibaba's core commerce and cloud computing recorded 42% and 50% YoY growth FY21. These are jaw-dropping growth numbers, especially at Alibaba's massive scale.\nAlso worth noting, while its revenue grows at an impressive rate, its Ebitda profit margin continues to show 17% YoY improvement, further demonstrate its superior unit economics, and effective cost control as it scales up.\n<img src=\"https://static.tigerbbs.com/b69f23fbc36af93ba24ecf933c2b4bbe\" tg-width=\"640\" tg-height=\"474\" referrerpolicy=\"no-referrer\">\nSource: 4Q21 AlibabaInvestor presentation\nInvestment Thesis\nMy conservative model values Alibaba between $773B ($299/share) to $967B ($373/share). It offers an upside potential between 45% and 81% to its closing price of $206/share on 7/9/21.\nThe table below provides a summary view of my Sum-of-all-parts valuation, and I discuss them in detail in later sections.\n<img src=\"https://static.tigerbbs.com/1c3b44cb0364f61901a479a1f6948afd\" tg-width=\"640\" tg-height=\"348\" referrerpolicy=\"no-referrer\">\nSource: Excel sheet prepared by Author\nValuation By Segments\nAlibaba has four business segments and two investment segments, they are:\n<ul>\n <li>Core Commerce: Taobao, TMall, Alibaba, AliExpress, Lazada, ele.me, etc.</li>\n <li>Cloud Computing: Alibaba Cloud</li>\n <li>Digital Media: Youku, Ali Sports, AliGame, etc.</li>\n <li>Innovative Initiatives: gmap, AliOS, etc</li>\n <li>Ant Group</li>\n <li>Other strategic Investments: DiDi, bilibili, etc</li>\n</ul>\nLet us dive into them.\n<img src=\"https://static.tigerbbs.com/033f24b75c357021d3d1177cc2e3bbf4\" tg-width=\"640\" tg-height=\"140\" referrerpolicy=\"no-referrer\">\nSource:Alibaba Investor Day2020\n1. Core Commerce\nMarketplace-based core commerceincludes Taobao, TMall, 1688.com, alibaba.com, AliExpress, TMall Market. These are mature and profit-generating marketplaces with steady growth.\nThese are the crown jewels of Alibaba's empire. It composes of No.1 Online retail, No.1 online wholesale, and No 1 B2C Export marketplace in China.\nFY21 adj Ebitda for marketplace-based core commerce is $35B.\nI use a moderate 15x - 20x Ev/Ebitda ratio (e.g. Amazon is 30x+ Ev/Ebitda), values its marketplace-based core commerce between 570B and 700B.\nLazada:international retail marketplace in SEA\nAlibaba, through three rounds of a total $4B investment, is a majority owner of Lazada.\nWhile Shopee (SE) takes the commanding lead in the SEA e-commerce marketplace, Lazada is still a No.2 with 100Mil+ monthly active users, ahead of Tokopedia.\nAlibaba only provides international e-commerce in aggregate (~5B) in FY21, with no revenue breakdown. Lazada and AliExpress are 2 primary contributors in this segment.\nAs a reference, Tokopedia, an e-commerce competitor and No.3 in SEA, was valued at $18B.\nI take a conservative approach and value Lazada between $5B (acquisition cost) and $10B (50% discount to Tokopedia's recent valuation despite Lazada's slightly larger size).\nLocal Services(ele.me, koubei)\nEle.me has about 80% of DoorDash (DASH) revenue, with 8x active customers (40Mil vs 5Mil) in FY21. In food delivery services in China, Meituan leads with 65% market share, ele.me No.2 with 27.4% market share, 3B FY21 revenue.\nIf we use DoorDash valuation at 15x EV/Sales, that would value ele.me at 45B, if we use Grubhub's (GRUB) 8x EV/Sales, it values ele.me at $24B\nAlibaba acquired ele.me in 2018 for $9.5B.\nI take a conservative approach and value ele.me between 9.5B (acquisition cost) and $24B (use Grub Ev/Sales ratio).\nNew Retail(Freshippo)\nKnown as Hema in China, it is similar to Amazon Go, a new retail format store leveraging technology to provide zero human touch shopping experience.\nI consider it as a part of its core commerce strategy to maintain its competitive edge and assign no additional value.\nLogistic(Cainiao)\nCainiao is Alibaba's logistic arm.\nBABA paid 3.3B to increase its Cainiao stake from 51% to 63% in its latestroundin 2019. That values its stake ~18B at cost.\nCross border e-commerece(Kaola)\nKaola is considered to be a TMall extension to improve its core competency and I assign no additional value.\n<img src=\"https://static.tigerbbs.com/80468b018507ac3b52aeec68b0598486\" tg-width=\"640\" tg-height=\"482\" referrerpolicy=\"no-referrer\">Source: FY21 Investorpresentation\n2. Alibaba Cloud\nAlibaba Cloud's YoY revenue growth was 62% and 50% in the last two years. Its FY21 revenue was $9.2B and turned cash flow positive the first time with 47M adjusted Ebitda.\nIn terms of China's cloud market share, Alibaba cloud leads the pack with 39.8% as of Q1 2021.\nAccording to China Internet Watch, cloud infrastructure spending growth in China outpaced the RoW, supported by the government's strategic priority in cloud computing, and it has been consistently over 50% over the last 7 quarters.\n<img src=\"https://static.tigerbbs.com/cb80ade495a99acd13fa3efc4fc3f518\" tg-width=\"640\" tg-height=\"391\" referrerpolicy=\"no-referrer\">\n<img src=\"https://static.tigerbbs.com/b8eb951fb359485adc84747b78e74c71\" tg-width=\"640\" tg-height=\"383\" referrerpolicy=\"no-referrer\">\nSource:China Cloud market 1Q21- China Internet Watch\nIf we zoom out globally, Alibaba cloud ranks No 4 with a 6% market share, right after Amazon, Microsoft (MSFT), and Google (GOOG).\nIt is about 20% the size of Amazon cloud in this $150B global market.\n<img src=\"https://static.tigerbbs.com/5ef9f1797dbfd7d1ca0ad84c3e009923\" tg-width=\"640\" tg-height=\"364\" referrerpolicy=\"no-referrer\">\nSource:Cloud Market Q3Y20Canalys\nSimilar research from Synergy Research Group in Q1 21 also confirmed the same ranking/market share.\n<img src=\"https://static.tigerbbs.com/cb5b1ff4c0cdbf586867d03a369d395e\" tg-width=\"499\" tg-height=\"497\" referrerpolicy=\"no-referrer\">\nSource: Synergy Research Group on Statista\nUsing a very conservative 10x P/S values Alibaba Cloud at $100B.\nBoth GS (GS) and MS (MS)valuedAlibaba Cloud at $120B+ a year ago after Alibaba disclosed its 1Q21 fiscal data in Aug 2020.\nGiven the above, I value Alibaba Cloud between 100B and 120B.\n3. Digital Media and Entertainment\nIt includes YouKu, AliSports, AliGame, UC\nYouKu has 500M Monthly Active Users, 800M video views, one of China's top video/streaming service platforms, along with iQIYI, and Tencent Video.\nAlibaba spent $4B in 2016 to acquire Youku.\nIts main competitor iQIYI (IQ) is listed in Nasdaq, currently valued at 10.4B.\nDigital media/entertainment reported $4.5B revenue in FY21, with an adjusted Ebitda is 0.9B.\nI value Youku (and the rest of segment assets) between $4.5B (acquisition cost) and 9B (10x Ev/Ebitda).\n4. Innovation Initiatives\nAs I have few visibilities in these innovation initiatives, I take a conservative approach and assign no value.\n5. Ant Group\nAnt Group valuation could certainly be a controversial take.\nIts valuation hit $320B at its peak prior to IPO. Since its IPO halt in Nov 2020, its valuation has declined significantly, the latestanalysisfrom Sanford Bernstein valued it at $120B.\nAt a $120B valuation, BABA's 1/3 stake is worth $40B.\nput aside valuation, a head-to-head comparison between 2 dominating FinTech in China (Ant and Tencent) shows its massive scale in absolute numbers.\n<img src=\"https://static.tigerbbs.com/f6ed30632a6897a6c57eca61205d3bc7\" tg-width=\"640\" tg-height=\"353\" referrerpolicy=\"no-referrer\">\nsource:TechCrunchchina's top fintech platform Ant vs Tencent\nPut the numbers into perspective, Ant Group's active user is about 2x PayPal (PYPL) size, and roughly the same revenue. PayPal is currently valued at $350B.\n<img src=\"https://static.tigerbbs.com/3318320d7217809542f5c2516c83cb01\" tg-width=\"640\" tg-height=\"764\" referrerpolicy=\"no-referrer\">\nsource:SPGlobal\nAn insightful comparison from S&amp;P Global market points out while Ant and PayPal revenue are comparable, Ant has about 20x TPV (Transaction Payment Volume) more than PayPal and Ant's take rate is only 5% of PayPal's.\nNote: PayPal take rate 2.5%, and Ant is at a mere 0.11%.\nAs shown in Chart 1 and 2, PayPal's take rate has been steadily declining since 2018, while Ant increases.\nIn summary, I think Bernstein's $120B valuations is a very conservative number. I consider Ant is on par with PayPal, and even with a 50% discount shall value Ant Group at $175B.\nThus I would value Alibaba's 1/3 stake in Ant Group between $40B and $58B.\n6. Strategic Investments\nReported by Alibaba at $45B valuations as of Jun30, 2020.\n<img src=\"https://static.tigerbbs.com/ce0e36c5240ce4a4c741785ea8a9de96\" tg-width=\"207\" tg-height=\"350\" referrerpolicy=\"no-referrer\">\nSome notable investment includes:\n8% ownership stake in Bilibili (BILI)\nA single-digit ownership stake in DiDi (DIDI)\nDelisting Risk\nNow let us talk about the elephant in the room - its various risks, particularly its delisting risk as discussed frequently among US market participants\nI discussed the general Chinese ADR delisting risk in a recent Tweet thread. For these interested in the details:\n<img src=\"https://static.tigerbbs.com/fbfb7535a1b9fc863aa6d492ae17dc3f\" tg-width=\"583\" tg-height=\"432\">\nIn summary:\n<ol>\n <li>delisting poses an immediate trading liquidity risk, thus short-term volatility.</li>\n <li>Stocks are fungible. For dually listed stocks such as Alibaba, there is no/limited long-term material impact to shareholders especially if one is prepared and ready to receive its shares in the other exchange. In BABA's case, that would be its shares listed on Hong Kong Stock Exchange.</li>\n <li>There are also established tender processes to redeem if the company offers, which was exactly what happened with China Mobile and China Unicom in earlier 2021.</li>\n</ol>\nOther Concerns\nAnti-monopoly violation: Alibaba was recently levied a $2.8B fine due to anti-monopoly violation. In relative terms, that fine alone has no material impact as it was less than 0.5% of its market cap. There are legit concerns that BABA could be subject to further regulatory fines in a less predictable manner.\nJack Ma: Jack Ma risk has been talked about a lot. The fact is Jack Ma already stepped down from both chairmanship and CEO role of Alibaba and has gradually detached himself (at least in the public) from the business.\nAnt Group IPO halt: I think Ant Group IPO halt was a big disappointment and shows certain unpredictability in the current environment. However, I think that has been more than priced in.\nConcluding Thoughts\nA conservative sum of all parts values BABA enterprise value between 773B ($299/share) and 965B ($373/share). At the current price of $206/share, it offers 45% to 81% upside potential, and I am increasing my position at the current price.","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Alibaba: An Undervalued Empire With 45%+ Upside</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAlibaba: An Undervalued Empire With 45%+ Upside\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-07-13 09:39 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nAlibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.\nIts stock price has been under pressure for over a year by perceived political/delisting risk ...\n\n<a href=\"https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BABA":"阿里巴巴","09988":"阿里巴巴-W"},"source_url":"https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1171355403","content_text":"Summary\n\nAlibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.\nIts stock price has been under pressure for over a year by perceived political/delisting risk and its recent Ant Financial IPO cancellation.\nI break it down by business units, show its strength and true value, and discuss its delisting risks.\n\nPrice action deviates from Fundamentals\nAlibaba Group Holding Limited(NYSE:BABA)stock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon (AMZN) was up 101%, its Latin American peer MercadoLibre (MELI) was up 172%, even the S&P 500 index was up 39%.\nData by YCharts\nAlibaba is the largest eCommerce operation in the world. It has over 1B annual active consumers, over 1T GMV (gross merchandise volume) in FY21, both numbers larger than any other e-commerce company in the world, Amazon included.\nIn the meantime, Alibaba's core commerce and cloud computing recorded 42% and 50% YoY growth FY21. These are jaw-dropping growth numbers, especially at Alibaba's massive scale.\nAlso worth noting, while its revenue grows at an impressive rate, its Ebitda profit margin continues to show 17% YoY improvement, further demonstrate its superior unit economics, and effective cost control as it scales up.\n\nSource: 4Q21 AlibabaInvestor presentation\nInvestment Thesis\nMy conservative model values Alibaba between $773B ($299/share) to $967B ($373/share). It offers an upside potential between 45% and 81% to its closing price of $206/share on 7/9/21.\nThe table below provides a summary view of my Sum-of-all-parts valuation, and I discuss them in detail in later sections.\n\nSource: Excel sheet prepared by Author\nValuation By Segments\nAlibaba has four business segments and two investment segments, they are:\n\nCore Commerce: Taobao, TMall, Alibaba, AliExpress, Lazada, ele.me, etc.\nCloud Computing: Alibaba Cloud\nDigital Media: Youku, Ali Sports, AliGame, etc.\nInnovative Initiatives: gmap, AliOS, etc\nAnt Group\nOther strategic Investments: DiDi, bilibili, etc\n\nLet us dive into them.\n\nSource:Alibaba Investor Day2020\n1. Core Commerce\nMarketplace-based core commerceincludes Taobao, TMall, 1688.com, alibaba.com, AliExpress, TMall Market. These are mature and profit-generating marketplaces with steady growth.\nThese are the crown jewels of Alibaba's empire. It composes of No.1 Online retail, No.1 online wholesale, and No 1 B2C Export marketplace in China.\nFY21 adj Ebitda for marketplace-based core commerce is $35B.\nI use a moderate 15x - 20x Ev/Ebitda ratio (e.g. Amazon is 30x+ Ev/Ebitda), values its marketplace-based core commerce between 570B and 700B.\nLazada:international retail marketplace in SEA\nAlibaba, through three rounds of a total $4B investment, is a majority owner of Lazada.\nWhile Shopee (SE) takes the commanding lead in the SEA e-commerce marketplace, Lazada is still a No.2 with 100Mil+ monthly active users, ahead of Tokopedia.\nAlibaba only provides international e-commerce in aggregate (~5B) in FY21, with no revenue breakdown. Lazada and AliExpress are 2 primary contributors in this segment.\nAs a reference, Tokopedia, an e-commerce competitor and No.3 in SEA, was valued at $18B.\nI take a conservative approach and value Lazada between $5B (acquisition cost) and $10B (50% discount to Tokopedia's recent valuation despite Lazada's slightly larger size).\nLocal Services(ele.me, koubei)\nEle.me has about 80% of DoorDash (DASH) revenue, with 8x active customers (40Mil vs 5Mil) in FY21. In food delivery services in China, Meituan leads with 65% market share, ele.me No.2 with 27.4% market share, 3B FY21 revenue.\nIf we use DoorDash valuation at 15x EV/Sales, that would value ele.me at 45B, if we use Grubhub's (GRUB) 8x EV/Sales, it values ele.me at $24B\nAlibaba acquired ele.me in 2018 for $9.5B.\nI take a conservative approach and value ele.me between 9.5B (acquisition cost) and $24B (use Grub Ev/Sales ratio).\nNew Retail(Freshippo)\nKnown as Hema in China, it is similar to Amazon Go, a new retail format store leveraging technology to provide zero human touch shopping experience.\nI consider it as a part of its core commerce strategy to maintain its competitive edge and assign no additional value.\nLogistic(Cainiao)\nCainiao is Alibaba's logistic arm.\nBABA paid 3.3B to increase its Cainiao stake from 51% to 63% in its latestroundin 2019. That values its stake ~18B at cost.\nCross border e-commerece(Kaola)\nKaola is considered to be a TMall extension to improve its core competency and I assign no additional value.\nSource: FY21 Investorpresentation\n2. Alibaba Cloud\nAlibaba Cloud's YoY revenue growth was 62% and 50% in the last two years. Its FY21 revenue was $9.2B and turned cash flow positive the first time with 47M adjusted Ebitda.\nIn terms of China's cloud market share, Alibaba cloud leads the pack with 39.8% as of Q1 2021.\nAccording to China Internet Watch, cloud infrastructure spending growth in China outpaced the RoW, supported by the government's strategic priority in cloud computing, and it has been consistently over 50% over the last 7 quarters.\n\n\nSource:China Cloud market 1Q21- China Internet Watch\nIf we zoom out globally, Alibaba cloud ranks No 4 with a 6% market share, right after Amazon, Microsoft (MSFT), and Google (GOOG).\nIt is about 20% the size of Amazon cloud in this $150B global market.\n\nSource:Cloud Market Q3Y20Canalys\nSimilar research from Synergy Research Group in Q1 21 also confirmed the same ranking/market share.\n\nSource: Synergy Research Group on Statista\nUsing a very conservative 10x P/S values Alibaba Cloud at $100B.\nBoth GS (GS) and MS (MS)valuedAlibaba Cloud at $120B+ a year ago after Alibaba disclosed its 1Q21 fiscal data in Aug 2020.\nGiven the above, I value Alibaba Cloud between 100B and 120B.\n3. Digital Media and Entertainment\nIt includes YouKu, AliSports, AliGame, UC\nYouKu has 500M Monthly Active Users, 800M video views, one of China's top video/streaming service platforms, along with iQIYI, and Tencent Video.\nAlibaba spent $4B in 2016 to acquire Youku.\nIts main competitor iQIYI (IQ) is listed in Nasdaq, currently valued at 10.4B.\nDigital media/entertainment reported $4.5B revenue in FY21, with an adjusted Ebitda is 0.9B.\nI value Youku (and the rest of segment assets) between $4.5B (acquisition cost) and 9B (10x Ev/Ebitda).\n4. Innovation Initiatives\nAs I have few visibilities in these innovation initiatives, I take a conservative approach and assign no value.\n5. Ant Group\nAnt Group valuation could certainly be a controversial take.\nIts valuation hit $320B at its peak prior to IPO. Since its IPO halt in Nov 2020, its valuation has declined significantly, the latestanalysisfrom Sanford Bernstein valued it at $120B.\nAt a $120B valuation, BABA's 1/3 stake is worth $40B.\nput aside valuation, a head-to-head comparison between 2 dominating FinTech in China (Ant and Tencent) shows its massive scale in absolute numbers.\n\nsource:TechCrunchchina's top fintech platform Ant vs Tencent\nPut the numbers into perspective, Ant Group's active user is about 2x PayPal (PYPL) size, and roughly the same revenue. PayPal is currently valued at $350B.\n\nsource:SPGlobal\nAn insightful comparison from S&P Global market points out while Ant and PayPal revenue are comparable, Ant has about 20x TPV (Transaction Payment Volume) more than PayPal and Ant's take rate is only 5% of PayPal's.\nNote: PayPal take rate 2.5%, and Ant is at a mere 0.11%.\nAs shown in Chart 1 and 2, PayPal's take rate has been steadily declining since 2018, while Ant increases.\nIn summary, I think Bernstein's $120B valuations is a very conservative number. I consider Ant is on par with PayPal, and even with a 50% discount shall value Ant Group at $175B.\nThus I would value Alibaba's 1/3 stake in Ant Group between $40B and $58B.\n6. Strategic Investments\nReported by Alibaba at $45B valuations as of Jun30, 2020.\n\nSome notable investment includes:\n8% ownership stake in Bilibili (BILI)\nA single-digit ownership stake in DiDi (DIDI)\nDelisting Risk\nNow let us talk about the elephant in the room - its various risks, particularly its delisting risk as discussed frequently among US market participants\nI discussed the general Chinese ADR delisting risk in a recent Tweet thread. For these interested in the details:\n\nIn summary:\n\ndelisting poses an immediate trading liquidity risk, thus short-term volatility.\nStocks are fungible. For dually listed stocks such as Alibaba, there is no/limited long-term material impact to shareholders especially if one is prepared and ready to receive its shares in the other exchange. In BABA's case, that would be its shares listed on Hong Kong Stock Exchange.\nThere are also established tender processes to redeem if the company offers, which was exactly what happened with China Mobile and China Unicom in earlier 2021.\n\nOther Concerns\nAnti-monopoly violation: Alibaba was recently levied a $2.8B fine due to anti-monopoly violation. In relative terms, that fine alone has no material impact as it was less than 0.5% of its market cap. There are legit concerns that BABA could be subject to further regulatory fines in a less predictable manner.\nJack Ma: Jack Ma risk has been talked about a lot. The fact is Jack Ma already stepped down from both chairmanship and CEO role of Alibaba and has gradually detached himself (at least in the public) from the business.\nAnt Group IPO halt: I think Ant Group IPO halt was a big disappointment and shows certain unpredictability in the current environment. However, I think that has been more than priced in.\nConcluding Thoughts\nA conservative sum of all parts values BABA enterprise value between 773B ($299/share) and 965B ($373/share). At the current price of $206/share, it offers 45% to 81% upside potential, and I am increasing my position at the current price.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":5202387,"gmtCreate":1626141295311,"gmtModify":1663230893438,"authorId":3573195706826515,"author":{"id":3573195706826515,"idStr":"3573195706826515","authorId":3573195706826515,"name":"Stellin","avatar":"https://static.tigerbbs.com/64d9f3f1aef29a95e764613cdcccff23","vip":1,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":142887444,"type":1,"supId":0,"prevId":0,"content":"Agreed","text":"Agreed","html":"Agreed"},{"id":5202401,"gmtCreate":1626141394625,"gmtModify":1663230891337,"authorId":3575499836282295,"author":{"id":3575499836282295,"idStr":"3575499836282295","authorId":3575499836282295,"name":"JackFruuud","avatar":"https://static.tigerbbs.com/4b7319ef4a1189825c613eb4c4756d41","vip":1,"currentWearingBadge":{"badgeId":"972123088c9646f7b6091ae0662215be-3","templateUuid":"972123088c9646f7b6091ae0662215be","name":"Legendary Trader","description":"Total number of securities or futures transactions reached 300","bigImgUrl":"https://static.tigerbbs.com/656db16598a0b8f21429e10d6c1cb033","smallImgUrl":"https://static.tigerbbs.com/03f10910d4dd9234f9b5702a3342193a","grayImgUrl":"https://static.tigerbbs.com/0c767e35268feb729d50d3fa9a386c5a","redirectLinkEnabled":0,"hasAllocated":1,"isWearing":1,"stampPosition":0,"hasStamp":0,"allocationCount":1,"allocatedDate":"2021.12.21","exceedPercentage":"93.79%","individualDisplayEnabled":0,"individualDisplaySort":0,"categoryType":1100},"crmLevel":3,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":142887444,"type":1,"supId":0,"prevId":0,"content":"?","text":"?","html":"?"},{"id":5202415,"gmtCreate":1626141463108,"gmtModify":1663230890835,"authorId":3582843618871796,"author":{"id":3582843618871796,"idStr":"3582843618871796","authorId":3582843618871796,"name":"Adollar","avatar":"https://static.tigerbbs.com/0b7c3e8d0ea455e203fda09d0d2cffb8","vip":1,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":142887444,"type":1,"supId":5202387,"prevId":0,"content":"Good stock to buy ","text":"Good stock to buy ","html":"Good stock to buy "}],"langContent":"EN"},{"id":142885234,"gmtCreate":1626141028128,"gmtModify":1703754131220,"author":{"id":"4088567084234020","authorId":"4088567084234020","name":"Bryan1999","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":3,"crmLevelSwitch":1,"authorIdStr":"4088567084234020","idStr":"4088567084234020"},"htmlText":"Like","listText":"Like","text":"Like","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/142885234","repostId":1171355403,"repostType":4,"repost":{"id":"1171355403","kind":"news","pubTimestamp":1626140399,"share":"https://ttm.financial/m/news/1171355403?lang=&edition=fundamental","pubTime":"2021-07-13 09:39","market":"us","language":"en","title":"Alibaba: An Undervalued Empire With 45%+ Upside","url":"https://stock-news.laohu8.com/highlight/detail?id=1171355403","media":"seekingalpha","summary":"Alibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.I break it down by business units, show its strength and true value, and discuss its delisting risks.Alibaba Group Holding Limitedstock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon was up 101%, its Latin American peer MercadoLibre was up 172%, even the S&P 500 index was up 39%.Alibaba is the largest eCommerce operation in the world. It has over 1B annual act","content":"Summary\n<ul>\n <li>Alibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.</li>\n <li>Its stock price has been under pressure for over a year by perceived political/delisting risk and its recent Ant Financial IPO cancellation.</li>\n <li>I break it down by business units, show its strength and true value, and discuss its delisting risks.</li>\n</ul>\nPrice action deviates from Fundamentals\nAlibaba Group Holding Limited(NYSE:BABA)stock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon (AMZN) was up 101%, its Latin American peer MercadoLibre (MELI) was up 172%, even the S&amp;P 500 index was up 39%.\n<img src=\"https://static.tigerbbs.com/699af948598c5dab55d7ba41931d1944\" tg-width=\"635\" tg-height=\"467\" referrerpolicy=\"no-referrer\">Data by YCharts\nAlibaba is the largest eCommerce operation in the world. It has over 1B annual active consumers, over 1T GMV (gross merchandise volume) in FY21, both numbers larger than any other e-commerce company in the world, Amazon included.\nIn the meantime, Alibaba's core commerce and cloud computing recorded 42% and 50% YoY growth FY21. These are jaw-dropping growth numbers, especially at Alibaba's massive scale.\nAlso worth noting, while its revenue grows at an impressive rate, its Ebitda profit margin continues to show 17% YoY improvement, further demonstrate its superior unit economics, and effective cost control as it scales up.\n<img src=\"https://static.tigerbbs.com/b69f23fbc36af93ba24ecf933c2b4bbe\" tg-width=\"640\" tg-height=\"474\" referrerpolicy=\"no-referrer\">\nSource: 4Q21 AlibabaInvestor presentation\nInvestment Thesis\nMy conservative model values Alibaba between $773B ($299/share) to $967B ($373/share). It offers an upside potential between 45% and 81% to its closing price of $206/share on 7/9/21.\nThe table below provides a summary view of my Sum-of-all-parts valuation, and I discuss them in detail in later sections.\n<img src=\"https://static.tigerbbs.com/1c3b44cb0364f61901a479a1f6948afd\" tg-width=\"640\" tg-height=\"348\" referrerpolicy=\"no-referrer\">\nSource: Excel sheet prepared by Author\nValuation By Segments\nAlibaba has four business segments and two investment segments, they are:\n<ul>\n <li>Core Commerce: Taobao, TMall, Alibaba, AliExpress, Lazada, ele.me, etc.</li>\n <li>Cloud Computing: Alibaba Cloud</li>\n <li>Digital Media: Youku, Ali Sports, AliGame, etc.</li>\n <li>Innovative Initiatives: gmap, AliOS, etc</li>\n <li>Ant Group</li>\n <li>Other strategic Investments: DiDi, bilibili, etc</li>\n</ul>\nLet us dive into them.\n<img src=\"https://static.tigerbbs.com/033f24b75c357021d3d1177cc2e3bbf4\" tg-width=\"640\" tg-height=\"140\" referrerpolicy=\"no-referrer\">\nSource:Alibaba Investor Day2020\n1. Core Commerce\nMarketplace-based core commerceincludes Taobao, TMall, 1688.com, alibaba.com, AliExpress, TMall Market. These are mature and profit-generating marketplaces with steady growth.\nThese are the crown jewels of Alibaba's empire. It composes of No.1 Online retail, No.1 online wholesale, and No 1 B2C Export marketplace in China.\nFY21 adj Ebitda for marketplace-based core commerce is $35B.\nI use a moderate 15x - 20x Ev/Ebitda ratio (e.g. Amazon is 30x+ Ev/Ebitda), values its marketplace-based core commerce between 570B and 700B.\nLazada:international retail marketplace in SEA\nAlibaba, through three rounds of a total $4B investment, is a majority owner of Lazada.\nWhile Shopee (SE) takes the commanding lead in the SEA e-commerce marketplace, Lazada is still a No.2 with 100Mil+ monthly active users, ahead of Tokopedia.\nAlibaba only provides international e-commerce in aggregate (~5B) in FY21, with no revenue breakdown. Lazada and AliExpress are 2 primary contributors in this segment.\nAs a reference, Tokopedia, an e-commerce competitor and No.3 in SEA, was valued at $18B.\nI take a conservative approach and value Lazada between $5B (acquisition cost) and $10B (50% discount to Tokopedia's recent valuation despite Lazada's slightly larger size).\nLocal Services(ele.me, koubei)\nEle.me has about 80% of DoorDash (DASH) revenue, with 8x active customers (40Mil vs 5Mil) in FY21. In food delivery services in China, Meituan leads with 65% market share, ele.me No.2 with 27.4% market share, 3B FY21 revenue.\nIf we use DoorDash valuation at 15x EV/Sales, that would value ele.me at 45B, if we use Grubhub's (GRUB) 8x EV/Sales, it values ele.me at $24B\nAlibaba acquired ele.me in 2018 for $9.5B.\nI take a conservative approach and value ele.me between 9.5B (acquisition cost) and $24B (use Grub Ev/Sales ratio).\nNew Retail(Freshippo)\nKnown as Hema in China, it is similar to Amazon Go, a new retail format store leveraging technology to provide zero human touch shopping experience.\nI consider it as a part of its core commerce strategy to maintain its competitive edge and assign no additional value.\nLogistic(Cainiao)\nCainiao is Alibaba's logistic arm.\nBABA paid 3.3B to increase its Cainiao stake from 51% to 63% in its latestroundin 2019. That values its stake ~18B at cost.\nCross border e-commerece(Kaola)\nKaola is considered to be a TMall extension to improve its core competency and I assign no additional value.\n<img src=\"https://static.tigerbbs.com/80468b018507ac3b52aeec68b0598486\" tg-width=\"640\" tg-height=\"482\" referrerpolicy=\"no-referrer\">Source: FY21 Investorpresentation\n2. Alibaba Cloud\nAlibaba Cloud's YoY revenue growth was 62% and 50% in the last two years. Its FY21 revenue was $9.2B and turned cash flow positive the first time with 47M adjusted Ebitda.\nIn terms of China's cloud market share, Alibaba cloud leads the pack with 39.8% as of Q1 2021.\nAccording to China Internet Watch, cloud infrastructure spending growth in China outpaced the RoW, supported by the government's strategic priority in cloud computing, and it has been consistently over 50% over the last 7 quarters.\n<img src=\"https://static.tigerbbs.com/cb80ade495a99acd13fa3efc4fc3f518\" tg-width=\"640\" tg-height=\"391\" referrerpolicy=\"no-referrer\">\n<img src=\"https://static.tigerbbs.com/b8eb951fb359485adc84747b78e74c71\" tg-width=\"640\" tg-height=\"383\" referrerpolicy=\"no-referrer\">\nSource:China Cloud market 1Q21- China Internet Watch\nIf we zoom out globally, Alibaba cloud ranks No 4 with a 6% market share, right after Amazon, Microsoft (MSFT), and Google (GOOG).\nIt is about 20% the size of Amazon cloud in this $150B global market.\n<img src=\"https://static.tigerbbs.com/5ef9f1797dbfd7d1ca0ad84c3e009923\" tg-width=\"640\" tg-height=\"364\" referrerpolicy=\"no-referrer\">\nSource:Cloud Market Q3Y20Canalys\nSimilar research from Synergy Research Group in Q1 21 also confirmed the same ranking/market share.\n<img src=\"https://static.tigerbbs.com/cb5b1ff4c0cdbf586867d03a369d395e\" tg-width=\"499\" tg-height=\"497\" referrerpolicy=\"no-referrer\">\nSource: Synergy Research Group on Statista\nUsing a very conservative 10x P/S values Alibaba Cloud at $100B.\nBoth GS (GS) and MS (MS)valuedAlibaba Cloud at $120B+ a year ago after Alibaba disclosed its 1Q21 fiscal data in Aug 2020.\nGiven the above, I value Alibaba Cloud between 100B and 120B.\n3. Digital Media and Entertainment\nIt includes YouKu, AliSports, AliGame, UC\nYouKu has 500M Monthly Active Users, 800M video views, one of China's top video/streaming service platforms, along with iQIYI, and Tencent Video.\nAlibaba spent $4B in 2016 to acquire Youku.\nIts main competitor iQIYI (IQ) is listed in Nasdaq, currently valued at 10.4B.\nDigital media/entertainment reported $4.5B revenue in FY21, with an adjusted Ebitda is 0.9B.\nI value Youku (and the rest of segment assets) between $4.5B (acquisition cost) and 9B (10x Ev/Ebitda).\n4. Innovation Initiatives\nAs I have few visibilities in these innovation initiatives, I take a conservative approach and assign no value.\n5. Ant Group\nAnt Group valuation could certainly be a controversial take.\nIts valuation hit $320B at its peak prior to IPO. Since its IPO halt in Nov 2020, its valuation has declined significantly, the latestanalysisfrom Sanford Bernstein valued it at $120B.\nAt a $120B valuation, BABA's 1/3 stake is worth $40B.\nput aside valuation, a head-to-head comparison between 2 dominating FinTech in China (Ant and Tencent) shows its massive scale in absolute numbers.\n<img src=\"https://static.tigerbbs.com/f6ed30632a6897a6c57eca61205d3bc7\" tg-width=\"640\" tg-height=\"353\" referrerpolicy=\"no-referrer\">\nsource:TechCrunchchina's top fintech platform Ant vs Tencent\nPut the numbers into perspective, Ant Group's active user is about 2x PayPal (PYPL) size, and roughly the same revenue. PayPal is currently valued at $350B.\n<img src=\"https://static.tigerbbs.com/3318320d7217809542f5c2516c83cb01\" tg-width=\"640\" tg-height=\"764\" referrerpolicy=\"no-referrer\">\nsource:SPGlobal\nAn insightful comparison from S&amp;P Global market points out while Ant and PayPal revenue are comparable, Ant has about 20x TPV (Transaction Payment Volume) more than PayPal and Ant's take rate is only 5% of PayPal's.\nNote: PayPal take rate 2.5%, and Ant is at a mere 0.11%.\nAs shown in Chart 1 and 2, PayPal's take rate has been steadily declining since 2018, while Ant increases.\nIn summary, I think Bernstein's $120B valuations is a very conservative number. I consider Ant is on par with PayPal, and even with a 50% discount shall value Ant Group at $175B.\nThus I would value Alibaba's 1/3 stake in Ant Group between $40B and $58B.\n6. Strategic Investments\nReported by Alibaba at $45B valuations as of Jun30, 2020.\n<img src=\"https://static.tigerbbs.com/ce0e36c5240ce4a4c741785ea8a9de96\" tg-width=\"207\" tg-height=\"350\" referrerpolicy=\"no-referrer\">\nSome notable investment includes:\n8% ownership stake in Bilibili (BILI)\nA single-digit ownership stake in DiDi (DIDI)\nDelisting Risk\nNow let us talk about the elephant in the room - its various risks, particularly its delisting risk as discussed frequently among US market participants\nI discussed the general Chinese ADR delisting risk in a recent Tweet thread. For these interested in the details:\n<img src=\"https://static.tigerbbs.com/fbfb7535a1b9fc863aa6d492ae17dc3f\" tg-width=\"583\" tg-height=\"432\">\nIn summary:\n<ol>\n <li>delisting poses an immediate trading liquidity risk, thus short-term volatility.</li>\n <li>Stocks are fungible. For dually listed stocks such as Alibaba, there is no/limited long-term material impact to shareholders especially if one is prepared and ready to receive its shares in the other exchange. In BABA's case, that would be its shares listed on Hong Kong Stock Exchange.</li>\n <li>There are also established tender processes to redeem if the company offers, which was exactly what happened with China Mobile and China Unicom in earlier 2021.</li>\n</ol>\nOther Concerns\nAnti-monopoly violation: Alibaba was recently levied a $2.8B fine due to anti-monopoly violation. In relative terms, that fine alone has no material impact as it was less than 0.5% of its market cap. There are legit concerns that BABA could be subject to further regulatory fines in a less predictable manner.\nJack Ma: Jack Ma risk has been talked about a lot. The fact is Jack Ma already stepped down from both chairmanship and CEO role of Alibaba and has gradually detached himself (at least in the public) from the business.\nAnt Group IPO halt: I think Ant Group IPO halt was a big disappointment and shows certain unpredictability in the current environment. However, I think that has been more than priced in.\nConcluding Thoughts\nA conservative sum of all parts values BABA enterprise value between 773B ($299/share) and 965B ($373/share). At the current price of $206/share, it offers 45% to 81% upside potential, and I am increasing my position at the current price.","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Alibaba: An Undervalued Empire With 45%+ Upside</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAlibaba: An Undervalued Empire With 45%+ Upside\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-07-13 09:39 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nAlibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.\nIts stock price has been under pressure for over a year by perceived political/delisting risk ...\n\n<a href=\"https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BABA":"阿里巴巴","09988":"阿里巴巴-W"},"source_url":"https://seekingalpha.com/article/4438813-alibaba-stock-baba-undervalued-empire-with-45-percent-plus-upside","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1171355403","content_text":"Summary\n\nAlibaba has top-ranking global business units from e-commerce marketplaces to cloud platforms.\nIts stock price has been under pressure for over a year by perceived political/delisting risk and its recent Ant Financial IPO cancellation.\nI break it down by business units, show its strength and true value, and discuss its delisting risks.\n\nPrice action deviates from Fundamentals\nAlibaba Group Holding Limited(NYSE:BABA)stock total return has been ~-3% since Jan 2020, during which time not only its US Peer Amazon (AMZN) was up 101%, its Latin American peer MercadoLibre (MELI) was up 172%, even the S&P 500 index was up 39%.\nData by YCharts\nAlibaba is the largest eCommerce operation in the world. It has over 1B annual active consumers, over 1T GMV (gross merchandise volume) in FY21, both numbers larger than any other e-commerce company in the world, Amazon included.\nIn the meantime, Alibaba's core commerce and cloud computing recorded 42% and 50% YoY growth FY21. These are jaw-dropping growth numbers, especially at Alibaba's massive scale.\nAlso worth noting, while its revenue grows at an impressive rate, its Ebitda profit margin continues to show 17% YoY improvement, further demonstrate its superior unit economics, and effective cost control as it scales up.\n\nSource: 4Q21 AlibabaInvestor presentation\nInvestment Thesis\nMy conservative model values Alibaba between $773B ($299/share) to $967B ($373/share). It offers an upside potential between 45% and 81% to its closing price of $206/share on 7/9/21.\nThe table below provides a summary view of my Sum-of-all-parts valuation, and I discuss them in detail in later sections.\n\nSource: Excel sheet prepared by Author\nValuation By Segments\nAlibaba has four business segments and two investment segments, they are:\n\nCore Commerce: Taobao, TMall, Alibaba, AliExpress, Lazada, ele.me, etc.\nCloud Computing: Alibaba Cloud\nDigital Media: Youku, Ali Sports, AliGame, etc.\nInnovative Initiatives: gmap, AliOS, etc\nAnt Group\nOther strategic Investments: DiDi, bilibili, etc\n\nLet us dive into them.\n\nSource:Alibaba Investor Day2020\n1. Core Commerce\nMarketplace-based core commerceincludes Taobao, TMall, 1688.com, alibaba.com, AliExpress, TMall Market. These are mature and profit-generating marketplaces with steady growth.\nThese are the crown jewels of Alibaba's empire. It composes of No.1 Online retail, No.1 online wholesale, and No 1 B2C Export marketplace in China.\nFY21 adj Ebitda for marketplace-based core commerce is $35B.\nI use a moderate 15x - 20x Ev/Ebitda ratio (e.g. Amazon is 30x+ Ev/Ebitda), values its marketplace-based core commerce between 570B and 700B.\nLazada:international retail marketplace in SEA\nAlibaba, through three rounds of a total $4B investment, is a majority owner of Lazada.\nWhile Shopee (SE) takes the commanding lead in the SEA e-commerce marketplace, Lazada is still a No.2 with 100Mil+ monthly active users, ahead of Tokopedia.\nAlibaba only provides international e-commerce in aggregate (~5B) in FY21, with no revenue breakdown. Lazada and AliExpress are 2 primary contributors in this segment.\nAs a reference, Tokopedia, an e-commerce competitor and No.3 in SEA, was valued at $18B.\nI take a conservative approach and value Lazada between $5B (acquisition cost) and $10B (50% discount to Tokopedia's recent valuation despite Lazada's slightly larger size).\nLocal Services(ele.me, koubei)\nEle.me has about 80% of DoorDash (DASH) revenue, with 8x active customers (40Mil vs 5Mil) in FY21. In food delivery services in China, Meituan leads with 65% market share, ele.me No.2 with 27.4% market share, 3B FY21 revenue.\nIf we use DoorDash valuation at 15x EV/Sales, that would value ele.me at 45B, if we use Grubhub's (GRUB) 8x EV/Sales, it values ele.me at $24B\nAlibaba acquired ele.me in 2018 for $9.5B.\nI take a conservative approach and value ele.me between 9.5B (acquisition cost) and $24B (use Grub Ev/Sales ratio).\nNew Retail(Freshippo)\nKnown as Hema in China, it is similar to Amazon Go, a new retail format store leveraging technology to provide zero human touch shopping experience.\nI consider it as a part of its core commerce strategy to maintain its competitive edge and assign no additional value.\nLogistic(Cainiao)\nCainiao is Alibaba's logistic arm.\nBABA paid 3.3B to increase its Cainiao stake from 51% to 63% in its latestroundin 2019. That values its stake ~18B at cost.\nCross border e-commerece(Kaola)\nKaola is considered to be a TMall extension to improve its core competency and I assign no additional value.\nSource: FY21 Investorpresentation\n2. Alibaba Cloud\nAlibaba Cloud's YoY revenue growth was 62% and 50% in the last two years. Its FY21 revenue was $9.2B and turned cash flow positive the first time with 47M adjusted Ebitda.\nIn terms of China's cloud market share, Alibaba cloud leads the pack with 39.8% as of Q1 2021.\nAccording to China Internet Watch, cloud infrastructure spending growth in China outpaced the RoW, supported by the government's strategic priority in cloud computing, and it has been consistently over 50% over the last 7 quarters.\n\n\nSource:China Cloud market 1Q21- China Internet Watch\nIf we zoom out globally, Alibaba cloud ranks No 4 with a 6% market share, right after Amazon, Microsoft (MSFT), and Google (GOOG).\nIt is about 20% the size of Amazon cloud in this $150B global market.\n\nSource:Cloud Market Q3Y20Canalys\nSimilar research from Synergy Research Group in Q1 21 also confirmed the same ranking/market share.\n\nSource: Synergy Research Group on Statista\nUsing a very conservative 10x P/S values Alibaba Cloud at $100B.\nBoth GS (GS) and MS (MS)valuedAlibaba Cloud at $120B+ a year ago after Alibaba disclosed its 1Q21 fiscal data in Aug 2020.\nGiven the above, I value Alibaba Cloud between 100B and 120B.\n3. Digital Media and Entertainment\nIt includes YouKu, AliSports, AliGame, UC\nYouKu has 500M Monthly Active Users, 800M video views, one of China's top video/streaming service platforms, along with iQIYI, and Tencent Video.\nAlibaba spent $4B in 2016 to acquire Youku.\nIts main competitor iQIYI (IQ) is listed in Nasdaq, currently valued at 10.4B.\nDigital media/entertainment reported $4.5B revenue in FY21, with an adjusted Ebitda is 0.9B.\nI value Youku (and the rest of segment assets) between $4.5B (acquisition cost) and 9B (10x Ev/Ebitda).\n4. Innovation Initiatives\nAs I have few visibilities in these innovation initiatives, I take a conservative approach and assign no value.\n5. Ant Group\nAnt Group valuation could certainly be a controversial take.\nIts valuation hit $320B at its peak prior to IPO. Since its IPO halt in Nov 2020, its valuation has declined significantly, the latestanalysisfrom Sanford Bernstein valued it at $120B.\nAt a $120B valuation, BABA's 1/3 stake is worth $40B.\nput aside valuation, a head-to-head comparison between 2 dominating FinTech in China (Ant and Tencent) shows its massive scale in absolute numbers.\n\nsource:TechCrunchchina's top fintech platform Ant vs Tencent\nPut the numbers into perspective, Ant Group's active user is about 2x PayPal (PYPL) size, and roughly the same revenue. PayPal is currently valued at $350B.\n\nsource:SPGlobal\nAn insightful comparison from S&P Global market points out while Ant and PayPal revenue are comparable, Ant has about 20x TPV (Transaction Payment Volume) more than PayPal and Ant's take rate is only 5% of PayPal's.\nNote: PayPal take rate 2.5%, and Ant is at a mere 0.11%.\nAs shown in Chart 1 and 2, PayPal's take rate has been steadily declining since 2018, while Ant increases.\nIn summary, I think Bernstein's $120B valuations is a very conservative number. I consider Ant is on par with PayPal, and even with a 50% discount shall value Ant Group at $175B.\nThus I would value Alibaba's 1/3 stake in Ant Group between $40B and $58B.\n6. Strategic Investments\nReported by Alibaba at $45B valuations as of Jun30, 2020.\n\nSome notable investment includes:\n8% ownership stake in Bilibili (BILI)\nA single-digit ownership stake in DiDi (DIDI)\nDelisting Risk\nNow let us talk about the elephant in the room - its various risks, particularly its delisting risk as discussed frequently among US market participants\nI discussed the general Chinese ADR delisting risk in a recent Tweet thread. For these interested in the details:\n\nIn summary:\n\ndelisting poses an immediate trading liquidity risk, thus short-term volatility.\nStocks are fungible. For dually listed stocks such as Alibaba, there is no/limited long-term material impact to shareholders especially if one is prepared and ready to receive its shares in the other exchange. In BABA's case, that would be its shares listed on Hong Kong Stock Exchange.\nThere are also established tender processes to redeem if the company offers, which was exactly what happened with China Mobile and China Unicom in earlier 2021.\n\nOther Concerns\nAnti-monopoly violation: Alibaba was recently levied a $2.8B fine due to anti-monopoly violation. In relative terms, that fine alone has no material impact as it was less than 0.5% of its market cap. There are legit concerns that BABA could be subject to further regulatory fines in a less predictable manner.\nJack Ma: Jack Ma risk has been talked about a lot. The fact is Jack Ma already stepped down from both chairmanship and CEO role of Alibaba and has gradually detached himself (at least in the public) from the business.\nAnt Group IPO halt: I think Ant Group IPO halt was a big disappointment and shows certain unpredictability in the current environment. However, I think that has been more than priced in.\nConcluding Thoughts\nA conservative sum of all parts values BABA enterprise value between 773B ($299/share) and 965B ($373/share). At the current price of $206/share, it offers 45% to 81% upside potential, and I am increasing my position at the current price.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":5202369,"gmtCreate":1626141182635,"gmtModify":1663230891433,"authorId":3575415767355515,"author":{"id":3575415767355515,"idStr":"3575415767355515","authorId":3575415767355515,"name":"NicholasTZL","avatar":"https://static.tigerbbs.com/6ebb0cc5935e43337f33be7e274b04b2","vip":1,"crmLevel":3,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":142885234,"type":1,"supId":0,"prevId":0,"content":"Naisr","text":"Naisr","html":"Naisr"}],"langContent":"EN"}],"hasMoreComments":true,"newsSizeData":{"likeSize":82,"commentSize":13,"repostSize":0,"favoriteSize":3,"likeStatus":false,"favoriteStatus":false}}