Alibaba Should Keep Rising From Here

seekingalpha09-17

Alibaba's stock remains a soft 'buy' due to attractive pricing and a recent regulatory victory, despite mixed performance across its diverse operations.The company's Taobao and Tmall Group saw a ...

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Danielng
·09-17
Soft your lj
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recent regulatory victory, despite mixed performance across its diverse operations.The company's Taobao and Tmall Group saw a ...</p>\n\n<a href=\"https://seekingalpha.com/article/4721303-alibaba-should-keep-rising-from-here\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU0786609619.USD","symbol_name":"高盛全球千禧一代股票组合Acc","start_time":0,"source_url":"https://seekingalpha.com/article/4721303-alibaba-should-keep-rising-from-here","article_id":"2467811721","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2467811721","pubTimestamp":1726539367,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Alibaba's stock remains a soft 'buy' due to attractive pricing and a recent regulatory victory, despite mixed performance across its diverse operations.The company's Taobao and Tmall Group saw a 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similar firms, justifying a continued soft 'buy' rating.Robert WayOne company that I have been following for some time is Alibaba Group Holding Limited (NYSE:BABA). With a market capitalization of $195.8 billion as of this writing, the business is one of the largest on the planet. Those who do follow the company closely know that it's the largest e-commerce company that is based out of China. But at its core, it has a lot of different operations. Some of these, recently, have been performing very nicely. Others, on the other hand, have seen some weak spots. All in all, the stock does look attractively priced, and management just received an important regulatory victory that should help to push shares higher. Given these factors, I have no problem keeping the company rated a soft 'buy' for now.This rating is something I have been consistent about for quite a while. The last time I rated the company a 'buy' was back in June of this year. Since then, things have gone quite well. The S&P 500 is up 2.2% over that window of time. By comparison, Alibaba is up a whopping 12.1%. This is on top of another 7.3% the stock was up from the prior. I wrote about it at a time when the S&P 500 was up only 5.3%. Although not all of my calls have been this good regarding this particular candidate, I do suspect that the long-term outlook for shareholders should be mildly positive.A necessary disclosureIn this article, I reference all figures in US dollars. Management actually provides US dollar figures for the most recent quarter. But to make sure that we aren't comparing apples to oranges here, I am translating prior year figures into US dollars at the same exchange rate that management used for the most recent quarter.A mixed bagBefore I get into the fundamentals regarding Alibaba, I would like to touch on a development that occurred a couple of weeks ago that should prove bullish for the company. For three years, the Chinese government had been investigating Alibaba over monopolistic practices that were alleged. This investigation followed a $2.8 billion fine that the company was hit with back in 2021 for the same reasons. But since then, the Chinese regulator, the State Administration for Market Regulation, had been keeping a close eye on the company to ensure that it became compliant with that nation's antitrust regulations.According to that regulator, the rectification work that the e-commerce business was forced to undergo saw 'good results'. This is not the end of the picture. Moving forward, Alibaba will be forced to standardize certain operations and to further improve both the quality and efficiency of its compliance. I do not know how long this part of the process will take. But the fact that regulators in China are pleased with progress is a big positive for shareholders. Unlike the US, the Chinese government has significantly more flexibility in how it deals with violations of its laws. So this should be viewed in very much a positive light.Author - SEC EDGAR DataNow, moving on to fundamentals, when I last wrote about the company earlier this year, we had data covering through the final quarter of the 2024 fiscal year. Results now extend through the first quarter of 2025. Before we get into the company as a whole, I do think it would be useful to look at each of its major operating units as they stand individually. The most significant set of operations is known as the Taobao and Tmall Group. This includes the company's consumer and business-to-business e-commerce operations.Even though you would expect this part of the company to continue growing, we actually have seen some contraction as of late. Revenue in the first quarter of 2025 came in at $15.60 billion. This is actually down 1.4% compared to the $15.82 billion the company reported just one year earlier. Even though this is disappointing to see, management claims that the drop was largely attributable to a decline in sales of consumer electronics and appliances that was orchestrated by the firm. The company made this decision to reduce certain direct sales, likely because of low margins and expected weak demand. This is not to say that all parts of that business performed poorly. Its wholesale commerce business in China jumped 16% year over year thanks to certain value-added services that the company provided to paying members. And customer management revenue grew by 1%.The business saw a similar decline, about 1% in total, when it came to segment profits. These fell from $6.79 billion to $6.72 billion. Interestingly, management rhetoric regarding this had nothing to do with the decrease in revenue. In fact, they said that segment profits fell because of higher investments in things like the user experience, as well as greater investments in technology infrastructure.Author - SEC EDGAR DataThe next largest part of the company, at least during the first quarter, was the Alibaba International Digital Commerce Group. Through this unit, the company offers up international commerce retail and wholesale optionality. Most notably, this includes its famous AliExpress operation. From a revenue perspective, this was a shining star for shareholders. Revenue skyrocketed 32.4% from $3.04 billion to $4.03 billion. This was mostly attributable to a 38.2% surge in the company's international commerce retail business that management stated was caused by improvements in monetization and a growth in its AliExpress' Choice service. For those not familiar, Choice is a premium service that the company offers curation of the best value products, as well as things like free shipping, free returns, and more. This was initially launched in early 2023. Since then, it has been a huge growth driver for the company.I don't know about you, but I would expect such an increase in revenue to bring with it a rise in profits. Unfortunately, segment profits worsened. The company went from losing $58 million to losing $510 million on a year-over-year basis. Even though these operations saw significant improvements in monetization and improved operating efficiencies, management's decision to increase investments in AliExpress negatively impacted the bottom line. It also doesn't help that Trendyol, which is a fashion-oriented e-commerce platform owned by the company that happens to engage in cross-border shipments, also saw increased investments by the parent company.Author - SEC EDGAR DataTo me, the most exciting part of Alibaba is its Cloud Intelligence Group. As its name suggests, this is the company's cloud computing operation. In fact, in the Asia Pacific region, it is the largest such cloud computing company there is. Year over year, revenue did manage to grow as the industry itself expands. That growth, however, was only about 5.9%, with revenue climbing from $3.45 billion to $3.65 billion. According to management, revenue involving public cloud products grew at a double-digit rate, largely thanks to AI-related products. But as was the case elsewhere for the company, some of the weakness was intentional. Specifically, there was a decrease in non-public cloud revenue because of the company's decision to move away from project-based activities that, historically speaking, offer very little in the way of margin.This decision seems to be bearing fruit. In the first quarter of the 2024 fiscal year, this part of the company generated profits of $126 million. But for the first quarter of 2025, profits were substantially higher at $322 million. This does seem to be part of a broader trend in the cloud computing market. In fact, I recently wrote an article about how Google parent Alphabet (GOOG) (GOOGL) saw improvements in its bottom line involving these operations.Author - SEC EDGAR DataThe last operating segment that I will provide some meaningful detail on is called Cainiao Smart Logistics Network Limited. This is a vital part of the company that focuses specifically on customer fulfillment. The company's long-term goal is to guarantee that customers can have their goods delivered to them within 24 hours if they live within China. If they live outside of China, the objective is to make sure their goods can reach the desired destination in 72 hours or less. This part of the company actually saw rather remarkable growth, with revenue shooting up 15.8% year over year from $3.19 billion to $3.69 billion. This was mostly because of a rise in sales from cross-border fulfillment solutions. Honestly, I consider this very exciting because it means that the firm's services are good enough to be in demand from customers in other nations.Unfortunately, just like what we saw with some other parts of the company, profitability for this unit did decline. Segment profits plunged from $121 million to only $85 million. But as was the case with other parts of the company, this was thanks to increased investments being made by management. Specifically, these investments have been focused on cross-border fulfillment solutions.Author - SEC EDGAR DataAs the chart above illustrates, there are other parts of the company as well. These parts of the business saw a growth in sales year over year. The most impressive involved the Local Services Group, which focuses on food and beverage delivery, as well as the delivery of other products, directly to consumers' homes. Sales there jumped 12.3% year over year while the bottom line improved from a loss of $272 million to a loss of $53 million.Author - SEC EDGAR DataFor the company as a whole, investors enjoyed growth year over year. Revenue managed to climb 3.9% from $32.22 billion to $33.47 billion. As you can probably figure, this increase was mostly because of the Alibaba International Digital Commerce Group, the Cloud Intelligence Group, and the Cainiao Smart Logistics Network segment. As great as it was to see a rise in sales, profits, and cash flows for the business declined. Net income fell from $4.73 billion to $3.34 billion. Operating cash flow dropped from $6.23 billion to $4.63 billion. And finally, EBITDA pulled back slightly from $7.16 billion to $7.04 billion.Author - SEC EDGAR DataUnfortunately, we don't have any real guidance when it comes to the 2025 fiscal year in its entirety. But if we annualize the results seen so far for the year, we would get net income of $7.81 billion, operating cash flow of $18.77 billion, and EBITDA of $26.09 billion. Using these estimates, as well as historical results for 2024, we can see in the chart above how shares of the company are currently valued. Relative to earnings, at least on a forward basis, the stock does look a bit pricey. But when it comes to the other two profitability metrics, it looks solid. In the table below, I then compared Alibaba to two similar firms. And even if we use the more conservative 2025 estimates, estimates mind you that are probably unreliable because we only have one quarter worth of data, we find that Alibaba is cheaper than either of these businesses when it comes to both its price to operating cash flow and its EV to EBITDA multiples. And on a price to earnings basis, it was in between the two.CompanyPrice/EarningsPrice/Operating Cash FlowEV/EBITDAAlibaba25.110.47.4Alphabet21.917.415.3Amazon (AMZN)44.217.518.8Click to enlargeTakeawayBased on the data provided, I would say that Alibaba is most certainly facing some mixed times. A lot of the negatives that we are seeing do happen to be intentionally inflicted by management in order for the company to further improve operations for the long haul. This is the best kind of weakness that an investor can hope for. But even with these mixed figures, shares look attractively priced, both on an absolute basis and relative to similar firms. I do know that, as a Chinese company, Alibaba deserves to trade at a discount compared to American-based competitors. As I detailed in another prior article, this is because of rampant corruption throughout China and more intensive government control. But even after accounting for that, I think that shares are cheap enough to justify a soft 'buy' rating at this time.","kind":"highlight","is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[{"id":350294284210424,"gmtCreate":1726549054678,"gmtModify":1726549932142,"author":{"id":"3567242381966976","authorId":"3567242381966976","name":"Danielng","avatar":"https://community-static.tradeup.com/news/5cd5b4aefd2b0994474d489d4d1c2904","vip":1,"hat":"https://static.tigerbbs.com/4c5ceab71416b120bab4604c0754b52a","crmLevel":7,"crmLevelSwitch":1,"idStr":"3567242381966976","authorIdStr":"3567242381966976"},"htmlText":"Soft your lj","listText":"Soft your lj","text":"Soft your lj","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/350294284210424","repostId":2467811721,"repostType":4,"repost":{"id":"2467811721","kind":"highlight","pubTimestamp":1726539367,"share":"https://ttm.financial/m/news/2467811721?lang=&edition=fundamental","pubTime":"2024-09-17 10:16","market":"sg","language":"en","title":"Alibaba Should Keep Rising From Here","url":"https://stock-news.laohu8.com/highlight/detail?id=2467811721","media":"seekingalpha","summary":"Alibaba's stock remains a soft 'buy' due to attractive pricing and a recent regulatory victory, despite mixed performance across its diverse operations.The company's Taobao and Tmall Group saw a sligh","content":"<html><head></head><body><ul style=\"\"><li><p>Alibaba&#39;s stock remains a soft &#39;buy&#39; due to attractive pricing and a recent regulatory victory, despite mixed performance across its diverse operations.</p></li><li><p>The company&#39;s Taobao and Tmall Group saw a slight revenue decline, but Alibaba International Digital Commerce Group and Cloud Intelligence Group showed significant growth.</p></li><li><p>Investments in technology and user experience have impacted short-term profits, but these are strategic moves for long-term improvement.</p></li><li><p>Despite challenges, Alibaba&#39;s valuation is compelling, especially when compared to similar firms, justifying a continued soft &#39;buy&#39; rating.</p></li></ul><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/4f805543ab3786cb8cb1d7d9034e0368\" tg-width=\"750\" tg-height=\"500\"/></p><p>Robert Way</p><p></p><p>One company that I have been following for some time is <strong>Alibaba Group Holding Limited</strong> (NYSE:BABA). With a market capitalization of $195.8 billion as of this writing, the business is one of the largest on the planet. Those who do follow the company closely know that it&#39;s the largest e-commerce company that is based out of China. But at its core, it has a lot of different operations. Some of these, recently, have been performing very nicely. Others, on the other hand, have seen some weak spots. All in all, the stock does look attractively priced, and management just received an important regulatory victory that should help to push shares higher. Given these factors, I have no problem keeping the company rated a soft &#39;buy&#39; for now.</p><p>This rating is something I have been consistent about for quite a while. The last time I rated the company a &#39;buy&#39; was back in June of this year. Since then, things have gone quite well. The S&amp;P 500 is up 2.2% over that window of time. By comparison, Alibaba is up a whopping 12.1%. This is on top of another 7.3% the stock was up from the prior. I wrote about it at a time when the S&amp;P 500 was up only 5.3%. Although not all of my calls have been this good regarding this particular candidate, I do suspect that the long-term outlook for shareholders should be mildly positive.</p><h2 id=\"id_3974892804\">A necessary disclosure</h2><p>In this article, I reference all figures in US dollars. Management actually provides US dollar figures for the most recent quarter. But to make sure that we aren&#39;t comparing apples to oranges here, I am translating prior year figures into US dollars at the same exchange rate that management used for the most recent quarter.</p><h2 id=\"id_1279001530\">A mixed bag</h2><p>Before I get into the fundamentals regarding Alibaba, I would like to touch on a development that occurred a couple of weeks ago that should prove bullish for the company. For three years, the Chinese government had been investigating Alibaba over monopolistic practices that were alleged. This investigation followed a $2.8 billion fine that the company was hit with back in 2021 for the same reasons. But since then, the Chinese regulator, the State Administration for Market Regulation, had been keeping a close eye on the company to ensure that it became compliant with that nation&#39;s antitrust regulations.</p><p>According to that regulator, the rectification work that the e-commerce business was forced to undergo saw &#39;good results&#39;. This is not the end of the picture. Moving forward, Alibaba will be forced to standardize certain operations and to further improve both the quality and efficiency of its compliance. I do not know how long this part of the process will take. But the fact that regulators in China are pleased with progress is a big positive for shareholders. Unlike the US, the Chinese government has significantly more flexibility in how it deals with violations of its laws. So this should be viewed in very much a positive light.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/62763858daf3537b5ecf047b2c77bd74\" tg-width=\"640\" tg-height=\"281\"/></p><p>Author - SEC EDGAR Data</p><p></p><p>Now, moving on to fundamentals, when I last wrote about the company earlier this year, we had data covering through the final quarter of the 2024 fiscal year. Results now extend through the first quarter of 2025. Before we get into the company as a whole, I do think it would be useful to look at each of its major operating units as they stand individually. The most significant set of operations is known as the Taobao and Tmall Group. This includes the company&#39;s consumer and business-to-business e-commerce operations.</p><p>Even though you would expect this part of the company to continue growing, we actually have seen some contraction as of late. Revenue in the first quarter of 2025 came in at $15.60 billion. This is actually down 1.4% compared to the $15.82 billion the company reported just one year earlier. Even though this is disappointing to see, management claims that the drop was largely attributable to a decline in sales of consumer electronics and appliances that was orchestrated by the firm. The company made this decision to reduce certain direct sales, likely because of low margins and expected weak demand. This is not to say that all parts of that business performed poorly. Its wholesale commerce business in China jumped 16% year over year thanks to certain value-added services that the company provided to paying members. And customer management revenue grew by 1%.</p><p>The business saw a similar decline, about 1% in total, when it came to segment profits. These fell from $6.79 billion to $6.72 billion. Interestingly, management rhetoric regarding this had nothing to do with the decrease in revenue. In fact, they said that segment profits fell because of higher investments in things like the user experience, as well as greater investments in technology infrastructure.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/eaf3e40bd0f0f594d90427a6ee6b5266\" tg-width=\"640\" tg-height=\"285\"/></p><p>Author - SEC EDGAR Data</p><p></p><p>The next largest part of the company, at least during the first quarter, was the Alibaba International Digital Commerce Group. Through this unit, the company offers up international commerce retail and wholesale optionality. Most notably, this includes its famous AliExpress operation. From a revenue perspective, this was a shining star for shareholders. Revenue skyrocketed 32.4% from $3.04 billion to $4.03 billion. This was mostly attributable to a 38.2% surge in the company&#39;s international commerce retail business that management stated was caused by improvements in monetization and a growth in its AliExpress&#39; Choice service. For those not familiar, Choice is a premium service that the company offers curation of the best value products, as well as things like free shipping, free returns, and more. This was initially launched in early 2023. Since then, it has been a huge growth driver for the company.</p><p>I don&#39;t know about you, but I would expect such an increase in revenue to bring with it a rise in profits. Unfortunately, segment profits worsened. The company went from losing $58 million to losing $510 million on a year-over-year basis. Even though these operations saw significant improvements in monetization and improved operating efficiencies, management&#39;s decision to increase investments in AliExpress negatively impacted the bottom line. It also doesn&#39;t help that Trendyol, which is a fashion-oriented e-commerce platform owned by the company that happens to engage in cross-border shipments, also saw increased investments by the parent company.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/c16710011e9cb19b1e69b0f95aab7862\" tg-width=\"640\" tg-height=\"278\"/></p><p>Author - SEC EDGAR Data</p><p></p><p>To me, the most exciting part of Alibaba is its Cloud Intelligence Group. As its name suggests, this is the company&#39;s cloud computing operation. In fact, in the Asia Pacific region, it is the largest such cloud computing company there is. Year over year, revenue did manage to grow as the industry itself expands. That growth, however, was only about 5.9%, with revenue climbing from $3.45 billion to $3.65 billion. According to management, revenue involving public cloud products grew at a double-digit rate, largely thanks to AI-related products. But as was the case elsewhere for the company, some of the weakness was intentional. Specifically, there was a decrease in non-public cloud revenue because of the company&#39;s decision to move away from project-based activities that, historically speaking, offer very little in the way of margin.</p><p>This decision seems to be bearing fruit. In the first quarter of the 2024 fiscal year, this part of the company generated profits of $126 million. But for the first quarter of 2025, profits were substantially higher at $322 million. This does seem to be part of a broader trend in the cloud computing market. In fact, I recently wrote an article about how Google parent <strong>Alphabet</strong> (GOOG) (GOOGL) saw improvements in its bottom line involving these operations.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/a23218381820f8af0d1df8276f24e297\" tg-width=\"640\" tg-height=\"288\"/></p><p>Author - SEC EDGAR Data</p><p></p><p>The last operating segment that I will provide some meaningful detail on is called Cainiao Smart Logistics Network Limited. This is a vital part of the company that focuses specifically on customer fulfillment. The company&#39;s long-term goal is to guarantee that customers can have their goods delivered to them within 24 hours if they live within China. If they live outside of China, the objective is to make sure their goods can reach the desired destination in 72 hours or less. This part of the company actually saw rather remarkable growth, with revenue shooting up 15.8% year over year from $3.19 billion to $3.69 billion. This was mostly because of a rise in sales from cross-border fulfillment solutions. Honestly, I consider this very exciting because it means that the firm&#39;s services are good enough to be in demand from customers in other nations.</p><p>Unfortunately, just like what we saw with some other parts of the company, profitability for this unit did decline. Segment profits plunged from $121 million to only $85 million. But as was the case with other parts of the company, this was thanks to increased investments being made by management. Specifically, these investments have been focused on cross-border fulfillment solutions.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/4577a07f38793f5fce43c022696e94a2\" tg-width=\"640\" tg-height=\"254\"/></p><p>Author - SEC EDGAR Data</p><p></p><p>As the chart above illustrates, there are other parts of the company as well. These parts of the business saw a growth in sales year over year. The most impressive involved the Local Services Group, which focuses on food and beverage delivery, as well as the delivery of other products, directly to consumers&#39; homes. Sales there jumped 12.3% year over year while the bottom line improved from a loss of $272 million to a loss of $53 million.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/627332d2c1d38fe4a18b003b965d0737\" tg-width=\"640\" tg-height=\"249\"/></p><p>Author - SEC EDGAR Data</p><p></p><p>For the company as a whole, investors enjoyed growth year over year. Revenue managed to climb 3.9% from $32.22 billion to $33.47 billion. As you can probably figure, this increase was mostly because of the Alibaba International Digital Commerce Group, the Cloud Intelligence Group, and the Cainiao Smart Logistics Network segment. As great as it was to see a rise in sales, profits, and cash flows for the business declined. Net income fell from $4.73 billion to $3.34 billion. Operating cash flow dropped from $6.23 billion to $4.63 billion. And finally, EBITDA pulled back slightly from $7.16 billion to $7.04 billion.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/a007ef6fe0c91e28515b54d98f9896b8\" tg-width=\"640\" tg-height=\"300\"/></p><p>Author - SEC EDGAR Data</p><p></p><p>Unfortunately, we don&#39;t have any real guidance when it comes to the 2025 fiscal year in its entirety. But if we annualize the results seen so far for the year, we would get net income of $7.81 billion, operating cash flow of $18.77 billion, and EBITDA of $26.09 billion. Using these estimates, as well as historical results for 2024, we can see in the chart above how shares of the company are currently valued. Relative to earnings, at least on a forward basis, the stock does look a bit pricey. But when it comes to the other two profitability metrics, it looks solid. In the table below, I then compared Alibaba to two similar firms. And even if we use the more conservative 2025 estimates, estimates mind you that are probably unreliable because we only have one quarter worth of data, we find that Alibaba is cheaper than either of these businesses when it comes to both its price to operating cash flow and its EV to EBITDA multiples. And on a price to earnings basis, it was in between the two.</p><table style=\"border-collapse:collapse;\"><tbody><tr><td style=\"text-align:left;\"><p><strong>Company</strong></p></td><td style=\"text-align:left;\"><p><strong>Price/Earnings</strong></p></td><td style=\"text-align:left;\"><p><strong>Price/Operating Cash Flow</strong></p></td><td style=\"text-align:left;\"><p><strong>EV/EBITDA</strong></p></td></tr><tr><td style=\"text-align:left;\"><p><strong>Alibaba</strong></p></td><td style=\"text-align:left;\"><p><strong>25.1</strong></p></td><td style=\"text-align:left;\"><p><strong>10.4</strong></p></td><td style=\"text-align:left;\"><p><strong>7.4</strong></p></td></tr><tr><td style=\"text-align:left;\"><p><strong>Alphabet</strong></p></td><td style=\"text-align:left;\"><p><strong>21.9</strong></p></td><td style=\"text-align:left;\"><p><strong>17.4</strong></p></td><td style=\"text-align:left;\"><p><strong>15.3</strong></p></td></tr><tr><td style=\"text-align:left;\"><p><strong>Amazon (AMZN)</strong></p></td><td style=\"text-align:left;\"><p><strong>44.2</strong></p></td><td style=\"text-align:left;\"><p><strong>17.5</strong></p></td><td style=\"text-align:left;\"><p><strong>18.8</strong></p></td></tr></tbody></table><p>Click to enlarge</p><h2 id=\"id_3977177242\">Takeaway</h2><p>Based on the data provided, I would say that Alibaba is most certainly facing some mixed times. A lot of the negatives that we are seeing do happen to be intentionally inflicted by management in order for the company to further improve operations for the long haul. This is the best kind of weakness that an investor can hope for. But even with these mixed figures, shares look attractively priced, both on an absolute basis and relative to similar firms. I do know that, as a Chinese company, Alibaba deserves to trade at a discount compared to American-based competitors. As I detailed in another prior article, this is because of rampant corruption throughout China and more intensive government control. But even after accounting for that, I think that shares are cheap enough to justify a soft &#39;buy&#39; rating at this time.</p></body></html>","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 Should Keep Rising From Here</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; 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}\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 Should Keep Rising From Here\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-09-17 10:16 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4721303-alibaba-should-keep-rising-from-here><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Alibaba's stock remains a soft 'buy' due to attractive pricing and a recent regulatory victory, despite mixed performance across its diverse operations.The company's Taobao and Tmall Group saw a ...</p>\n\n<a href=\"https://seekingalpha.com/article/4721303-alibaba-should-keep-rising-from-here\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"89988":"阿里巴巴-WR","LU0786609619.USD":"高盛全球千禧一代股票组合Acc","LU0149725797.USD":"汇丰美国股市经济规模基金","BK4502":"阿里概念","IE00B5MMRT66.SGD":"NEUBERGER BERMAN CHINA EQUITY \"A\" (SGDHDG) ACC","IE00B543WZ88.USD":"NEUBERGER BERMAN CHINA EQUITY \"A\" (USD) ACC","BK1521":"挪威政府全球养老基金持仓","BK4573":"虚拟现实","IE00BKVL7J92.USD":"Legg Mason ClearBridge - US Equity Sustainability Leaders A Acc USD","BK4505":"高瓴资本持仓","IE00BMPRXR70.SGD":"Neuberger Berman 5G Connectivity A Acc SGD-H","IE00BSNM7G36.USD":"NEUBERGER BERMAN SYSTEMATIC GLOBAL SUSTAINABLE VALUE \"A\" (USD) ACC","BK4581":"高盛持仓","BK4504":"桥水持仓","IE00B4JS1V06.HKD":"JANUS HENDERSON BALANCED \"A2\" (HKD) ACC","LU0229945570.USD":"TEMPLETON BRIC \"A\" (USD) ACC","BABA":"阿里巴巴","LU0251143458.SGD":"Fidelity Emerging Markets A-SGD","IE0004086264.USD":"BNY MELLON GLOBAL OPPORTUNITIES \"A\" (USD) ACC","LU0228367735.SGD":"Eastspring Investments - Asian Equity Fund AS SGD","BK4548":"巴美列捷福持仓","LU0097036916.USD":"贝莱德美国增长A2 USD","LU0140636845.USD":"施罗德大中华区股票A Acc","LU0234570918.USD":"高盛全球核心股票组合Acc Close","LU0048580855.USD":"富达大中华区A","LU0170899867.USD":"EASTSPRING INVESTMENTS WORLD VALUE EQUITY  \"A\" (USD) ACC","LU0640476718.USD":"THREADNEEDLE (LUX) US CONTRARIAN CORE EQ \"AU\" (USD) ACC","IE00B0JY6N72.USD":"PINEBRIDGE GLOBAL EMERGING MARKETS FOCUS EQUITY \"A\" (USD) ACC","BK4554":"元宇宙及AR概念","BK1575":"同股不同权","LU0080751232.USD":"富达环球多元动力基金A","IE0034224299.USD":"PINEBRIDGE ASIA EX JAPAN EQUITY \"A\" (USD) ACC","IE00BJJMRY28.SGD":"Janus Henderson Balanced A Inc SGD","IE00BFSS7M15.SGD":"Janus Henderson Balanced A Acc SGD-H","LU0196878994.USD":"MANULIFE GF CHINA VALUE \"AA\" (USD) INC","BK4553":"喜马拉雅资本持仓","LU0029864427.USD":"TEMPLETON GLOBAL \"A\" (USD) INC","LU0158827781.USD":" ALLIANZ GLOBAL SUSTAINABILITY \"AT\" (USD) ACC","LU0234572021.USD":"高盛美国核心股票组合Acc","LU0109392836.USD":"富兰克林科技股A","LU1105468828.SGD":"Allianz Total Return Asian Equity AM DIS H2-SGD","IE0005OL40V9.USD":"JANUS HENDERSON BALANCED \"A6M\" (USD) INC","09988":"阿里巴巴-W","LU0011850046.USD":"贝莱德全球长线股票 A2 USD","IE00BWXC8680.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5\" (SGD) ACC","LU0466842654.USD":"HSBC ISLAMIC GLOBAL EQUITY INDEX \"A\" (USD) ACC"},"source_url":"https://seekingalpha.com/article/4721303-alibaba-should-keep-rising-from-here","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2467811721","content_text":"Alibaba's stock remains a soft 'buy' due to attractive pricing and a recent regulatory victory, despite mixed performance across its diverse operations.The company's Taobao and Tmall Group saw a slight revenue decline, but Alibaba International Digital Commerce Group and Cloud Intelligence Group showed significant growth.Investments in technology and user experience have impacted short-term profits, but these are strategic moves for long-term improvement.Despite challenges, Alibaba's valuation is compelling, especially when compared to similar firms, justifying a continued soft 'buy' rating.Robert WayOne company that I have been following for some time is Alibaba Group Holding Limited (NYSE:BABA). With a market capitalization of $195.8 billion as of this writing, the business is one of the largest on the planet. Those who do follow the company closely know that it's the largest e-commerce company that is based out of China. But at its core, it has a lot of different operations. Some of these, recently, have been performing very nicely. Others, on the other hand, have seen some weak spots. All in all, the stock does look attractively priced, and management just received an important regulatory victory that should help to push shares higher. Given these factors, I have no problem keeping the company rated a soft 'buy' for now.This rating is something I have been consistent about for quite a while. The last time I rated the company a 'buy' was back in June of this year. Since then, things have gone quite well. The S&P 500 is up 2.2% over that window of time. By comparison, Alibaba is up a whopping 12.1%. This is on top of another 7.3% the stock was up from the prior. I wrote about it at a time when the S&P 500 was up only 5.3%. Although not all of my calls have been this good regarding this particular candidate, I do suspect that the long-term outlook for shareholders should be mildly positive.A necessary disclosureIn this article, I reference all figures in US dollars. Management actually provides US dollar figures for the most recent quarter. But to make sure that we aren't comparing apples to oranges here, I am translating prior year figures into US dollars at the same exchange rate that management used for the most recent quarter.A mixed bagBefore I get into the fundamentals regarding Alibaba, I would like to touch on a development that occurred a couple of weeks ago that should prove bullish for the company. For three years, the Chinese government had been investigating Alibaba over monopolistic practices that were alleged. This investigation followed a $2.8 billion fine that the company was hit with back in 2021 for the same reasons. But since then, the Chinese regulator, the State Administration for Market Regulation, had been keeping a close eye on the company to ensure that it became compliant with that nation's antitrust regulations.According to that regulator, the rectification work that the e-commerce business was forced to undergo saw 'good results'. This is not the end of the picture. Moving forward, Alibaba will be forced to standardize certain operations and to further improve both the quality and efficiency of its compliance. I do not know how long this part of the process will take. But the fact that regulators in China are pleased with progress is a big positive for shareholders. Unlike the US, the Chinese government has significantly more flexibility in how it deals with violations of its laws. So this should be viewed in very much a positive light.Author - SEC EDGAR DataNow, moving on to fundamentals, when I last wrote about the company earlier this year, we had data covering through the final quarter of the 2024 fiscal year. Results now extend through the first quarter of 2025. Before we get into the company as a whole, I do think it would be useful to look at each of its major operating units as they stand individually. The most significant set of operations is known as the Taobao and Tmall Group. This includes the company's consumer and business-to-business e-commerce operations.Even though you would expect this part of the company to continue growing, we actually have seen some contraction as of late. Revenue in the first quarter of 2025 came in at $15.60 billion. This is actually down 1.4% compared to the $15.82 billion the company reported just one year earlier. Even though this is disappointing to see, management claims that the drop was largely attributable to a decline in sales of consumer electronics and appliances that was orchestrated by the firm. The company made this decision to reduce certain direct sales, likely because of low margins and expected weak demand. This is not to say that all parts of that business performed poorly. Its wholesale commerce business in China jumped 16% year over year thanks to certain value-added services that the company provided to paying members. And customer management revenue grew by 1%.The business saw a similar decline, about 1% in total, when it came to segment profits. These fell from $6.79 billion to $6.72 billion. Interestingly, management rhetoric regarding this had nothing to do with the decrease in revenue. In fact, they said that segment profits fell because of higher investments in things like the user experience, as well as greater investments in technology infrastructure.Author - SEC EDGAR DataThe next largest part of the company, at least during the first quarter, was the Alibaba International Digital Commerce Group. Through this unit, the company offers up international commerce retail and wholesale optionality. Most notably, this includes its famous AliExpress operation. From a revenue perspective, this was a shining star for shareholders. Revenue skyrocketed 32.4% from $3.04 billion to $4.03 billion. This was mostly attributable to a 38.2% surge in the company's international commerce retail business that management stated was caused by improvements in monetization and a growth in its AliExpress' Choice service. For those not familiar, Choice is a premium service that the company offers curation of the best value products, as well as things like free shipping, free returns, and more. This was initially launched in early 2023. Since then, it has been a huge growth driver for the company.I don't know about you, but I would expect such an increase in revenue to bring with it a rise in profits. Unfortunately, segment profits worsened. The company went from losing $58 million to losing $510 million on a year-over-year basis. Even though these operations saw significant improvements in monetization and improved operating efficiencies, management's decision to increase investments in AliExpress negatively impacted the bottom line. It also doesn't help that Trendyol, which is a fashion-oriented e-commerce platform owned by the company that happens to engage in cross-border shipments, also saw increased investments by the parent company.Author - SEC EDGAR DataTo me, the most exciting part of Alibaba is its Cloud Intelligence Group. As its name suggests, this is the company's cloud computing operation. In fact, in the Asia Pacific region, it is the largest such cloud computing company there is. Year over year, revenue did manage to grow as the industry itself expands. That growth, however, was only about 5.9%, with revenue climbing from $3.45 billion to $3.65 billion. According to management, revenue involving public cloud products grew at a double-digit rate, largely thanks to AI-related products. But as was the case elsewhere for the company, some of the weakness was intentional. Specifically, there was a decrease in non-public cloud revenue because of the company's decision to move away from project-based activities that, historically speaking, offer very little in the way of margin.This decision seems to be bearing fruit. In the first quarter of the 2024 fiscal year, this part of the company generated profits of $126 million. But for the first quarter of 2025, profits were substantially higher at $322 million. This does seem to be part of a broader trend in the cloud computing market. In fact, I recently wrote an article about how Google parent Alphabet (GOOG) (GOOGL) saw improvements in its bottom line involving these operations.Author - SEC EDGAR DataThe last operating segment that I will provide some meaningful detail on is called Cainiao Smart Logistics Network Limited. This is a vital part of the company that focuses specifically on customer fulfillment. The company's long-term goal is to guarantee that customers can have their goods delivered to them within 24 hours if they live within China. If they live outside of China, the objective is to make sure their goods can reach the desired destination in 72 hours or less. This part of the company actually saw rather remarkable growth, with revenue shooting up 15.8% year over year from $3.19 billion to $3.69 billion. This was mostly because of a rise in sales from cross-border fulfillment solutions. Honestly, I consider this very exciting because it means that the firm's services are good enough to be in demand from customers in other nations.Unfortunately, just like what we saw with some other parts of the company, profitability for this unit did decline. Segment profits plunged from $121 million to only $85 million. But as was the case with other parts of the company, this was thanks to increased investments being made by management. Specifically, these investments have been focused on cross-border fulfillment solutions.Author - SEC EDGAR DataAs the chart above illustrates, there are other parts of the company as well. These parts of the business saw a growth in sales year over year. The most impressive involved the Local Services Group, which focuses on food and beverage delivery, as well as the delivery of other products, directly to consumers' homes. Sales there jumped 12.3% year over year while the bottom line improved from a loss of $272 million to a loss of $53 million.Author - SEC EDGAR DataFor the company as a whole, investors enjoyed growth year over year. Revenue managed to climb 3.9% from $32.22 billion to $33.47 billion. As you can probably figure, this increase was mostly because of the Alibaba International Digital Commerce Group, the Cloud Intelligence Group, and the Cainiao Smart Logistics Network segment. As great as it was to see a rise in sales, profits, and cash flows for the business declined. Net income fell from $4.73 billion to $3.34 billion. Operating cash flow dropped from $6.23 billion to $4.63 billion. And finally, EBITDA pulled back slightly from $7.16 billion to $7.04 billion.Author - SEC EDGAR DataUnfortunately, we don't have any real guidance when it comes to the 2025 fiscal year in its entirety. But if we annualize the results seen so far for the year, we would get net income of $7.81 billion, operating cash flow of $18.77 billion, and EBITDA of $26.09 billion. Using these estimates, as well as historical results for 2024, we can see in the chart above how shares of the company are currently valued. Relative to earnings, at least on a forward basis, the stock does look a bit pricey. But when it comes to the other two profitability metrics, it looks solid. In the table below, I then compared Alibaba to two similar firms. And even if we use the more conservative 2025 estimates, estimates mind you that are probably unreliable because we only have one quarter worth of data, we find that Alibaba is cheaper than either of these businesses when it comes to both its price to operating cash flow and its EV to EBITDA multiples. And on a price to earnings basis, it was in between the two.CompanyPrice/EarningsPrice/Operating Cash FlowEV/EBITDAAlibaba25.110.47.4Alphabet21.917.415.3Amazon (AMZN)44.217.518.8Click to enlargeTakeawayBased on the data provided, I would say that Alibaba is most certainly facing some mixed times. A lot of the negatives that we are seeing do happen to be intentionally inflicted by management in order for the company to further improve operations for the long haul. This is the best kind of weakness that an investor can hope for. But even with these mixed figures, shares look attractively priced, both on an absolute basis and relative to similar firms. I do know that, as a Chinese company, Alibaba deserves to trade at a discount compared to American-based competitors. As I detailed in another prior article, this is because of rampant corruption throughout China and more intensive government control. But even after accounting for that, I think that shares are cheap enough to justify a soft 'buy' rating at this time.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"hasMoreComments":true,"newsSizeData":{"likeSize":10,"commentSize":1,"repostSize":0,"favoriteSize":1,"likeStatus":false,"favoriteStatus":false}}