Kuaishou and Alibaba are both in my portfolio. The downside risk for Kuaishou is minimal due to share buybacks, future predictable profits, and high return on equity (ROE).
Of course, the downside risk for Alibaba is also limited. Personally, I believe Kuaishou has greater upside potential.
An important value logic for Kuaishou that has been overlooked is its high ROE. Moreover, the profits are in pure cash, with almost no inventory and bad debts, or provisions.
Assuming a profit of 16 billion this year and 20 billion next year, this year's ROE would be 16/49 = 32.65%, and next year's ROE would be 20/65 = 30.7%.
This ROE is very impressive. Even if it falls to 20% in the next 3-5 years, it would still be excellent. Looking at the liquor industry as a reference, which also has cash profits and no issues with bad debts, provisions, or inventory, it has shown long-term stability and growth.
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