观点 | 大跌之后,能抄底阿里巴巴了吗?

Opinion | After the sharp decline, can Alibaba go to the bottom?

巴倫週刊 ·  Nov 20, 2023 22:16

Source: Barron's

Author: Lin Yidan

Jack Ma cashed out, suspended the launch of the cloud business, and planned dividends for the first time — even after “Double Eleven,”$Alibaba (BABA.US)$,$BABA-SW (09988.HK)$The popularity is still unabated.

First, it was revealed by the media that Jack Ma's Family Trust plans to reduce its holdings of Alibaba shares by 10 million shares, then in the September 2023 quarterly results report, it “decided not to promote the complete split of Cloud Intelligence Group” and suspended Hema's IPO. Alibaba's stock price dived last week. As of November 20, Alibaba's market capitalization had fallen by more than 70% compared to its peak in 2020.

So is now a good time to buy Alibaba on dips?

1+1 is not necessarily greater than 2

One reason the market is disappointed with Alibaba is that Alibaba's Cloud Intelligence Group is no longer completely splitting up.

Alibaba said in its quarterly report, “The US recently expanded restrictions on the export of advanced computing chips, bringing uncertainty to the future of Cloud Intelligence Group. We believe that the complete spin-off of Cloud Intelligence Group may not enhance shareholder value according to the original vision, so we decided not to promote the complete spin-off of Cloud Intelligence Group, but instead face an uncertain environment and focus on building a model for the sustainable growth of Cloud Intelligence Group.”

A market source focusing on Internet investment in China said that to a certain extent, this shows that the split of the Cloud Intelligence Group cannot achieve a “market effect of 1+1 greater than 2.” Chen Da, a senior US stock investor, further believes that Alibaba Cloud is an empowering business. Staying in the body is probably better than being spun out. In the future, Alibaba's stock price will rise to a higher level, and to a large extent, it will depend on it.

On the one hand, the growth of Cloud Intelligence Group has been tested quite a bit in the past six months. Alibaba's quarterly report shows that in the six months ending September 30, Cloud Intelligence Group's revenue growth rate was the slowest among all departments. Cloud Intelligence Group's latest quarterly revenue was RMB 27.648 billion, up 2% year on year.

Source: Company Financial Report; Cartography: Barron's Chinese Edition

Alibaba's goal of a split listing needs to take into account the listing entry requirements of each exchange, the most basic of which is the profitability requirement. Seen from this perspective, Cloud Intelligence Group's recent performance is not a satisfactory report card for investors who expect it to become a new growth stock in the Chinese Internet.

On the other hand, the overall market environment is calm and restrained. In its report entitled “Review of the Mainland China and Hong Kong IPO Markets for the Third Quarter of 2023", KPMG pointed out that under the combined effects of the four major factors of geopolitics, economic recovery, central bank interest rate hikes, and slowing inflation, the global IPO market is still sluggish, and the number of listings and capital raised fell 10% and 35%, respectively, from the same period in 2022. As far as Cloud Intelligence Group is concerned, this is not a good time to go public.

In addition to Cloud Intelligence Group, Alibaba also stated that “Hema's initial public offering plans have been suspended.”

However, on September 26, 2023, Cainiao Smart Logistics (H01941.) took the first step in Alibaba's split listing, indicating that in the future, Cloud Intelligence Group is not completely out of possibility of going public.

For the quarter ended September 30, 2023, Cainiao's revenue increased 25% year over year to RMB 22,823 billion, mainly driven by revenue from cross-border logistics fulfillment solutions.

Long-term worth owning?

And for Alibaba, whose values are “customers first, employees second, shareholders third,” its first annual dividend payment also attracted investors' attention.

According to the quarterly report, Alibaba's board of directors has approved the payment of FY2023 annual cash dividends to common stock holders and American depository share holders. The amount is $0.125 per common share or $1.00 per American depository share, respectively, to be paid in US dollars. Total dividends were approximately $2.5 billion.

However, this good news was overshadowed by news that Jack Ma's family trust has reduced its holdings.

According to the US SEC, Jack Ma's family trust JC Properties Limited and JSP Investment Limited plan to reduce their holdings of Alibaba founder by 5 million shares respectively on November 21. As a result, Alibaba's US stocks and Hong Kong stocks fell 9.14% and 9.96% respectively on November 16.

On the evening of November 17, Ma Yun's office lawyer responded to this. The sale plan disclosed this time was a long-term plan. Jack Ma is firmly optimistic about Ali. The current stock price is far below Ali's actual value, and he will still firmly hold Ali shares.

So is Alibaba currently underestimated?

According to the aforementioned market observers, Alibaba's annual dividend distribution is an important sign that the Internet giant is beginning to pay attention to shareholder returns, giving investors a reason to hold Alibaba for a long time; at the same time, this is not the first time Jack Ma has reduced his holdings in Alibaba; the market's focus will eventually return to the company's strategic and business levels.

Judging from Alibaba's FY2023 annual report, Jack Ma and his family trust did not appear on the list of major shareholders, which also meant that its shareholding ratio was less than 5%. This reduction in holdings will further reduce the proportion of Alibaba shares it holds.

Even so, the market reaction showed the founder's influence. After two trading days of decline, Alibaba's US stock price has reached 77.6 US dollars, with a market value of 1976 billion dollars. On November 20, Alibaba's Hong Kong stock decline narrowed from last week to close at HK$74.45.

UBS believes that even though Alibaba founder Jack Ma is no longer involved in the company's operations, selling shares at a time when valuations are sluggish may hurt investor sentiment. Even if the agency believes Alibaba is moving in the right direction, the company needs to prove its long-term investment potential to investors in the short term. The agency gave Alibaba a “buy” rating for US stocks, with a target price of $120.

However, there are also organizations that believe that the change in Cloud Intelligence Group's spin-off and listing plan is a major disadvantage. Morgan Stanley drastically cut the target price of Alibaba's US stock by about 27% to $110, and replaced the industry's preferred stock from Alibaba due to the uncertainty of the mainland consumer market, uncertain growth prospects of the cloud computing market, and the suspension of the Cloud Intelligence Group's split plan$TENCENT (00700.HK)$.

Nomura, on the other hand, said that regardless of the reasons behind Alibaba's decision, Alibaba Cloud will remain part of the Alibaba Group, and Alibaba's shareholders will be able to indirectly benefit from the future growth of Alibaba Cloud's assets.


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