occurrences

On November 14, Alibaba submitted 13F disclosure documents to the US Securities Regulatory Commission. As of September 30, Xiaopeng Motor ADS held by Ali increased sharply from 6.65 million shares on June 30 to 31.309 million ADS shares.

reviews

The intention is to reduce rather than increase holdings. The market initially interpreted this change as Alibaba's significant increase in Xiaopeng Motor's holdings in Q3. However, we think this is a market misinterpretation. As a strategic investor in Xiaopeng Motor, Ali itself holds Xiaopeng's common shares, and the increase in ADS may be due to the conversion of common stock to ADS.

According to the disclosure requirements of the 13F document, it is only necessary to report US stock holdings, so the increase in the number of ADS may be due to Ali converting common stock to ADS in order to trade more easily in the US market. Combined with Ali's recent strategic adjustments and the trend of disposing of non-core assets, this move may be preparing for potential future holdings reductions.

Strategic investments were phased out, and Ali focused on divesting non-core assets from its main business. The partnership between Alibaba and Xiaopeng Motors began in 2018, when Alibaba participated in Xiaopeng's Series B financing. In 2020, before Xiaopeng Motor went public on the US NASDAQ, Ali once again increased its capital, further deepening the strategic cooperation between the two sides.

In addition to financial support, Ali also provided Xiaopeng with technical support such as cloud computing and data processing, and introduced AliGenie, an intelligent voice assistant to Xiaopeng Motors. However, since the end of 2023, Alibaba's shareholding strategy in Xiaopeng Motor has changed significantly: according to the Hong Kong Stock Exchange's disclosure, Ali sold 25 million shares of Xiaopeng ADs in December 2023, with a transaction amount of about 0.391 billion US dollars, and the shareholding ratio fell from 10.2% to 7.5%; in March 2024, Ali once again reduced its holdings by 33 million shares, about 2.2 billion yuan. The shareholding ratio fell below 5%, and there was no need to reduce its holdings thereafter Further disclosure. As of the end of Q3, Ali still held 31.309 million shares of Xiaopeng Ads. The scale of the reduction was similar to the previous two, so we think it is more likely that it will continue to reduce its holdings in the future. This series of transaction actions is closely related to the major strategic adjustments that Ali will implement starting in 2023, including “1+6+N” organizational structure changes and executive changes. We believe that Ali's reduction in Xiaopeng's holdings is not due to a change in views on its future prospects, but is part of a strategic adjustment aimed at clearly distinguishing between core and non-core businesses and focusing on the two main businesses of e-commerce and cloud computing. The continued reduction in Xiaopeng's holdings is a reflection of Ali's accelerated divestment of non-core assets and optimization of its business structure.

risks

Major shareholders are reducing their holdings, competition is increasing the risk, sales and research and development of new models fall short of expectations, and the macroeconomy is declining.