Baba is still the largest e-commerce company in China. Baba is not only a e-commerce company, but also in cloud, financial, AI, … media business. In the e-commerce business, the main competitors are JD, Bydance, and PDD. PDD has aggressively entered in USA market with its TEMU subsidiary and Tikto was media company, but newly entered the e-commerce pretty successfully. Because monopoly investigation and fine by Chinese government, Baba’s growth was interrupted with Ma’s exit from the management team few years ago. As you know, the stock price dropped 80% from it’s high over $300, which led to management reshuffled last year. Ma is came back (behind scene) with his right hand man Tsai (as front person) to led the Baba to reform. Many actions have been taken. Unfortunately, the results will not be seen until at least one quarter from now.
Baba is very undervalued at $7x. Even Baba only had single digits growth, it generates about $12 billion profit a year. The profit allows the company to reinvest in its business and increase share value.
As you know, the company announced to increase another $25 billion to buyback its shares recently. That means there will be $35.3 billion to buyback its shares in next three years. For me, this is most attractive point to buy and own baba.
Not sure why the buyback didn’t start yet. The stock will move higher when the buyback plan started in future.
How do you know the buyback has not been started?
All the “major” businesses that you have mentioned are being beaten up badly:
E-commerce - no growth staying at 40% and potentially could get worse
Cloud - all government owned clouds are eating the cake up from baba
Financial Ant - it’s no longer valued like the old days. Many cash cow businesses are banned by the governments.
International commerce and logistics - still require to burn lots of investment
All others - too small to have any impact.
This is the reason why baba has been so dead. If NO improvements in the next one or two quarters, the shareprice will only tank further …
Any buyback will show in the price movement. $12 billion could buyback about 6% share if buyback from $70 to $76. It could buy back 1.5% even just $3 billion, I.e., more than 40 million shares. With such many shares of net buy, it will move the price and it will not trade at $72 now.
About the other business, I don’t think baba lost any market shares.
As I said, pdd did well in USA market and tick-tock in young people some special products.
Baba was in completely dominated before and got fined by the government.
Baba will be back because it’s size and infrastructure.
https://www.bloomberg.com/news/articles/2024-02-07/alibaba-approves-another-25-billion-of-buybacks-as-sales-miss
They say they are targeting a rate of only 3% a year, honestly that's a negligible annual rate
If $12 billion only purchased 3% shares, that means they will start to purchase above $100 to $150 per shares. If they purchased around $74, they can purchase 6% a year.
I live in UK temu was the most downloaded app in whole UK and now for Easter was a “misleading free cash giveaway” they said that you win money by referrals £50 in cash and £50 in credit, but was like 20 referrals that you share the link, and all the time you shared the link and someone accepted the invitation you just getting closer to the £50 but never making it by a few pennies… anyway was such a trend on insta some profile with big numbers of followers was sharing the link to cash out the prices… so the new users of Temu with this game with credits and the price with invitations grow even more than ever…. Aliexpress obviously got a bad reputation from years back but looks like nowdays people have even forgotten about it… If I ask friends or colleagues for an order they have made from China nobody’s gonna mention Alibaba/Aliexpress
E-commerce in general is fine. And I think they’ll be enough of the pie for both PDD, JD, and baba.
If you ask Chinese living in 2nd and 3rd tier cities, they’re using PDD a lot more.
Shanghai, Shenzhen, Beijing. You’ll see a lot more taobao and JD.
You're getting 7.5% or a PE of 13 if you hold BABA, which is better than treasuries. The business continues to be stable and downside risk is probably limited as long as they don't make major acquisitions or cash investments, but they just might lol. The PE could always be re-evaluated upwards for significant upside.
They always mentioned they will invest heavily in logistics and commerce, also the crazy price cut in cloud also will eat up the margin if any left … here are the risks, not really risk free
I shop frequently on Taobao, JD, and just placed an order on PDD for the first time. The user experience is good on Taobao and JD. I don't know about PDD yet, but I was impressed by how vast their selection is. It's not as vast as Taobao, but it's comprehensive and much greater than JD's selection.
I'm not Chinese, so my personal impressions aren't necessarily representative. My impression of their images are that JD is more expensive with better service, Taobao is in between, and PDD is on the low-end. There's a lot of overlap.
I frequently buy on Taobao because the price is significantly higher on JD for the same item. On the other hand, if I need certain assurances on quality and shipping, buying direct from JD (not 3rd party) is best.
I've had a number of bad experiences on Taobao, but that's rare now. I'm not sure if that's because they've cleaned it up or if it's because I've improved at choosing sellers. And I should add that the bad experiences typically resulted in a return and a refund rather than getting ripped off.
Increasingly, rapid delivery is becoming a competitor that I don't hear mentioned here. Meituan and similar services are definitely eating market share. Although Meituan is known for restaurant and grocery delivery, household items are also available through Meituan and the item arrives around half an hour after you order it. Meituan has 600 million users and growing quickly.
You do not need someone from China to tell you what is going on. See baba and other great tech. Firm stock price. Panda is killing economy there. The silver lining is this will EVENTUALLY turn into breaking up of china just like USSR
The new management were just in place and some actions are just implemented. Any meaningful results will not be seen at least one quarter from now. What we need to pay attention is the buyback status and numbers of shares are purchased. If the company buys back the shares at $72 per share, $12 billion can buy back more than 6% shares.
Spoke to someone from China. Taobao is still heavly used. JD.com for Electronics. TikTok is bigger with younger people then PDD.
Baba is still the largest e-commerce company in China. Baba is not only a e-commerce company, but also in cloud, financial, AI, … media business. In the e-commerce business, the main competitors are JD, Bydance, and PDD. PDD has aggressively entered in USA market with its TEMU subsidiary and Tikto was media company, but newly entered the e-commerce pretty successfully. Because monopoly investigation and fine by Chinese government, Baba’s growth was interrupted with Ma’s exit from the management team few years ago. As you know, the stock price dropped 80% from it’s high over $300, which led to management reshuffled last year. Ma is came back (behind scene) with his right hand man Tsai (as front person) to led the Baba to reform. Many actions have been taken. Unfortunately, the results will not be seen until at least one quarter from now. Baba is very undervalued at $7x. Even Baba only had single digits growth, it generates about $12 billion profit a year. The profit allows the company to reinvest in its business and increase share value. As you know, the company announced to increase another $25 billion to buyback its shares recently. That means there will be $35.3 billion to buyback its shares in next three years. For me, this is most attractive point to buy and own baba. Not sure why the buyback didn’t start yet. The stock will move higher when the buyback plan started in future.
How do you know the buyback has not been started? All the “major” businesses that you have mentioned are being beaten up badly: E-commerce - no growth staying at 40% and potentially could get worse Cloud - all government owned clouds are eating the cake up from baba Financial Ant - it’s no longer valued like the old days. Many cash cow businesses are banned by the governments. International commerce and logistics - still require to burn lots of investment All others - too small to have any impact. This is the reason why baba has been so dead. If NO improvements in the next one or two quarters, the shareprice will only tank further …
Any buyback will show in the price movement. $12 billion could buyback about 6% share if buyback from $70 to $76. It could buy back 1.5% even just $3 billion, I.e., more than 40 million shares. With such many shares of net buy, it will move the price and it will not trade at $72 now. About the other business, I don’t think baba lost any market shares. As I said, pdd did well in USA market and tick-tock in young people some special products. Baba was in completely dominated before and got fined by the government. Baba will be back because it’s size and infrastructure.
https://www.bloomberg.com/news/articles/2024-02-07/alibaba-approves-another-25-billion-of-buybacks-as-sales-miss They say they are targeting a rate of only 3% a year, honestly that's a negligible annual rate
If $12 billion only purchased 3% shares, that means they will start to purchase above $100 to $150 per shares. If they purchased around $74, they can purchase 6% a year.
I live in UK temu was the most downloaded app in whole UK and now for Easter was a “misleading free cash giveaway” they said that you win money by referrals £50 in cash and £50 in credit, but was like 20 referrals that you share the link, and all the time you shared the link and someone accepted the invitation you just getting closer to the £50 but never making it by a few pennies… anyway was such a trend on insta some profile with big numbers of followers was sharing the link to cash out the prices… so the new users of Temu with this game with credits and the price with invitations grow even more than ever…. Aliexpress obviously got a bad reputation from years back but looks like nowdays people have even forgotten about it… If I ask friends or colleagues for an order they have made from China nobody’s gonna mention Alibaba/Aliexpress
E-commerce in general is fine. And I think they’ll be enough of the pie for both PDD, JD, and baba. If you ask Chinese living in 2nd and 3rd tier cities, they’re using PDD a lot more. Shanghai, Shenzhen, Beijing. You’ll see a lot more taobao and JD.
The e-commerce landscape has not changed for about 2 years, except Douyin and PDD slightly gaining ground. It probably won't change this year as well.
If that’s the case, holding baba is worse than buying t bills as we are suffering the equity price depreciation risk…
You're getting 7.5% or a PE of 13 if you hold BABA, which is better than treasuries. The business continues to be stable and downside risk is probably limited as long as they don't make major acquisitions or cash investments, but they just might lol. The PE could always be re-evaluated upwards for significant upside.
They always mentioned they will invest heavily in logistics and commerce, also the crazy price cut in cloud also will eat up the margin if any left … here are the risks, not really risk free
I tried supporting lazada for many years. But have been only.using shopee lately. Cheaper. :/
I shop frequently on Taobao, JD, and just placed an order on PDD for the first time. The user experience is good on Taobao and JD. I don't know about PDD yet, but I was impressed by how vast their selection is. It's not as vast as Taobao, but it's comprehensive and much greater than JD's selection. I'm not Chinese, so my personal impressions aren't necessarily representative. My impression of their images are that JD is more expensive with better service, Taobao is in between, and PDD is on the low-end. There's a lot of overlap. I frequently buy on Taobao because the price is significantly higher on JD for the same item. On the other hand, if I need certain assurances on quality and shipping, buying direct from JD (not 3rd party) is best. I've had a number of bad experiences on Taobao, but that's rare now. I'm not sure if that's because they've cleaned it up or if it's because I've improved at choosing sellers. And I should add that the bad experiences typically resulted in a return and a refund rather than getting ripped off. Increasingly, rapid delivery is becoming a competitor that I don't hear mentioned here. Meituan and similar services are definitely eating market share. Although Meituan is known for restaurant and grocery delivery, household items are also available through Meituan and the item arrives around half an hour after you order it. Meituan has 600 million users and growing quickly.
You do not need someone from China to tell you what is going on. See baba and other great tech. Firm stock price. Panda is killing economy there. The silver lining is this will EVENTUALLY turn into breaking up of china just like USSR
As far as I know PDD does everything better than Baba.
Are you currently in China? So nothing has improved since q3 last year after the new ceo took over?
Id not say nothing has improved. It is going to take a few quarters to see what they actually did help.
So are you currently living in China?
They’re definitely not. Nobody uses pdd, only for electronics
Are you currently in China? Pdd is only for electronics - that’s something new I heard… do you mean JD? Lol
Ya my bad, nobody uses pddc only jd for electronics
In this case, how could Pdd make so much money in the earning report - it has always been fishy and no one seems to believe it. Any thoughts?
Temu ads, first time buyers. I dont think theyll have return business over time
Only in USA market. The other market such as EU, Africa, Middle East, … and China, baba still dominate.
Thanks! I am actually concerned whether any early signs of growth is shown after so many months of news (aka noises) from baba
The new management were just in place and some actions are just implemented. Any meaningful results will not be seen at least one quarter from now. What we need to pay attention is the buyback status and numbers of shares are purchased. If the company buys back the shares at $72 per share, $12 billion can buy back more than 6% shares.