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QuestionsCategory: Investor PsychologyHKex Alibaba 9988 Valuation
Theodore Tan asked 1 year ago

Hi Victor,
Alibaba is still relatively quite new on the HKex Exchange rate. However it was listed on NYSE for a while.
In this case, there is no historical 5 years price on Baba in HKex. From this aspect, can kindly check with you what will be a good approach to value Baba 9988?
 
Thank you!

1 Answers
Victor Chng answered 1 year ago

Hi Theodore,
 
Alibaba was listed in the NYSE in 2014 so there is almost a 5 years track record. I think it is fine to analyse the company using their NYSE listed information and look into their Hong Kong listed stocks. 

Theodore Tan replied 1 year ago

Thanks!

Victor Chng replied 1 year ago

welcome :)

Theodore Tan replied 11 months ago

Hi Victor. May I know your views of Ali Baba situation currently?
Thanks!

Victor Chng replied 11 months ago

Hi Theodore,

You may want to share your view your Alibaba first so that I can understand from your perspective. After understanding, I will input my comment.

Theodore Tan replied 11 months ago

Hi Victor, operationally it seems like Alibaba is stable. However the intervention by the China govt may reduce their economic moat in e-commerce in such a way that it will be increased competition. Having said so, it seems like their other business are relatively stable and they still have the advantage of integrated supply chain with business such as CaiNiao.

Alibaba (Duopoly with Tecent) also owned stakes in business such as Alipay (Duopoly with Wechat Payin China), Ant Group

The investigation is only likely to incur a fine only on Alibaba.
In the worst case, Alibaba is forced to break up, I am not sure what to do though.

I will buy below USD 215 according to the average 5 year PE of 29.23 and EPS of USD 7.73 and after accounting for standard deviation since March 2020. This is based on current business.

Victor Chng replied 11 months ago

Hi Theodore,

Your theory is sound. Good job

The anti trust law will definitely affect them and their competitors (since their competitors is doing the same thing). E-commerce competition in China is very competitive as compared to US. Overall, it should be well managed as Alibaba is still the main player.

Moreover with the latest news that China regulatory want Ant group to focus back to their payment business (https://www.bloomberg.com/news/articles/2020-12-27/china-asks-ant-to-return-to-origin-of-payments-service).

Moving forward, the future of Alibaba may unfold unexpected event and as investors we may not be able to see every perspective of the problem. Hence, sizing the position properly is important. If it is a small stake in your portfolio and it does not turn out the way you want. It does not hurt that much.

Theodore Tan replied 11 months ago

Thanks Victor. I got the stock at HKD 210.
Good assurance from you.
Thanks!