Best
Please note this is only an opinion and not financial advice. Direct stock investing is subject to business and market risks. Therefore, it’s highly recommended to do proper risk management and your own due diligence before investing.
Growth Stock Analysis As of 23 December 2023
NASDAQ: BABA (Alibaba Group Holding Limited)
- Alibaba Group facilitates technology and marketing services for businesses globally, connecting them with customers in China and beyond.
- The company is divided into seven segments: China Commerce, International Commerce, Local Consumer Services, Cainiao, Cloud, Digital Media and Entertainment, and Innovation Initiatives and Others.
- Alibaba operates various platforms, including Taobao and Tmall for digital retail, AliExpress for retail marketplace, and Alibaba.com for online wholesale.
- The company also manages e-commerce platforms like Lazada, Trendyol, and Daraz, along with Freshippo for groceries, and Tmall Global for import e-commerce.
- Additionally, Alibaba runs Cainiao Network for logistics, Ele.me for on-demand delivery, Koubei for restaurant and local services guidance, and Fliggy for online travel services.
- The company was incorporated in 1999 and is based in Hangzhou, the People’s Republic of China.
- Top Shareholdings of Alibaba Group Holding Limited (BABA):
| Holder | Shares | Date Reported | % Out | Value |
|---|---|---|---|---|
| Primecap Management Company | 17,343,272 | Sep 29, 2023 | 0.68% | 1,305,601,494 |
| Dodge & Cox Inc | 16,091,470 | Sep 29, 2023 | 0.63% | 1,211,365,841 |
| Sanders Capital, LLC | 15,029,238 | Sep 29, 2023 | 0.59% | 1,131,401,018 |
| Price (T.Rowe) Associates Inc | 11,912,370 | Sep 29, 2023 | 0.46% | 896,763,199 |
| Morgan Stanley | 11,610,078 | Sep 29, 2023 | 0.45% | 874,006,657 |
| JP Morgan Chase & Company | 11,142,620 | Sep 29, 2023 | 0.43% | 838,816,419 |
| FIL LTD | 9,646,859 | Sep 29, 2023 | 0.38% | 726,215,533 |
| Goldman Sachs Group Inc | 9,825,528 | Sep 29, 2023 | 0.38% | 739,665,735 |
| Temasek Holdings (Private) Limited | 9,563,814 | Sep 29, 2023 | 0.37% | 719,963,906 |
| Bank of America Corporation | 8,593,733 | Sep 29, 2023 | 0.33% | 646,936,209 |
What we think are PROs of Alibaba Group Holding Limited (BABA):
- Over the past decade, Alibaba, China’s e-commerce giant, has seen remarkable growth, with revenues soaring by 15 times.
- Despite the notable achievement, the compounded annual growth rate (CAGR) has decelerated from 31% over the past decade to 11% in the first half of the current financial year (H1 FY24, concluding in September 2023).
- In H1 FY24, the net income attributable to stockholders has surged by 28 times compared to the same period last year.
- Alibaba (BABA) is currently undervalued, possessing significant assets in Cloud Computing and Ant Financial, along with a diverse portfolio of other business holdings.
- The strength in EPS was supported by robust operating leverage, marked by a year-over-year increase in the operating margin from 12.13% to 14.94%.
- BABA unveiled its most recent quarterly earnings on November 16, surpassing consensus estimates. The company experienced a 7.2% year-over-year revenue growth, accompanied by a significant expansion in adjusted EPS.
What we think the RISKs are in Alibaba Group Holding Limited (BABA):
- Its stock price has seen a massive sell off so we can predict when the Big buyers are interested in this stock so that the prices will start increasing
- China’s regulatory environment is dynamic and can swiftly impact businesses, such as Alibaba, particularly with changes in e-commerce or technology-related policies.
- Currency fluctuations, especially in the value of the Chinese currency (Renminbi), pose a risk to investors holding foreign currencies.
- A decrease in Renminbi’s value against the US dollar, for instance, may impact Alibaba by potentially making its products more expensive for foreign customers, affecting demand.
FUNDAMENTALS:
Market Cap = $193.96B
Beta = 0.59
52 week Range = 70.08 – 121.30
PE (FWD) = 8.27
Yield (TTM) = (0.98) 1.31%
Rev Growth (YoY) = 6.46%
Revenue = $914 B
EPS = 51.50
D/E = 0.14
- Technical Analysis of BABA:
* It is bouncing from the lower support levels of 2015 and 2022 which is marked with the yellow zone on the below charts.
* You can start accumulating this stock from the current levels.
* We are expecting a huge upside above 80 levels till then it may consolidates in this zone.
* This each candles represents the Monthly time frame of this stock.
* Volumes at the lower levels are also increasing which indicates the buyers are interested in this stock at current levels.
* RSI is trading near the oversold zone and it may bounce to higher levels.
* You can hold this stock for next 3-4 years for the bigger targets of 200 & 260.
Entry: 75
Target: 135 / 200
Stoploss: 69
Our Final Thought:
Alibaba, a market leader, maintains a positive outlook with a strategic focus on investor interests. Key drivers for future performance include financial growth, segment profitability, and potential IPOs. Despite risks like a potential Chinese economic slowdown, the company’s management initiatives, including buybacks and dividends, suggest optimism for shareholder value and potential price appreciation in 2024, backed by consistent strong earnings growth. The company Revenue is almost 10X from its market cap which shows it fundamental is very strong with support of the company just started paying a dividend and it earns enough in free cash flow to do $20 billion in buybacks each and every year even after subtracting the amount paid out in dividends.
Please note this is only an opinion and not financial advice. Direct stock investing is subject to business and market risks. Therefore, it’s highly recommended to do proper risk management and your own due diligence before investing.
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