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Fundamental Analysis: ALIBABA GROUP HOLDINGS LTD (#BABA)

Alibaba Group Holding Limited, also known as Alibaba Group and as Alibaba.com, is a Chinese multinational technology company specializing in e-commerce, retail, Internet, and technology.


๐Ÿ’ก For the long term strategy , we recommend buying shares in e-commerce giant Alibaba #BABA following the company's third-quarter earnings, indicating that the company will continue to benefit amid rising consumer spending in China.


๐Ÿ‘‰๐Ÿป Alibaba's third-quarter revenue was 155 billion yuan, up 30% year-on-year and in line with the expectations of economists surveyed by Bloomberg. In turn, earnings per share (EPS) were RMB 17.97, up 37% year-on-year and 30% above consensus, driven by higher operating margins and non-operating income.


โšก๏ธ Growth factors:

โ€ข Alibaba is the world's largest e-commerce company by gross value of goods sold on a platform (GMV), currently accounting for 18% of total retail sales in China (10% in 2015). The outstripping growth of GMV will be a key factor in the company's development, while the fastest growing category in the third quarter was the segment of consumer goods (+ 28% compared to last year).

โ€ข Development of the cloud platform Alibaba Cloud - in the third quarter revenue growth was 60% year-on-year, but EBITDA margin decreased by 5 bp. up to -1%. At the same time, the company confirmed its forecast that Alibaba Cloud will become profitable as early as March 2021 and is confident that it will be able to reach the level of profitability similar to Amazon Web Services of 31%.

โ€ข Good performance in other business segments. For example, the logistics company China Smart Logistic Network showed revenue growth of 54% compared to last year, thanks to an increase in volume and revenue per order.

โ€ข Analysts praise the company's strategic purchases, including the STO Express courier service, which will reduce JD.com's order fulfillment advantage.

โ€ข Despite excellent performance, the company's shares lagged behind rivals since the beginning of the year: + 36% versus + 199% for Pinduoduo #PDD, + 160% for JD.com #JD and + 223% for Meituan # 3690.


๐Ÿ’Ž We consider the shares of Alibaba #BABA a promising Long Term investment


๐ŸŽฏ Target price - $ 317 (medium term) and $ 340 (long term), growth potential + 28%.


Below a quick comparison #AMZN and #BABA


Amazon Alibaba

Net Income 11.59B 167.47B

Quick Ratio 0.86 1.84

Operating Margin 5.26% 18.74%

Return on Equity 21.95% 23.91%

Dividend Yield 0% 0.%

5y Performance 365% 224%

Beta 1.23 1.12

Price to Earning 136.08 32.77

Share Price (USD) 3,119.12 250.07

Market Cap (USD) 1.565T 712.46B

Sales/Revenue (USD) 280.52B 571.88



OTB Global Investments

London, 22 November 2020

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