Is Alibaba a Right Investment?

  Is Alibaba a Right Investment? In this article, “Is Alibaba really a Solid Business?” and “Is Alibaba a Right Investment?”  We will seek answers to your questions. Alibaba Group Holding Limited (BABA) is a company that almost every investor in the Far East hears frequently.

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Alibaba Group was founded in 1999 by 18 people. The Hangzhou-based company has grown into a multinational technology company over the years, with a market cap of $570 billion. Ranked 10th in the list of the world's most valuable companies (by market value), Alibaba has become the second most valuable company in China, after Tencent in 7th place. In fact, Alibaba focuses more on e-commerce and retail operations, while Alibaba Group is a conglomerate with many different sales services. Besides retail, the Group also offers electronic payment services, shipping, search engines and computer services. It also has a portfolio of various global companies in many industries.

The company reports in four different segments:

-Core Commerce Revenue:

This segment consists of platforms operating in retail and wholesale trade in China, as well as logistics services and local consumer services. In fiscal 2021, this segment generated revenue of RMB 621,1 billion and revenue of RMB 159 billion from operations.

- Cloud Computing Revenue:

This segment consists of Alibaba Cloud, which provides different cloud services such as database, storage, large-scale computing security to customers around the world. In fiscal 2021, this segment generated RMB 60.1 billion, but so far it has not been profitable (loss of RMB 9 billion).

In this article, “Is Alibaba really a Solid Business?” and “Is Alibaba a Right Investment?”  We will seek answers to your questions.

- Digital Media and Entertainment Revenue:

This segment is used to serve the broader interests of consumers who provide online videos, movies, live events, literature and music with the major distribution platforms Youku and Alibaba Pictures. In fiscal 2021, this segment generated RMB 31,2 billion, but it was not profitable either.

- Innovation Initiatives and Other Income:

This segment includes businesses such as Amap, DingTalk, Tmall Genie and others. In fiscal 2021, this segment; It generated revenues of RMB 4,8 billion but also made operating losses. Looking at the last 1-year results, it is seen that Alibaba has earned RMB 717,3 billion in revenue. Compared to fiscal 2020, this reflects an increase of 41 %. Alibaba generated RMB 172,7 billion free cash flow in fiscal 2021, compared to RMB 130,9 billion a year ago, although it suffered operating losses in some industries. It is useful to keep these in mind when valuing.    

Source: seekingalpha.com

 

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