Alibaba: A Business With Deep Intrinsic Value🧵

*Note: This Is Not Financial Advice*

#AliExpress #Alibaba #Baba $BABA

(1/18)
Alibaba is China's 3rd most valuable business, and the most dominant global e-commerce giant after Amazon. 
These are Alibaba's income streams and how much they contribute to revenue as of 2nd Quarter 2022:

(2/18)
In terms of financials, Alibaba is off the charts. 

Revenues in my estimations are expected to grow at 11%, likely higher considering that their cloud computing business is expected to bring in a lot more revenue than is being anticipated by most analysts.

(3/18)
Alibaba's earnings are forecasted to grow at 18.97% a year. 

Most investors are apprehensive about whether an industry leader can sustain such healthy growth? 
The answer to that lies in the serious barriers to entry for other Chinese e-commerce players.

(4/18)
The short term assets for Alibaba stand at CN¥645.0B, which  outweighs its short term and long term liabilities which stand at CN¥375.06B and CN¥245.07B, respectively.

(5/18)
Alibaba now has more cash effectively on its balance sheet than its total debt. 
It's Debt to Equity ratio has made significant improvements, from 27.1% in 2017, to 14% as of 30th June, 2022.

(6/18)
In my opinion, Alibaba's debt will not be a bother to shareholders, as it's operating cash flow (94.1%) more than overs its debt well.

(7/18)
The interest payment on the Debt is covered by an EBIT of 6.7x coverage.

(8/18)
I've often said Alibaba's valuation is criminal, and here's one of the many reasons why:

(9/18)
•Alibaba's EV/EBITDA  for FY ending March 2018-22 averaged 23.8x.

•Alibaba operated at a median EV/ EBITDA of 22.7x for FY ending March 2018-22.

•The EV/EBITDA multiple of Alibaba in the last twelve months stands at 10.1x. 
And this number gets even cheaper.

(10/18)
The 10.1x multiple doesn't fully consider the contribution of Alibaba's 33% stake in Ant Group, listed investment portfolios, cloud business, #Taobao and #TMall businesses, which yields $32B, and they report $20B dollars.

(11/18)
The remaining $12B is spent on growth initiatives which will eventually result in higher margins, irrespective of any regulatory pressure Alibaba faces. 

Hence, if we consider EV/Revenue instead of EV/ EBITDA, outside of net cash($50B dollars), the multiple is at 1.6x. 

(12/18)
There's been a lot of speculation about the looming pressures of the CCP's  regulatory oversight on China's big tech, and how that may result in a delisting for #Alibaba from the #NYSE. 
This is highly unlikely, for the following reasons:

(13/18) 
•A company of the calibre of Alibaba, is unlikely to do anything which could harm its foreign investors. 

•Or, put its ADS structure, which allows it to have its shares listed both on the HKD exchange and the NYSE to be jeopardized.

PART 2 continued 👆