BABA - Alibaba Group Holding Limited
| Previous Close | 182.80 |
| Open | 184.00 |
| Bid | 185.18 x 1100 |
| Ask | 185.50 x 1200 |
| Day's Range | 183.71 - 185.60 |
| 52 Week Range | 129.77 - 195.72 |
| Volume | 11,312,539 |
| Avg. Volume | 13,310,284 |
| Market Cap | 484.287B |
| Beta (3Y Monthly) | 2.26 |
| PE Ratio (TTM) | 53.04 |
| EPS (TTM) | 3.50 |
| Earnings Date | Jan. 28, 2020 - Feb. 3, 2020 |
| Forward Dividend & Yield | N/A (N/A) |
| Ex-Dividend Date | N/A |
| 1y Target Est | 223.44 |
Reuters VideosAlibaba gets strong demand for IPO - sources
On Monday (November 11) it notched sales of 38 billion dollars in its latest Singles' Day shopping fest. Now Alibaba looks certain to shift 13.4 billion dollars of shares in its upcoming IPO. Sources have told Reuters that order books for the sale have been covered many times over. The e-commerce giant plans to list in Hong Kong on November 26. It's currently marketing the deal to investors around the world. . Sources say an earlier attempt at an IPO was abandoned due to the city's political unrest. This time Alibaba looks certain to press ahead. Not coincidentally, perhaps, the offering will be fully automated and paperless. That avoids the potential publicity nightmare of investors queuing to submit applications as protests rage around them. The share sale will be Hong Kong's biggest this year. Pricing for the shares will be announced on November 20th.
- Bloomberg
Saudi Arabia Cuts Aramco Valuation, Boosts Loans to Get IPO Done
(Bloomberg) -- Saudi Arabia set a valuation target for Aramco’s initial public offering well below Crown Prince Mohammed bin Salman’s goal of $2 trillion and pared back the size of the sale to ensure the world’s largest oil producer successfully lists on the Riyadh stock exchange next month.The Saudi central bank also relaxed lending limits to boost demand from local investors after bankers were unable to convince many international money managers of the merits of the deal.Aramco will sell just 1.5% of its shares on the the local stock exchange, about half the amount that had been considered, and seek a valuation of between $1.6 trillion and $1.71 trillion.While that would allow Aramco to overtake Apple Inc. as the world’s biggest public company by some distance, the plans are a long way from Prince Mohammed’s initial aims: a local and international listing to raise as much as $100 billion for the kingdom’s sovereign wealth fund.At the lower end of the price range, the offer would fall short of a record, coming in just below the $25 billion raised Alibaba Group Holding Ltd.’s in 2014.The lackluster response from investors outside the kingdom meant Aramco decided shares won’t be marketed in the U.S. and Canada as originally planned. Japan’s also off the list. But bankers working on the deal said they were confident that there was more than enough local demand to ensure the deal’s success at the proposed valuation.Aramco Chief Executive Officer Amin Nasser kicked off the IPO’s final phase at a presentation for hundreds of local fund managers in Riyadh.This is “a historic day for Saudi Aramco,” Nasser said. “We are excited about the transition to being a listed company.”Aramco will need to lean heavily on investors, large and small, to get the job done. The Saudi Arabian Monetary Authority will allow smaller retail investors will be able to borrow twice their cash investment, double the normal leverage limits the regulator allows for IPOs, according to people familiar with matter.The kingdom’s richest families, some of whom had members detained in Riyadh’s Ritz-Carlton hotel during a so-called corruption crackdown in 2017, are expected to make significant contributions to the IPO and will be allowed to borrow in either higher multiples to finance their purchases.Cornerstone InvestorsThe final version of the prospectus didn’t identify any cornerstone investors, though the company is still in talks with Middle Eastern, Chinese and Russian funds.Foreign investors had always been skeptical of the $2 trillion target and recently suggested they would be interested at a valuation below $1.5 trillion. That would offer a return on their investment close to other leading oil and gas companies like Exxon Mobil Corp. and Royal Dutch Shell Plc.The new valuation implies Aramco, which has promised a dividend of at least $75 billion next year, will reward investors with a dividend yield of between 4.4% and 4.7%. Exxon Mobil pays a dividend yield of just under 5%, while Shell pays 6.4%.Saudi Arabia has been pulling out all the stops to ensure the IPO is a success to a skeptical audience. It’s cut the tax rate for Aramco three times, promised the world’s largest dividend and offered bonus shares for retail investors who keep hold of the stock.“Aramco’s price range takes into account some uncertainties that weren’t fully absorbed when the IPO was first floated,” such as governance, said Jaafar Altaie, managing director of Abu Dhabi-based consultant Manaar Group. “The lower range reflects uncertainties. It takes into account issues of supply that are very fluid, and demand that doesn’t look so good now.”Aramco has also faced the challenge of the strengthening global movement against climate change that’s targeted the world’s largest oil and gas companies. Many foreign investors are concerned the shift away from the internal combustion engine -- a technology that drove a century of steadily rising fossil fuel demand -- means consumption of oil will peak in the next two decades.Speaking in Riyadh on Sunday, Nasser acknowledged the prospect of peak demand, but argued that with the lowest production costs in the industry, Aramco would be able to win market share from less efficient producers.The Aramco IPO is a pillar of Prince Mohammed’s much-hyped Vision 2030 plan to change the social and economic fabric of the kingdom and attract foreign investment. The prince, who rules Saudi Arabia day-to-day, is trying to recover his reformist credentials after his global reputation was damaged by the 2018 assassination of government critic Jamal Khashoggi in the kingdom’s Istanbul consulate.Proceeds from the IPO will be transferred to the Public Investment Fund, which has been making a number of bold investments, plowing $45 billion into SoftBank Corp.’s Vision Fund, taking a $3.5 billion stake in Uber Technologies Inc. and planning a $500 billion futuristic city.No matter what the final valuation, the share sale will create a public company of unmatched profitability. Aramco earned net income of $111 billion in 2018 on revenue of $315 billion.\--With assistance from Nayla Razzouk, Abbas Al Lawati, Filipe Pacheco, Archana Narayanan and Dinesh Nair.To contact the reporters on this story: Matthew Martin in Dubai at mmartin128@bloomberg.net;Javier Blas in London at jblas3@bloomberg.netTo contact the editors responsible for this story: Nayla Razzouk at nrazzouk2@bloomberg.net, ;Stefania Bianchi at sbianchi10@bloomberg.net, Bruce StanleyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Bloomberg
Alibaba's Hong Kong Share Sale Is Feeling Lucky
(Bloomberg Opinion) -- Hong Kong is doing everything it can to ensure Alibaba Group Holding Ltd.'s listing is a roaring success. That's turning the $12 billion mega-sale into a hot item — if you can get your hands on the shares.Alibaba will initially offer only 2.5% of the offering to individual investors, a quarter of the allocation specified in Hong Kong’s listing rules and half the 5% level typically allowed for sales valued at more than HK$10 billion ($1.3 billion). The retail portion may be increased to as much as 10% depending on the level of demand, though that’s still well below the 50% that the listing rules require for the most heavily subscribed offers.The effect of squeezing down the retail offering may be to increase the perceived rarity value of Alibaba shares, magnifying the buzz around what may be Hong Kong’s biggest share sale since 2010. For example, an allocation that is barely covered at 10% would be four times subscribed at 2.5% with the same level of demand.Hong Kong Exchanges & Clearing Ltd. has done its utmost to accommodate Alibaba, introducing rules that allow dual-class shares after resisting change for a decade — and losing the company’s $25 billion initial public offering to New York in 2014. The word “waiver” appears 80 times in Alibaba’s prospectus.With Hong Kong’s economy and markets rocked by protests, there’s much riding on a successful sale. After the listing, HKEX will be home to Asia’s two largest technology companies in Alibaba and Tencent Holdings Ltd. That could help the exchange attract more tech plays such as Southeast Asian ride-hailing giants Grab Holdings Inc. and Gojek.There are reasons to expect Alibaba’s Hong Kong stock to do well. Many mainland Chinese investors will get their first chance to buy shares of the country’s most valuable corporation, once Alibaba is included in the “stock connect” trading pipes that link Hong Kong with the Shanghai and Shenzhen exchanges. Capital controls prevent Chinese investors from easily accessing overseas stock markets, meaning that only those with money parked outside the mainland can trade Alibaba’s U.S. stock. And Chinese technology companies often attract higher valuations on local exchanges than overseas.Alibaba is at the forefront of China’s digital and consumer economies, with its Taobao and Tmall sites continuing to thrive as weakening growth prompts more people to seek bargains online. The company reported record sales for its Singles’ Day shopping festival on Nov. 11 and posted a 40% surge in September-quarter revenue. Its New York-traded stock had risen 33% this year as of Thursday’s close, and 54 of 55 analysts tracked by Bloomberg rate the stock a buy (the other is a hold).Institutions are sure to support the sale, encouraged by expectations of a wall of Chinese money joining them. Demand will come from Asian funds that have overlooked Alibaba previously because they want to trade in their own time zone. Hedge funds also sense opportunity. An expected price gap between Alibaba’s New York and Hong Kong shares is fueling a colossal arbitrage trade, Fox Hu and Carol Zhong of Bloomberg News reported Nov. 14. Alibaba will raise as much as $13.4 billion if an over-allotment option is exercised. The institutional offering will be priced on Nov. 20.In a possible fillip for retail demand, the offering will be Hong Kong’s first fully paperless listing, according to Reuters. Whether by accident or design, that means individuals won’t have to line up at banks or brokerages to obtain application forms — a potential deterrent given the unrest. Even the numbers associated with the listing are auspicious. Alibaba has capped the per-share price for individual investors at HK$188 apiece — double eight is particularly lucky in Chinese. And the company will trade under the stock code 9988, which sounds like “forever prosperous.” It looks like no one is leaving anything to chance. To contact the author of this story: Nisha Gopalan at ngopalan3@bloomberg.netTo contact the editor responsible for this story: Matthew Brooker at mbrooker1@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
- Yahoo Finance
Henry Kissinger: A permanent U.S.-China conflict will be 'catastrophic'
Henry Kissinger, with decades of experience of dealing with China, gives his assessment on the two countries' relationship.
- Zacks
Singles' Day Bonanza a Prelude to Holiday Season: 5 Picks
After a successful Singles' Day, American retailers expect a smashing holiday season.
- Reuters
Alibaba's $13.4 billion bookbuild covered multiple times - sources
Alibaba's $13.4 billion (£10.5 billion) institutional bookbuild for its Hong Kong listing is already covered "multiple times," according to a message sent to investors and verified by sources with direct knowledge of the matter. The Chinese e-commerce giant plans to list its shares in Hong Kong from November 26 and is currently marketing the deal to investors around the world. Pricing of the stock for institutional shareholders will be set on November 20, a prospectus lodged with the Hong Kong Stock Exchange shows.
- Market Exclusive
Market Morning: Alibaba Goes Hong Kong, Uber Dump, Alzheimer’s Hope, Cannabis Collapse
Alibaba, Now May Not Be the Best Time to IPO in Hong Kong Alibaba (NYSE:BABA) is going public in Hong Kong with a $13.4 billion listing, and it’s putting extra stress on the Hong Kong banking system specifically at a time when the island is on the verge of exploding in cacophonous riots leading to […]The post Market Morning: Alibaba Goes Hong Kong, Uber Dump, Alzheimer's Hope, Cannabis Collapse appeared first on Market Exclusive.
- Reuters
Explainer: Why is Alibaba listing in Hong Kong?
Chinese e-commerce giant Alibaba is set to price its first share sale in Hong Kong next week, raising up to $13.4 billion (£10.5 billion) in what will be the largest deal in the city since 2010 and the world's biggest ever cross-border secondary listing. WHY IS ALIBABA LISTING IN HONG KONG? Alibaba, which is due to start trading on Nov. 26 in Hong Kong, could also benefit from Chinese demand.
- Reuters
Hong Kong's cash pool tightens as Alibaba primes for $13 billion listing
Alibaba Group's $13.4 billion (£10.5 billion) Hong Kong listing is shrinking cash levels in the protest-wracked financial hub, with short-term borrowing costs shooting back towards a decade-high marked in July. Large IPOs and share sales typically hoover up cash in Hong Kong's relatively small banking system, albeit temporarily. "Timing wise, it's not good for the liquidity to get sucked out of the system as there's a bit of capital outflow happening due to the protests," said a Hong Kong-based senior banker at a European bank, who asked not to be identified.
- Bloomberg
Alibaba Launches Mega Share Sale With $12 Billion Retail Tag
(Bloomberg) -- Alibaba Group Holding Ltd. priced the retail portion of its Hong Kong share sale Friday, issuing an appeal to individual investors in a city in the throes of recession after months of violent pro-democracy protests.The largest Chinese e-commerce company capped the 12.5 million shares available to individual investors at HK$188 apiece -- an auspicious number in Chinese culture -- making it the most expensive first-time share sale in Hong Kong. Alibaba said it may price the remainder of its 500 million-share offering above that ceiling, signaling that it aims to raise at least $12 billion in what would be one of the world’s largest sales of stock this year. The company will price the rest of its international offering by Nov. 20.Asia’s largest corporation is proceeding with what could be Hong Kong’s biggest share sale since 2010. Slated for late November, it’ll be the Chinese e-commerce juggernaut’s official Asian coming-out party -- half a decade after snubbing the financial hub for a record Wall Street debut. Alibaba’s return hands a much-needed victory to a city wracked by protests since the summer, and will please Chinese officials who’ve watched many of the country’s largest private corporations flock overseas for capital. If the deal goes through, Alibaba will challenge Tencent Holdings Ltd. for the title of the largest Hong Kong-listed corporation.“The listing in Hong Kong will allow more of the company’s users and stakeholders in the Alibaba digital economy across Asia to invest and participate in Alibaba’s growth,” the company said. “During this time of ongoing change, we continue to believe that the future of Hong Kong remains bright,” Daniel Zhang, chief executive officer of Alibaba, said in a letter to investors.Read more: Alibaba Is Taking Orders for $11 Billion Hong Kong ListingListing closer to home has been a long-time dream of billionaire Alibaba co-founder Jack Ma’s. A successful Hong Kong share sale could help finance a costly war of subsidies with Meituan Dianping in food delivery and travel, and divert investor cash from rivals like Meituan and WeChat operator Tencent. It will also be a feather in the cap for Zhang, who took over as chairman from Ma in September. The former accountant is now spearheading the company’s expansion beyond Asia but also into adjacent markets from cloud computing to entertainment, logistics and physical retail.What Bloomberg Intelligence SaysAlibaba’s secondary listing in Hong Kong could lead to a shake up of the Hang Seng Index, the city’s main stock benchmark. The 50-member index is heavy on financial stocks, when comparing weights to other leading equity indexes in the world. Meanwhile, IT, industrials and consumer discretionary stocks are severely underrepresented.\- Steven Lam, analystClick here for the researchA marquee name like Alibaba’s could draw investors and boost trading liquidity for Hong Kong Exchanges & Clearing Ltd., which just incurred its biggest profit slump in more than three years. For Hong Kong, it’s bit of welcome news following half a year of often violent protests that have at times paralyzed the city and its service industry. Efforts to court Alibaba emanated from the very top, with Chief Executive Carrie Lam herself exhorting Ma to consider a listing in the city.Alibaba has considered a Hong Kong listing for a long time, Michael Yao, head of corporate finance at Alibaba, said on a call with investors this week. The deal size hasn’t changed as a result of the protests, he added.(Updates with details of price per share comparison in second paragraph)\--With assistance from Zhen Hao Toh.To contact the reporters on this story: Lulu Yilun Chen in Hong Kong at ychen447@bloomberg.net;Alistair Barr in San Francisco at abarr18@bloomberg.netTo contact the editors responsible for this story: Peter Elstrom at pelstrom@bloomberg.net, Edwin Chan, Colum MurphyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Reuters
Alibaba gets strong demand for $13.4 billion Hong Kong listing: sources
Alibaba's order books for its $13.4 billion Hong Kong share sale have already been covered "multiple times," sources with direct knowledge of the matter said on Friday, as the ecommerce group kicked off its campaign for the secondary listing in the city gripped by protests. The Chinese e-commerce giant plans to list its shares in Hong Kong from November 26, where it is hoping to raise up to $13.4 billion, and it is marketing the deal to investors around the world. The sources said potential investors had been told that the "quality of demand is high" and that there "continues to be very strong feedback" about the deal.
- Business Wire
Alibaba Group Launches Hong Kong Initial Public Offering
The Company’s American depositary shares (“ADSs”), each representing eight ordinary shares of the Company, will continue to be listed and traded on the New York Stock Exchange (“NYSE”). Upon listing in Hong Kong, the Hong Kong-listed shares will be fully fungible with the ADSs listed on the NYSE.
- Bloomberg
Jack Ma Says U.S.-China Trade Tension Could Last 20 Years
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. Jack Ma, the co-founder and former chairman of Alibaba Group Holding Ltd., said the U.S.-China relationship could face 20 years of “turbulence” if the two superpowers aren’t careful in how they handle trade.“We have to be very, very careful,” Ma said on Thursday in an interview with Bloomberg TV. “We have to solve problems, we should not create more problems.”While a full-scale trade war might not last that long, relations could end up rocky for the next two decades, he said. Ma emphasized the importance of the two countries working together and sharing technology.The trade dispute, which has been going on for more than a year and a half, has already ensnared more than 70% of bilateral trade in goods. If the two countries can’t resolve at least some of their differences in the coming weeks, the White House on Dec. 15 will add 15% punitive tariffs on $160 billion in Chinese imports. China-based Alibaba, one of Asia’s biggest companies, is expected to ride out the storm better than some, thanks to booming online consumption in the world’s No. 2 economy. But Alibaba saw its stock dip earlier this fall on reports that the Trump administration was weighing a limit on U.S. government pension funds buying Chinese stocks.The internet giant listed shares in New York in 2014, in the biggest ever initial public offering. It’s now readying a share sale in Hong Kong that could raise almost $12 billion. Alibaba’s shares were little changed in New York Thursday at $182.80. They have risen 33% this year.(Updates with shares in final paragraph. An earlier version was corrected to remove a reference to Ma’s reason for Hong Kong listing)To contact the reporters on this story: Kiley Roache in New York at kroache@bloomberg.net;Yinka Ibukun in Accra at yibukun@bloomberg.netTo contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Molly SchuetzFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Investing.com
Day Ahead: Top 3 Things to Watch
Investing.com - Here's a preview of the top 3 things that could rock markets tomorrow.
- Reuters
Alibaba's Hong Kong listing offers valuable Beijing goodwill
Alibaba's Hong Kong listing will not only land it $13.4 billion, it will also garner goodwill from Beijing to help the Chinese e-commerce giant weather the fallout of a damaging trade war. The share sale, set to be Hong Kong's largest in more than nine years, comes as Beijing seeks support from businesses and entrepreneurs in the face of anti-government protests there. "Beijing has long wanted China's tech champions to list closer to home," Mark Natkin, managing director at Beijing-based Marbridge Consulting, said of Alibaba's plans.
- Reuters
Alibaba to pioneer paperless listing in break with Hong Kong norm
Alibaba's planned $13.4 billion (£10.47 billion) share sale will be Hong Kong's first paperless stock market listing, a source with knowledge of the matter said, breaking with a long-held tradition of investors placing stock orders in bank branches. Companies carrying out initial public offerings in Hong Kong have traditionally placed prospectuses in banks, which would often stay open late or over the weekend, and investors would fill out paper forms to place their stock orders. The decision by Alibaba to fully automate the retail subscription component of its deal comes as Hong Kong is gripped by violent civil unrest which has shut shops in the financial district and on Thursday led the government to close schools.
- Bloomberg
Macron and Merkel Are Caught in a New Cold War
(Bloomberg Opinion) -- “Technological sovereignty” is one of the European Union’s buzzwords of the moment, conjuring up an image of a safe and secure space for zettabytes of home-grown data, free from interference or capture by the U.S. and China.Both France’s Emmanuel Macron and Germany’s Angela Merkel have used the phrase to kick-start all sorts of initiatives, from artificial intelligence programs to state-backed cloud computing. The new European Commission president Ursula Von der Leyen has etched the concept into her political guidelines.It’s a noble goal, if only because it acknowledges Europe is anything but technologically sovereign right now. The internet behemoths are in America and China — Alphabet Inc., Facebook Inc., Amazon.com Inc., Alibaba Group Holding Ltd — and an estimated 92% of the Western world’s data is stored in the U.S., according to the CEPS think tank. China accounts for more than one-third of global patent applications for 5G mobile technology. Amazon boasts that 80% of blue-chip German companies on the DAX exchange use its cloud services business AWS. The trigger to do something about it is the race for supremacy between Beijing and Washington, which is spilling over into the tech sector and undercutting the EU’s ability to protect its turf. President Donald Trump’s ban on Huawei Technologies Co. and his attempts to bully allies into doing the same was a wake-up call, however valid his security concerns. The U.S. “Cloud Act,” which forces American businesses to hand over data if ordered regardless of where it’s stored, was another. Both China and the U.S. see the EU as an easy mark in the global tech tussle. And they’re right. Europe’s problem is that recapturing sovereignty is neither easy nor cheap. Take cloud computing, one area where France and Germany are eyeing the building of “sovereign” domestic infrastructure for use by national and European companies. This is a $220 billion global market dominated by U.S. suppliers with market values of close to $1 trillion, which invests tens of billions of dollars every year on infrastructure. Their power isn’t just technological: When Microsoft Corp. spends $7.5 billion on an acquisition such as GitHub, a forum for open-source coding, it’s bringing valuable developers into its own orbit. Likewise, Amazon’s AWS has the scale, cheap pricing and perks that lock in customers.France and Germany won’t win a head-on battle in this field. Paris is still smarting from a failed attempt years ago at building a sovereign cloud for the princely sum of 150 million euros ($165 million). Germany has Gaia-X, which looks like a common space for the sharing of data by the leading lights of the DAX , from SAP SE to Siemens AG. It’s hard to see how such initiatives will lead to true digital sovereignty, though; not just because of a lack of serious investment, but because it’s hard to avoid using U.S. cloud tech.Still, it wouldn’t be a bad thing if this trend led to France and Germany collaborating more — laying the groundwork for more ambitious spending — and to Brussels doing what it does best: setting the rules of engagement for tech companies everywhere. Digital commissioner Margrethe Vestager is already demanding tougher enforcement of data protection laws and taking a consistently muscular approach to antitrust violations by the Silicon Valley and Seattle giants. It’s not sovereignty, but it’s a start.To contact the author of this story: Lionel Laurent at llaurent2@bloomberg.netTo contact the editor responsible for this story: James Boxell at jboxell@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Lionel Laurent is a Bloomberg Opinion columnist covering Brussels. He previously worked at Reuters and Forbes.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
- Bloomberg
Tencent Tests Key Support Level After Profit Disappoints
(Bloomberg) -- Tencent Holdings Ltd. slid almost 3% after reporting earnings below the lowest analyst’s estimate, underscoring the Chinese internet giant’s challenges in reviving growth during an economic slowdown.The social media goliath’s profit plummeted 13% last quarter -- worse than the most pessimistic analyst anticipated -- when an economic downturn depressed advertising and prompted charges within its huge portfolio of investments. Marketers fled to nurse shrinking budgets after drama series got delayed. And costs jumped 21% as Tencent hoovered up content to feed its Netflix-style service.Tencent was supposed to hit the comeback trail this year after a nine-month freeze on game approvals gutted its most profitable business in 2018. But the slowdown, competition from up-and-comer ByteDance Inc. for internet traffic and advertising, and now tricky political considerations is snarling that recovery. That’s a key reason its stock has vastly under-performed rival Alibaba Group Holding Ltd. this year, creating a gap of roughly $90 billion in their market valuation.“The PC gaming and media advertising business was under pressure,” said David Dai, an analyst with Bernstein. “Fintech and cloud are doing well but we need to wait a bit longer to see them contribute more significant profit.”Read more: Tencent Will Have to Wait a Little Longer for Its ComebackChina’s economic slowdown is dousing revenue growth across Tencent’s platforms, dampening appetite for advertising among large brands as well as subscriptions to its video and music streaming services. Sales from media advertising, including on the Netflix-like Tencent Video service, plummeted 28% as marketers cut spending while major shows got delayed. Beijing’s decision to cap game-time for underage users is also prompting Tencent to spend more on producing AAA-rated mobile titles that appeal to a global audience.On Wednesday, the company posted net income of 20.4 billion yuan ($2.9 billion) in the September quarter. That came alongside a 90% drop in one-time gains -- an item that tracks its vast portfolio of startups around the world -- after it swallowed charges for investments in connected automobiles. Tencent fell as much as 2.9% Thursday, testing key support at around HK$320 in its biggest decline in more than two months. The company, which has shed roughly $90 billion of market capitalization this year, is now trading at about 24 times its estimated earnings for next year, about its lowest in 2019.On Thursday, Citigroup and BOCOM International were among the brokerages that trimmed their share-price targets on Tencent. But both maintained their buy ratings and BOCOM said its HK$401 goal still implied a valuation of 31 times 2020 earnings.Read more: Tencent Analysts See Turnaround Delay as Media Ads DisappointWhat Bloomberg Intelligence SaysRobust growth in mobile games should continue, as deferred revenue from Peacekeeper Elite is recognized in coming quarters. Tencent’s rapid internationalization of its game operations will also help.\- Vey-Sern Ling, analystClick here for the research.Tencent might see light at the end of the tunnel in the fourth quarter. It hit pay-dirt with its smartphone adaptation of Call of Duty. The game garnered more than 100 million downloads in the first week, putting it ahead of Nintendo Co.’s Mario Kart Tour. That was four times more than Fortnite’s mobile version managed. That strong debut positioned it to join the other mega cash-cows in Tencent’s stable: old favorite Honour of Kings and 2019’s standout hit, Peacekeeper Elite.It wants to replicate that success over the longer term. Tencent owns stakes in some of the biggest U.S. game studios and publishers, including the outfits that created household names Fortnite, League of Legends and World of Warcraft. The Chinese company is now counting on converting popular PC content for smartphones to re-kindle growth. The pipeline for such content stretches into 2022, the company says.The “business strategy of Tencent remains intact to capture long-term opportunities ahead,” Thomas Chong and Ken Chong, analysts with Jefferies, wrote.(Updates with valuation analysis from the sixth paragraph)To contact the reporter on this story: Lulu Yilun Chen in Hong Kong at ychen447@bloomberg.netTo contact the editors responsible for this story: Peter Elstrom at pelstrom@bloomberg.net, Edwin Chan, Charlie ZhuFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Bloomberg
Alibaba Is Taking Orders for Its $11 Billion Hong Kong Listing
(Bloomberg) -- Alibaba Group Holding Ltd. started taking investor orders for its Hong Kong share sale, which could raise more than $11 billion in the city’s largest equity offering since 2010.The New York-listed tech giant is offering 500 million new shares, according to terms for the deal obtained by Bloomberg on Wednesday. The base offering could raise about $11.7 billion based on Alibaba’s Tuesday close in New York, though it’s possible the stock will be priced at a discount. Alibaba’s American depositary shares, which represent 8 ordinary shares of the internet company, closed at $186.97 in U.S. trading Tuesday. The shares fell 2.4% on Wednesday.Asia’s largest corporation is proceeding with what could be one of this year’s biggest stock offering globally despite violent pro-democracy protests gripping the city. Alibaba aims to price the offering before U.S. market open on Nov. 20 and start trading in Hong Kong on Nov. 26, the terms show.Alibaba plans to use the offering proceeds to drive user engagement, improve operational efficiency and fund continued innovation, according to the terms. Deal underwriters have a so-called greenshoe option to sell an additional 75 million shares. Alibaba said in a regulatory filing that New York will continue to be its primary listing venue.China International Capital Corp. and Credit Suisse Group AG are joint sponsors of the offering, while Citigroup Inc., JPMorgan Chase & Co. and Morgan Stanley are joint global coordinators. HSBC Holdings Plc and ICBC International Holdings Ltd. are also helping arrange the sale, the terms show.Alibaba’s share sale marks a triumph for the Hong Kong stock exchange, which lost many of China’s brightest technology stars to U.S. rivals. The city’s bourse has introduced new rules that allow dual-class shares after resisting such a change for a decade. Efforts to lure Alibaba went all the way to the top of Hong Kong’s government, with Chief Executive Carrie Lam exhorting billionaire Jack Ma to consider a listing in the city.Alibaba has considered a Hong Kong listing for a long time, even as far back as five years ago when it was scouting for its initial public offering, said Michael Yao, head of corporate finance at Alibaba, on a call with investors. “We viewed Hong Kong as strategically important to us. It’s one of the most important financial centers. And this listing will allow more of our users and stakeholders in the Alibaba digital economy across Asia the ability to invest in and participate in the fruits of our growth,” Yao said.The New York-listed Chinese giant had aimed to list over the summer before pro-democracy protests rocked the financial hub, while trade tensions between Washington and Beijing clouded the market’s outlook. It’s unclear if the violence will affect the listing process, given growing resentment toward mainland Chinese influence as well as the country’s most visible corporate symbols.Yao said the deal size hasn’t changed as a result of the protests. “This has always been our deal size,” he said, adding that the company wants to ensure there is ample liquidity in the market.Listing closer to home has been a long-time dream of Ma’s-- a move that curries favor with Beijing and hedges against trade war risks. A successful Hong Kong share sale could also help finance a costly war of subsidies with Meituan Dianping in food delivery and travel, and divert investor cash from rivals like Meituan and WeChat operator Tencent Holdings Ltd.A successful Hong Kong debut will be another feather in the cap for Daniel Zhang, who took over as chairman from Ma in September. The former accountant is now spearheading the company’s expansion beyond Asia but also into adjacent markets from cloud computing to entertainment, logistics and physical retail.(Updates Alibaba’s share price to close in second paragraph.)\--With assistance from Manuel Baigorri, Crystal Tse and Julia Fioretti.To contact the reporters on this story: Lulu Yilun Chen in Hong Kong at ychen447@bloomberg.net;Kiuyan Wong in Hong Kong at kwong739@bloomberg.net;Carol Zhong in Hong Kong at yzhong71@bloomberg.netTo contact the editors responsible for this story: Peter Elstrom at pelstrom@bloomberg.net, ;Fion Li at fli59@bloomberg.net, Ben ScentFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Bloomberg
Jack Ma Is Ripping Up a $12 Trillion Stock Market
(Bloomberg Opinion) -- Jack Ma is riding high this week. Alibaba Group Holding Ltd., the company he founded, has won approval to forge ahead with a Hong Kong share sale that could raise at least $10 billion. On Monday, China’s largest e-commerce company logged more than $38.3 billion of purchases during its annual Singles’ Day shopping event, a new record. The rest of China’s retail sector hasn't been so lucky. Just as shoppers were placing gadgets in their carts, investors were selling their consumer stocks. In two days, Gree Electric Appliances Inc. of Zhuhai and peer Midea Group Co. tumbled 7.4% and 6.2%. That’s despite electronics companies notching a 30% rise in sales this Singles’ Day.What explains the selloff?Blame Jack the Ripper. He’s killing the most beloved trade in China’s $12 trillion stock market: a bet on consumers. The retail sector, excluding cars, has been remarkably resilient this year.Now Alibaba’s Singles’ Day has kicked off a price war. Over the weekend, Gree announced it would forgo 3 billion yuan ($427.5 million) in profit just to please China’s lonesome hearts. Its air conditioners sold for as little as 1,399 yuan, a 42% discount, both online and at the company’s thousands of retail outlets. China’s biggest electronics makers have been caught in a three-way race, so it’s little surprise that rivals from Midea to Haier Electronics Group Co. quickly followed suit.Investors were already looking at Monday’s stellar statistics with suspicion, after an alarming report over the weekend that producer prices fell again in October. Call it bad timing — blockbuster sales on the heels of dour economic data. It’s also a stern reminder that deflation still grips broad swathes of the economy.There are good reasons to like consumer stocks. They are a bet on China’s rising middle class. Companies like Gree and Midea are also highly profitable, both notching a return on equity of more than 25%. This may not last much longer, however, with falling prices spreading through China’s manufacturing sector. A full-blown price war that erodes these companies’ profitability seems inevitable. In that light, you could argue that Alibaba is a good hedge against China Inc.’s deflation problem. If consumers expect deals, they’ll only visit the company’s Taobao and T-Mall platforms more frequently. When Alibaba lists in Hong Kong later this month, mainland investors will get an opportunity to buy shares via the stock connect with Shanghai and Shenzhen. Some may well dump their consumer-stock holdings to free up money for the e-commerce company. Everyone likes a good bargain; but once price wars take hold, it can be tough to find the basement.To contact the author of this story: Shuli Ren at sren38@bloomberg.netTo contact the editor responsible for this story: Rachel Rosenthal at rrosenthal21@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. She previously wrote on markets for Barron's, following a career as an investment banker, and is a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
- Reuters
UPDATE 5-Alibaba launches $13.4 bln Hong Kong listing to fund expansion
Chinese e-commerce giant Alibaba Group launched the share sale for its Hong Kong listing on Wednesday, braving unrest in the global financial hub to try to raise up to $13.4 billion to fund its expansion plans. The stock is due to start trading on Nov. 26 in Hong Kong, according to a term-sheet seen by Reuters. The books for institutional investors looking to buy the shares opened during the New York trading session on Wednesday.
- Reuters
Alibaba's Jack Ma says Singles' Day shopping results miss expectations
Alibaba Group Holding Inc co-founder Jack Ma said on Wednesday results from the Singles' Day annual online shopping festival had missed the Chinese e-commerce giant's expectations. Analysts monitor sales on Singles' Day to gauge consumer sentiment in China. The Chinese shopping festival is held on Nov. 11 and is also referred to as Double Eleven because of the date.
