We’re pleased to share the below audio, the first of a series of interviews with AtlasTrend by Christopher Hall of Arrow Securities Group.

The following information does not take into account your personal objectives, financial situation or needs. You should consider if the relevant investment is appropriate having regard to your own objectives, financial situation and needs.

 

Kevin Hua, Co-Founder of AtlasTrend, walks us through the three growing arms of Alibaba’s fast-paced evolution reinforcing their market dominance.

CLICK BELOW to listen to the interview (listening time is 8:26 minutes)

 

Key points:

How big is Alibaba?

• Alibaba has a market value of approximately US$360 billion (or A$475 billion)
• That’s larger than the combined size of Australia’s big 4 banks
• 6 times the combined size of Australia’s 2 largest retailers, Woolworths and Wesfarmers

How fast is Alibaba growing?

• Alibaba has generated 56% revenue growth in 2017 alone
• It’s average revenue growth is 52% for the 5 years up to 2017
• Growth is coming from all 3 core businesses – e-commerce, cloud computing, digital media
• At its recent Investor Day, it surprised the market forecasting 45% to 49% revenue growth for 2018, exceeding market expectations of 35%
• Significant growth can still be expected particularly in its cloud computing and digital media business which are at the beginning of their growth journey

Is it expensive?

• Alibaba is priced as a growth stock. Arguably some of the growth is factored in with its share price jumping 11% since the announcement of its new revenue guidance at its recent Investor Day
• Taking into account its long-term growth outlook, on a price to earnings growth basis it is not as expensive as some online Australian companies such as Webjet

What makes Alibaba an attractive investment?

• It’s enjoyed successes in building a network effect similar to Amazon and Facebook, providing opportunities in adjacent businesses
• It has more room for growth in China where it is a dominant player as well as via expansion to offshore markets
• Alibaba is leveraged into at least 2 long term structural trends, most notably online shopping and big data

Stay tuned for the next series of AtlasTrend’s interviews with Christopher Hall.

 

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