- Alibaba is still in the lead as the world’s leading e-commerce corporation.
- Alibaba has mastered “minority investments” as well as making the right partnerships with the right companies.
BABA (Alibaba Group Holdings Limited,$179.92) is the world’s largest online and mobile e-commerce marke. Headquarters based in Hangzhou and Zhejiang China, BABA has generated $736 billion for the fiscal year (ended March 2018) with over 500 million active monthly users and high revenue from their other businesses such as UCWeb, AutoNavi, Youku, Intime, Caniao Network, Ele.me, Alipay and etc.
The BABA stock is loved by most investors, whether you’re day-trading or buying investments for the long-term, BABA is currently listed at this time as a “strong buy” according to stock analysts.
(Screenshot from Finviz app)
Shareholders are satisfied with their consistently managed financials of even portions of SGA costs (30%) and fair NPM (net profit margin) of 25%. The company’s primary focus is globalization, rural expansion, large data and cloud computing. BABA also have their own strategic strategy for making minority investments as well as making many acquisitions. In April 2018, the company fully acquired Kaiyuan Commerce Co., a leading department store in Northwestern China for RMB of $3.4 billion or $15.36 million in US dollars.
Acquisitions, Mergers & Investments
BABA has many specialties, yet the company is very skilled with their investment choices. An example of their “minority investments” was announced in their recent 20-F filing:
Beijing Easyhome Furnishing Chain Group Co., Ltd., or Easyhome, a company that operates one of the largest home improvement supplies and furniture chains in China. In March 2018, we acquired a 10% equity interest in Easyhome for a cash consideration of RMB3.6 billion (US$580 million). The business cooperation between Easyhome and us will provide both online and offline customers with a comprehensive home improvement solution.
In early July of 2018, BABA’s Alibaba Cloud and Siemens have partnered to enhance each other’s global digital networks. Siemens is known for their outstanding performance of engineering excellence, quality, and innovation.
BABA also took a step further and deepened their partnership with SBUX (Starbucks Corporation) this year improve SBUX’s customer base in China with an enhanced the coffee delivery system. President Kevin Johnson stated on behalf fo SBUX,
“Our transformational partnership with Alibaba will reshape modern retail and represents a significant milestone in our efforts to exceed the expectations of Chinese consumers. Starbucks China is one to watch, and I have full confidence in the team that will bring the new innovation behind the Starbucks Experience to life.”
This is nothing but good news for the two power companies.
While some investors believe it’s still fair to buy close to its current 52-week low of $147.50, other investors believe the volatility will weaken after the trade wars calm down. Otherwise, it’s apparent that quality partnerships can strengthen any business.
Please see About Me & Disclaimer for additional information about Black Tea.