Yesterday, following the re-election of Xi-Jinping as absolute leader in China for the third time, and his “closing” words on everything related to capitalism and in general everything that can be somehow reconnected to the markets, the Asian lists took a big blow, and with them all the main components, including Alibaba Group Holdings Ltd ADR (NYSE :).
Personally, in the late evening of yesterday, I started to accumulate a position on the stock (ADR listed on the NYSE) with a first executed at 61.73 Usd, and as always these days, 2 further entries possible at certain levels in the event of a decline.
Now, on the fact that at these prices the values are at a discount, there are few doubts, what we must ask ourselves is whether the decline is dictated only by external factors, and if the stock still has quality numbers.
The stock has returned to the lows of 2015-2016, with a drop of more than 80% from the highs of 2021.
In terms of evaluations, therefore, it is not surprising (see below) that its value is at a discount compared to a possible Fair Value, analyzing it with our InvestingPro.
Analyzing the income statement, we see an excellent trend in turnover, constantly growing year on year, even if margins and profits are instead decreasing, especially in the last year. Overall, however, the 10-year annual earnings growth rate is over 20%.
Other interesting data from Alibaba Group Holdings Ltd ADR (NYSE:)…
Free cash flow (14.1 Billion) is equivalent to 5.32 Usd per share, and considering the current price it is equivalent to 8.4% return (but we are talking about the last year which was numerically one of the weakest in the recent period).
Even the valuation of the stock (Market Cap 167 Billion) makes you smile if we think, for example, that only between liquidity and short-term investments, Alibaba Group Holdings Ltd ADR (NYSE 🙂 has something like 72 Billion (I’ll tell you in a more understandable way, the stock is worth 63.15 Usd, but of these 27 Usd are practically liquidity per share).
Finally, also at the level of balance and capital stability, the ratio between current assets and current liabilities is higher than 1, and the debt-to-capital ratio lower than 1.
Now, as always, the impact of Chinese government policies has had and will continue to have an impact on the stock, however at these valuations we cannot deny that the stock is heavily discounted. The next quarterly on November 3 will be the next test, in any case, even if the stock were to maintain a similar trend to the last 2-3 years, weaker than the previous ones, at these prices it would still be interesting.
As anticipated, however, to be even more prudent, I will keep other possible entries if the downward trend continues.
Until next time!
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“This article has been written for informational purposes only; it does not constitute solicitation, offer, advice, advice or recommendation to invest as such, it does not want to incentivize the purchase of assets in any way. I remember that any type of assets is evaluated from several points of view and is highly risky and therefore, every investment decision and the related risk remain at the expense of “