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Alibaba Stock: Group Opens New Asian Markets

Posted On September 19, 2017 2:52 pm
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An Alibaba Display

Alibaba Group Holding Ltd (NYSE:BABA) continues to garner the attention of the Wall Street amid explosive growth prospects and lucrative investments. Goldman Sachs recently said in a report that retail revenues in China will keep skyrocketing.  Goldman analyst Piyush Mubayi said that rising B2C, C2C, content spending and transactions present excellent opportunities for Alibaba in Asia. The analyst increased his price target for Alibaba stock to $211.

Online sales still account for only 14% of the total retail sales in China. This shows the enormous growth potential Alibaba has.

A Graph of Alibaba's Growth

In 2016, Alibaba generated a whopping 86% of total revenue from its core commerce segment, which includes all the e-commerce segments in China and around the world. Sales in this segment increased by 58% year over year during in the June quarter.

Alibaba Group is crushing Amazon’s chances in Asia by investing heavily into the fintech and e-commerce startups. The company recently invested $200 million in BigBasket’s Series-E funding round. BigBasket is an India-based online grocery store, and Alibaba now has about 20% stake in it. Analysts think that Alibaba is killing Amazon’s acquisition opportunities by acquiring small stakes in e-commerce startups in Asia. India is the third biggest e-commerce market. Also, Alibaba is already enjoying market dominance in China, the world’s biggest e-commerce market.

 

A Graph of Grocery Sales

Alibaba also has about 80% stake in Lazada, a major e-commerce company operating in Southeast Asia.  The company also made a $1.1 billion investment in Indonesia’s Tokopedia. Tokopedia is a platform which connects buyers and sellers, and charges a small amount of every transaction for the service.

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Alibaba Group is also becoming a market leader in the online payments ecosphere. According to a report, Alipay, Alibaba’s payment service, has about 35% of the market share in China.

A Graph of Alipay's Market Share in China

Alibaba stock is attractively valued. The company is currently trading at 32 times estimated EPS of 2019, while its biggest competitor JD.com has a multiple of over 150.

Last week, Nomura analyst Jialong Shi gave a bullish outlook for Alibaba after the National Bureau of Statistics (NBS) released China’s retail data for August. Jialong said that Alibaba is an excellent investment opportunity because the company is set to gain on the back of its e-commerce and Cloud business.

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