Roberto’s Path
Alibaba Group Holding Limited (NYSE:BABA) is heading towards the highly anticipated release of its second quarter 2023 (quarter ended September 30) effects on November 17, although it refrained from releasing actual sales figures for its 2022 Singles’ Day sales. (11. 11) occasion for the first time.
Alibaba reported that its Nov. 11 event “[provided a GMV] for brands in line with [2021] despite economic and COVID-related hurdles. “of 2021.
Therefore, all eyes will be on CEO Daniel Zhang and his own on November 17, as Bloomberg previously reported that Alibaba’s 11. 11 event “could suffer an unprecedented decline in the event’s 14-year history. “
Despite this, BABA outperformed the S
As a result, the market had likely ruled out any near-term likelihood of even slow easing by particularly lowering Chinese equity valuations in reaction to the start of President Xi Jinping’s unprecedented third term.
That is why we deduce that the average reversal movement of BABA remains hot at existing levels. Despite the great pessimism observed as investors further devalue China’s political risks, BABA’s value movement remains constructive. Together with a valuation outperformed in line with its Hong Kong generation colleagues, we believe BABA’s reward/risk profile remains attractive.
Hold a fixed purchase with a medium-term value (PT) target of $90.
China revived market sentiment last week when the newly installed Politburo Standing Committee (PSC) wanted “more decisive” action, as Bloomberg reported:
At an assembly of the new Politburo Standing Committee chaired by President Xi Jinping, members called for more decisive measures to curb the spread of the virus in order to resume life and production as soon as possible, according to Xinhua.
Therefore, the market was waiting for the “20 measures” implemented through China’s State Council and National Health Commission that reduced centralized quarantine time and the consequences of flight suspension. China rose to 11. 3000 on Friday, Nov. 11, surpassing 10,000 for the first time since April on Thursday.
In addition, some cities have actually reduced mass testing despite the backlog of cases. Therefore, we believe that the chances of a slow end to COVID 0 are increasingly likely.
Still, investors are not ruling out Beijing tightening COVID policy again if COVID cases continue to rise or even rise. China has argued that the recent measures do not imply that China has moved to live with the virus. The immediate eradication of COVID remains the guiding precept of its policy measures. As such, investors expect downward volatility in the near term if Beijing tightens further.
% replacement on Alibaba and % replacement on adjusted EBITDA consensus estimates (S)
As a result, we believe the thesis of a drop in Alibaba’s earnings and profitability expansion through fiscal year 23 (year ending March 2023) is increasingly likely.
Xi Jinping’s hand likely forced worsening global macroeconomic headwinds that added significant strain to his domestic malaise. As a result, China will almost certainly miss its target of 5. 5% of GDP for this year. October, with exports falling for the first time since May 2020, by 0. 3% year-on-year.
In addition, China’s Manufacturers’ Value Index (PPI) fell 1. 3% year-on-year in October, a drop for the first time in more than two years. As a result, symptoms of disinflation are building up in the Chinese economy, making policymakers likely act with greater urgency to prevent China’s economic malaise.
So, while Alibaba would possibly report a relatively tepid or even lower FQ2 earnings release than the project, the market is already looking ahead. the “second quarter of [2023]”. Therefore, Wall Street’s estimates are based on such a possibility.
Given that Xi Jinping already has to put the wheels rolling, despite the increase in COVID cases, we believe that the reward/risk of an early exit is likely to be on the rise.
BABA Price Chart (Weekly) (TradingView)
We noted in our previous update that BABA has two physically powerful spaces that can see buyers vigorously protect themselves rather than promoting more pressure.
So, even after the market forced traders to give up after breaking through its March lows, buyers came here to protect their October 2015 grades ($57). weak forks that added the falls in March/May 2022.
However, we still want BABA to start from its March point and feel above decisively so that our thesis of a reversion configuration towards the $95 point spreads accordingly.
As China gradually moves away from its 0 COVID strategy, the prospect of Alibaba beating heavily downgraded consensus projections looks increasingly likely.
Maintain an acquisition with a medium-term PT of $90.
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This article written by
I am a JR, senior and founder of JR Research and the Ultimate Growth Investing Marketplace service. Our team is committed to providing more clarity to investors in their investment decisions.
Our market service focuses on a value-based approach to expansion and generation stocks, supported through basic analysis. In addition, our general SA site deals with sector and industry stocks.
Our discussion basically focuses on a thesis in the short or medium term. While we hold long-term stocks, we also take advantage of the right opportunities to take advantage of short- and medium-term fluctuations, taking advantage of long (directionally bullish) or short (directionally bearish configurations) stocks.
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Disclosure: I have/have a long advantageous position in BABA shares, whether through ownership of shares, features or other derivatives. I wrote this article myself and it expresses my own opinions. I don’t get any refunds for this (other than Seeking Alpha). I have nothing to do with a company whose actions are analyzed in this article.