hillfronter83 Posted April 24, 2014 Share Posted April 24, 2014 arent there capital restrictions in china in regard to paying out $ to foreign shareholders if they make money in renminbi? How does that work here? I'm not aware of any regulation that requires different treatment for foreign or domestic shareholders. There are many chinese companies on NYSE that pay regular dividends. I wouldn't think this is a much different situation than Apple's Chinese subsidary that needs to send back its profits. Link to comment Share on other sites More sharing options...
bmichaud Posted April 24, 2014 Share Posted April 24, 2014 May have already been posted, but good article on Alibaba: http://oraclefromomaha.wordpress.com/2014/04/20/whats-alibaba-really-worth-2/ Link to comment Share on other sites More sharing options...
hillfronter83 Posted April 24, 2014 Share Posted April 24, 2014 is there any % of income from alibaba reflected in softbank's figures? They will do 4-6 billion$ in income this year (alibaba). I dont think a 35x multiple is unreasonable for the ipo here. a 33% stake would imply roughly 57 billion$. Softbank did 3 billion $ in net income, so you pay about 33 billion for the remaining business. Which seems pretty cheap. If you value softbank at 15x earnings, then your getting alibaba for between 22-33x earnings. Which seems really cheap for a business like that (or at least 22x earnings is). You have serious growth prospects, really high return on capital and a big moat. sina holds a 1% stake. Ticker is SINA. They bought 50 million$ in octobre 2011. So i assume that is 1%? so that is worth north of 1 billion. They also hold 100 million $ worth of Youku Tudou shares, apparantly the chinese youtube? And they did 45 million in net income in 2013, and are growing. revenue grew 25% YoY, but gross profit grew 40%. and there seems to be some leverage there. So you could argue that their core business is worth more then 10x earnings? Anyone have an opinion on Sina? Where did you find information about Sina's equity holding in other public trade securities? Sina down over 5% due to government investigation about porngraphy. Current market value is about sum of cash and Weibo stake. Link to comment Share on other sites More sharing options...
yadayada Posted April 24, 2014 Share Posted April 24, 2014 that oracle of omaha guy probably has gotten some new regular readers because of that post. And if you google you see they got about 56% i think of weibo after the IPO and selling off a stake to alibaba. And 200 million$ worth of alibaba, and 100 million$ worth of youku toudu or something. But I doubt the chinese youtube will make money anytime soon. Im not even sure if our youtube makes money. Link to comment Share on other sites More sharing options...
PatientCheetah Posted April 24, 2014 Share Posted April 24, 2014 that oracle of omaha guy probably has gotten some new regular readers because of that post. And if you google you see they got about 56% i think of weibo after the IPO and selling off a stake to alibaba. And 200 million$ worth of alibaba, and 100 million$ worth of youku toudu or something. But I doubt the chinese youtube will make money anytime soon. Im not even sure if our youtube makes money. Our youtube makes 3-4 bil in net income. With 30-40% growth, the right valuation is somewhere between a Twitter and a Facebook. Link to comment Share on other sites More sharing options...
yadayada Posted April 24, 2014 Share Posted April 24, 2014 How do you know that? I googled and looked in their 10k but couldnt find anything about youtube profits. Another interesting note is that Weibo was actually already making a profit in Q4 last year. Link to comment Share on other sites More sharing options...
PatientCheetah Posted April 24, 2014 Share Posted April 24, 2014 How do you know that? I googled and looked in their 10k but couldnt find anything about youtube profits. Another interesting note is that Weibo was actually already making a profit in Q4 last year. Watch the latest episode of "this week in startups" on youtube Link to comment Share on other sites More sharing options...
PatientCheetah Posted April 25, 2014 Share Posted April 25, 2014 is there any % of income from alibaba reflected in softbank's figures? They will do 4-6 billion$ in income this year (alibaba). I dont think a 35x multiple is unreasonable for the ipo here. a 33% stake would imply roughly 57 billion$. Softbank did 3 billion $ in net income, so you pay about 33 billion for the remaining business. Which seems pretty cheap. If you value softbank at 15x earnings, then your getting alibaba for between 22-33x earnings. Which seems really cheap for a business like that (or at least 22x earnings is). You have serious growth prospects, really high return on capital and a big moat. sina holds a 1% stake. Ticker is SINA. They bought 50 million$ in octobre 2011. So i assume that is 1%? so that is worth north of 1 billion. They also hold 100 million $ worth of Youku Tudou shares, apparantly the chinese youtube? And they did 45 million in net income in 2013, and are growing. revenue grew 25% YoY, but gross profit grew 40%. and there seems to be some leverage there. So you could argue that their core business is worth more then 10x earnings? Anyone have an opinion on Sina? Where did you find information about Sina's equity holding in other public trade securities? Sina down over 5% due to government investigation about porngraphy. Current market value is about sum of cash and Weibo stake. The danger is Weibo stake not worth its valuation. Maybe a safer way to own Sina and short Weibo. I can't find borrows from my broker. Anyone see glaring flaw in the idea? Link to comment Share on other sites More sharing options...
Stevieoopsie Posted April 25, 2014 Share Posted April 25, 2014 If you are looking for Chinese internet sum-of-parts ideas, SOHU is much cheaper than SINA. Link to comment Share on other sites More sharing options...
yadayada Posted April 25, 2014 Share Posted April 25, 2014 How do you know that? I googled and looked in their 10k but couldnt find anything about youtube profits. Another interesting note is that Weibo was actually already making a profit in Q4 last year. Watch the latest episode of "this week in startups" on youtube wouldnt it be smart then to own the chinese youtube? I mean china is much larger, so 6-7 billion in net income might not be crazy 6-7 years from now? That would make it like a 15-20 bagger over that time? They are only valued at 5 billion$ now. Link to comment Share on other sites More sharing options...
wbr Posted April 25, 2014 Share Posted April 25, 2014 How do you know that? I googled and looked in their 10k but couldnt find anything about youtube profits. Another interesting note is that Weibo was actually already making a profit in Q4 last year. Watch the latest episode of "this week in startups" on youtube wouldnt it be smart then to own the chinese youtube? I mean china is much larger, so 6-7 billion in net income might not be crazy 6-7 years from now? That would make it like a 15-20 bagger over that time? They are only valued at 5 billion$ now. Youtube is the clear leader in a market with winner-takes-all characteristics and that makes it a great asset. Facebook is successful and Twitter will be successful because they are the first movers with no clear competition. In China those services are copied by entrepreneurs and then you usually end up with a bunch of competitiors instaed of a clear leader. Different platforms are competing for the market and in the end one winner will emerge and the other companies are going to vanish. I'd rather own Baidu or Tencent who have deep pockets to support their platforms and make them come out on top in the different markets against Yoku Todou, Renren and even Weibo (they would be better off if Alibaba owned 100%). It isnt a coincidence that Youtube became the leader and not some independent video platform. Link to comment Share on other sites More sharing options...
PatientCheetah Posted April 25, 2014 Share Posted April 25, 2014 How do you know that? I googled and looked in their 10k but couldnt find anything about youtube profits. Another interesting note is that Weibo was actually already making a profit in Q4 last year. Watch the latest episode of "this week in startups" on youtube wouldnt it be smart then to own the chinese youtube? I mean china is much larger, so 6-7 billion in net income might not be crazy 6-7 years from now? That would make it like a 15-20 bagger over that time? They are only valued at 5 billion$ now. Youtube is the clear leader in a market with winner-takes-all characteristics and that makes it a great asset. Facebook is successful and Twitter will be successful because they are the first movers with no clear competition. In China those services are copied by entrepreneurs and then you usually end up with a bunch of competitiors instaed of a clear leader. Different platforms are competing for the market and in the end one winner will emerge and the other companies are going to vanish. I'd rather own Baidu or Tencent who have deep pockets to support their platforms and make them come out on top in the different markets against Yoku Todou, Renren and even Weibo (they would be better off if Alibaba owned 100%). It isnt a coincidence that Youtube became the leader and not some independent video platform. The more I researched the more I became convinced that Weibo is now a #2. WeChat has come a long way and is now becoming the dominating platform of everything - it took all the best ideas from the U.S. - uber, facebook, twitter, etc. Link to comment Share on other sites More sharing options...
Stevieoopsie Posted April 25, 2014 Share Posted April 25, 2014 Yoku is not China's Youtube. The online video business in China is very fragmented and no player has nearly the same level of dominance that Youtube enjoys in the U.S. The industry is viewed by many of the big internet conglomerates as one of the few areas on the internet where it's not yet too late to join the game given the fragmentation and companies are investing heavily in proprietary content to take market share away from Yoku. SOHU's video business, for example, is no.2 in China and that business has sunk hundreds of $millions in high quality content. Consumer behavior in video content distribution in China is different too. People value high-quality, programmed content a lot more highly than the stuff on Youtube so the network effect on these video platforms is not that strong. Link to comment Share on other sites More sharing options...
yadayada Posted April 25, 2014 Share Posted April 25, 2014 Youku tudou is a clear leader in user uploaded video's right? And they have the rights for a lot of popular mainstream american shows. So it seems like apples and oranges? Link to comment Share on other sites More sharing options...
PatientCheetah Posted April 25, 2014 Share Posted April 25, 2014 Not comparable, youtube splits 45/55 with content owners - charge expensive toll without having to put down anything for the content. Youku is more comparable to netflix, not a FCF machine - only makes sense from a M&A angle. Link to comment Share on other sites More sharing options...
fareastwarriors Posted April 28, 2014 Share Posted April 28, 2014 Knockoffs Thrive on Alibaba's Taobao Critics Say Chinese E-Commerce Giant Needs to Do More About Counterfeit Goods http://online.wsj.com/news/articles/SB10001424052702304049904579517642158573008?mod=WSJ_hpp_MIDDLENexttoWhatsNewsFifth&mg=reno64-wsj Link to comment Share on other sites More sharing options...
wbr Posted April 28, 2014 Share Posted April 28, 2014 The value venture analysis states the following: "The company also has a zero tolerance policy toward counterfeit products, and does a very effective job regulating vendors. Alibaba’s platforms all require vendors to deposit a large amount of cash upfront; customers can send complaints to the company when they receive counterfeit products and when verified, Alibaba charges the vendor a hefty penalty fee on its deposit." Why - according to the WSJ article - would this system fail or not be effective enough? (I can't read the article :S) Link to comment Share on other sites More sharing options...
yadayada Posted April 28, 2014 Share Posted April 28, 2014 search the title, and go through google that way you an read it. title: Knockoffs Thrive on Alibaba's Taobao Link to comment Share on other sites More sharing options...
beerbaron Posted April 29, 2014 Share Posted April 29, 2014 The value venture analysis states the following: "The company also has a zero tolerance policy toward counterfeit products, and does a very effective job regulating vendors. Alibaba’s platforms all require vendors to deposit a large amount of cash upfront; customers can send complaints to the company when they receive counterfeit products and when verified, Alibaba charges the vendor a hefty penalty fee on its deposit." Why - according to the WSJ article - would this system fail or not be effective enough? (I can't read the article :S) Go on Aliexpress an search for NHL hockey jerseys it is obvious Alibaba does not care about copyrights. The hockey jerseys are great tough! Just like the real thing, it even says "made in Canada" BeerBaron Link to comment Share on other sites More sharing options...
Liberty Posted May 1, 2014 Author Share Posted May 1, 2014 http://www.nytimes.com/2014/05/01/technology/after-alibaba-ipo-us-web-giants-may-stop-ignoring-chinese-rivals.html Link to comment Share on other sites More sharing options...
wbr Posted May 2, 2014 Share Posted May 2, 2014 I like Alibaba's core business, but it worries me that they start throwing money around. Their cashflow is so strong (with minimal growth capex) it seems they dont even need the money from the IPO. The main reason for the IPO is the ability for the big shareholders to sell parts of their equity stakes over the coming years. When they grow more in the next years and take in $20 billion from the IPO there is a lot of potential for bad investment decisions. http://www.reuters.com/article/2014/04/28/us-youku-tudou-alibaba-group-idUSBREA3R0MG20140428 I dont mind the latest investments too much. I think placing a lot of small bets is a decent strategy that worked for Google and Amazon, but once they have the IPO money in their pockets they can make a big bet and potentially waste a lot of money. I'm still not convinced that the Whatsapp acquisition was bad, because it depends on what they make out of it, but it definitely comes to mind when I think about things I wouldnt want Alibaba to do. Link to comment Share on other sites More sharing options...
frommi Posted May 4, 2014 Share Posted May 4, 2014 Thanks for posting this idea. Reading the articles i am under the impression that the US internet giants have huge problems in china and their growth probably comes to an end soon. The IPO of Alibaba will probably leech a lot of money out of the US tech stocks just because of supply and demand. Perhaps its a better idea to short AMZN instead of going long Alibaba. Link to comment Share on other sites More sharing options...
Liberty Posted May 6, 2014 Author Share Posted May 6, 2014 http://dealbook.nytimes.com/2014/05/06/alibaba-files-to-go-public-in-the-u-s/ http://projects.wsj.com/alibaba/ Link to comment Share on other sites More sharing options...
fareastwarriors Posted May 7, 2014 Share Posted May 7, 2014 Alibaba and VIEs: A Primer http://blogs.wsj.com/moneybeat/2014/05/06/alibaba-and-vies-a-primer/?mod=WSJBlog&mod=MarketsMain Link to comment Share on other sites More sharing options...
Patmo Posted May 7, 2014 Share Posted May 7, 2014 Don't forget (almost) any investment in Chinese companies has 100% potential downside from multiple angles, so be smarter than I have been and use the dropper if you're going to take a position. Link to comment Share on other sites More sharing options...
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