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Daniel Zhang sounds like a really interesting guy, surprised no one here talked about him yet. He works til 11PM every night and networks on weekends. Hema, the high end grocery chain, was his pet project that he kept secret from Jack Ma for 2 years until he found the best operational model that suit the blending of offline and online retail in China. Tmall's Single Day event and its subsequent success was also his idea.

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What do people here make of BABA’s accounting. the article below, while biased, raised some valid point regarding BABA’s accounting. having a $1.2B company like Wazmu disappear from BABA’s annual report and balance sheet without a trace is done discomforting:

https://deep-throat-ipo.blogspot.com/2018/08/the-baba-20-ffinancial-comedy-gold.html

I think they've closet full of skeletons and that's the real the reason behind Ma's retirement.

 

The "deep-throat" guy is hyperbolic, but I've never seen any evidence that anyone really understands BABA's financials. So in that sense he's right.

 

Clearly BABA contains lots of extremely valuable businesses, but it's the ultimate too hard situation IMO.

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What do people here make of BABA’s accounting. the article below, while biased, raised some valid point regarding BABA’s accounting. having a $1.2B company like Wazmu disappear from BABA’s annual report and balance sheet without a trace is done discomforting:

https://deep-throat-ipo.blogspot.com/2018/08/the-baba-20-ffinancial-comedy-gold.html

I think they've closet full of skeletons and that's the real the reason behind Ma's retirement.

 

The "deep-throat" guy is hyperbolic, but I've never seen any evidence that anyone really understands BABA's financials. So in that sense he's right.

 

Clearly BABA contains lots of extremely valuable businesses, but it's the ultimate too hard situation IMO.

 

My notes from reading the 20-f:

 

P. 4 what are the $3.262B in impairments on investments? ( mostly Alibaba pictures ?)

P.36 $13.7B senior notes and $4B 5 year loan fully drawn down, why?

p.43 VIE structure, 3 layer of holding companies above the operating subs

P. 45 WASU related party transaction

P.137 $4.862B in investment and interest income, (counted as earnings )

F-40 why change 37.5% of Alipay profit for a 33% stake? (This diluted shareholders)

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What do people here make of BABA’s accounting. the article below, while biased, raised some valid point regarding BABA’s accounting. having a $1.2B company like Wazmu disappear from BABA’s annual report and balance sheet without a trace is done discomforting:

https://deep-throat-ipo.blogspot.com/2018/08/the-baba-20-ffinancial-comedy-gold.html

I think they've closet full of skeletons and that's the real the reason behind Ma's retirement.

 

The "deep-throat" guy is hyperbolic, but I've never seen any evidence that anyone really understands BABA's financials. So in that sense he's right.

 

Clearly BABA contains lots of extremely valuable businesses, but it's the ultimate too hard situation IMO.

 

My notes from reading the 20-f:

 

P. 4 what are the $3.262B in impairments on investments? ( mostly Alibaba pictures ?)

P.36 $13.7B senior notes and $4B 5 year loan fully drawn down, why?

p.43 VIE structure, 3 layer of holding companies above the operating subs

P. 45 WASU related party transaction

P.137 $4.862B in investment and interest income, (counted as earnings )

F-40 why change 37.5% of Alipay profit for a 33% stake? (This diluted shareholders)

The VIE structure goes very deep,  I wish it was only 3 layers. Ma has some 41 connections to different companies based in the PRC. About 25 of which he owns a certain shareholder percentage, the rest he is on the board of. The response I got back from the BABA investor relations was that he was only a director at these 25 companies as well and not an investor. They told a flat out lie, I went to  http://www.gsxt.gov.cn/index.html

just to verify every company to make sure nothing changed. I've attached the excel file that was sent, if anyone was interested.

JackMA.xlsx

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What do people here make of BABA’s accounting. the article below, while biased, raised some valid point regarding BABA’s accounting. having a $1.2B company like Wazmu disappear from BABA’s annual report and balance sheet without a trace is done discomforting:

https://deep-throat-ipo.blogspot.com/2018/08/the-baba-20-ffinancial-comedy-gold.html

I think they've closet full of skeletons and that's the real the reason behind Ma's retirement.

 

The "deep-throat" guy is hyperbolic, but I've never seen any evidence that anyone really understands BABA's financials. So in that sense he's right.

 

Clearly BABA contains lots of extremely valuable businesses, but it's the ultimate too hard situation IMO.

 

My notes from reading the 20-f:

 

P. 4 what are the $3.262B in impairments on investments? ( mostly Alibaba pictures ?)

P.36 $13.7B senior notes and $4B 5 year loan fully drawn down, why?

p.43 VIE structure, 3 layer of holding companies above the operating subs

P. 45 WASU related party transaction

P.137 $4.862B in investment and interest income, (counted as earnings )

F-40 why change 37.5% of Alipay profit for a 33% stake? (This diluted shareholders)

The VIE structure goes very deep,  I wish it was only 3 layers. Ma has some 41 connections to different companies based in the PRC. About 25 of which he owns a certain shareholder percentage, the rest he is on the board of. The response I got back from the BABA investor relations was that he was only a director at these 25 companies as well and not an investor. They told a flat out lie, I went to  http://www.gsxt.gov.cn/index.html

just to verify every company to make sure nothing changed. I've attached the excel file that was sent, if anyone was interested.

 

Thanks for your detective work, I really didn’t go that far. I was interested in BABA for a long, but will pass. There simply is no way to rationally explain such a complex structure and the related party transactions which have been disclosed, that are positive for an investor.

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I'm amazed so many HF's/institutions own this given it's effectively un-dilligenceable given the layers of subs and unclear personal/management holdings.

 

Regardless of how it turns out, it's one of the worst examples of corporate governance and disclosure I've ever seen.

 

At least with Tencent, 90% of the assets are owned by the listco. With BABA, you get nothing AND a management team with a history of screwing western shareholders.

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I'm amazed so many HF's/institutions own this given it's effectively un-dilligenceable given the layers of subs and unclear personal/management holdings.

 

Regardless of how it turns out, it's one of the worst examples of corporate governance and disclosure I've ever seen.

 

At least with Tencent, 90% of the assets are owned by the listco. With BABA, you get nothing AND a management team with a history of screwing western shareholders.

 

Its possible to do due-diligence it just takes a ridiculous amount of time to get to the bottom of anything they own. I just have to assume that none of the hedge funds that own this have done any kind of work or have read a single line from an Alibaba annual report. Take for example their Best Inc. holdings, its held in Hangzhou Ali Venture Capital Co., Ltd which is owned 80% by Ma and 20% by Simon, not by the listco. They pledged their equity in the firm to one of the WFOE's so Hangzhou Ali Venture Capital Co is thus consolidated in the BABA annual report. That's not even disclosed in the BABA annual report, I ended up finding it in the Best Inc. reports.

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Its possible to do due-diligence it just takes a ridiculous amount of time to get to the bottom of anything they own. I just have to assume that none of the hedge funds that own this have done any kind of work or have read a single line from an Alibaba annual report. Take for example their Best Inc. holdings, its held in Hangzhou Ali Venture Capital Co., Ltd which is owned 80% by Ma and 20% by Simon, not by the listco. They pledged their equity in the firm to one of the WFOE's so Hangzhou Ali Venture Capital Co is thus consolidated in the BABA annual report. That's not even disclosed in the BABA annual report, I ended up finding it in the Best Inc. reports.

 

Where are you seeing this in the Best annual report?  Under the Share Ownership footnotes the Best 20-F says Alibaba's stake is owned by Alibaba Investment Limited, which is wholly owned Alibaba Group Holding Limited, the ListCo...

 

 

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Its possible to do due-diligence it just takes a ridiculous amount of time to get to the bottom of anything they own. I just have to assume that none of the hedge funds that own this have done any kind of work or have read a single line from an Alibaba annual report. Take for example their Best Inc. holdings, its held in Hangzhou Ali Venture Capital Co., Ltd which is owned 80% by Ma and 20% by Simon, not by the listco. They pledged their equity in the firm to one of the WFOE's so Hangzhou Ali Venture Capital Co is thus consolidated in the BABA annual report. That's not even disclosed in the BABA annual report, I ended up finding it in the Best Inc. reports.

 

Where are you seeing this in the Best annual report?  Under the Share Ownership footnotes the Best 20-F says Alibaba's stake is owned by Alibaba Investment Limited, which is wholly owned Alibaba Group Holding Limited, the ListCo...

 

The stock is a shell co., most of the business is run through its VIE.

https://www.qichacha.com/firm_ca73e5d4965cdf0c9c66938e38a3866c.html

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Its possible to do due-diligence it just takes a ridiculous amount of time to get to the bottom of anything they own. I just have to assume that none of the hedge funds that own this have done any kind of work or have read a single line from an Alibaba annual report. Take for example their Best Inc. holdings, its held in Hangzhou Ali Venture Capital Co., Ltd which is owned 80% by Ma and 20% by Simon, not by the listco. They pledged their equity in the firm to one of the WFOE's so Hangzhou Ali Venture Capital Co is thus consolidated in the BABA annual report. That's not even disclosed in the BABA annual report, I ended up finding it in the Best Inc. reports.

 

Where are you seeing this in the Best annual report?  Under the Share Ownership footnotes the Best 20-F says Alibaba's stake is owned by Alibaba Investment Limited, which is wholly owned Alibaba Group Holding Limited, the ListCo...

 

The stock is a shell co., most of the business is run through its VIE.

https://www.qichacha.com/firm_ca73e5d4965cdf0c9c66938e38a3866c.html

 

Isn't this the case for all Chinese listed technology companies?  They all have the VIE structure, what's the difference?  Alibaba the ListCo owns Alibaba Investment Limited which owns shares in BSTI on the Nasdaq which are worth $500MM, so are you saying the public shareholders in BSTI own absolutely nothing but are paying $2.3Bn for it? 

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Its possible to do due-diligence it just takes a ridiculous amount of time to get to the bottom of anything they own. I just have to assume that none of the hedge funds that own this have done any kind of work or have read a single line from an Alibaba annual report. Take for example their Best Inc. holdings, its held in Hangzhou Ali Venture Capital Co., Ltd which is owned 80% by Ma and 20% by Simon, not by the listco. They pledged their equity in the firm to one of the WFOE's so Hangzhou Ali Venture Capital Co is thus consolidated in the BABA annual report. That's not even disclosed in the BABA annual report, I ended up finding it in the Best Inc. reports.

 

Where are you seeing this in the Best annual report?  Under the Share Ownership footnotes the Best 20-F says Alibaba's stake is owned by Alibaba Investment Limited, which is wholly owned Alibaba Group Holding Limited, the ListCo...

 

The stock is a shell co., most of the business is run through its VIE.

https://www.qichacha.com/firm_ca73e5d4965cdf0c9c66938e38a3866c.html

 

Isn't this the case for all Chinese listed technology companies?  They all have the VIE structure, what's the difference?  Alibaba the ListCo owns Alibaba Investment Limited which owns shares in BSTI on the Nasdaq which are worth $500MM, so are you saying the public shareholders in BSTI own absolutely nothing but are paying $2.3Bn for it?

Welcome to Chinese ADR's you own an offshore shell company with contractual obligations not the actual Chinese operating assets.

You can thank Enron for changing how VIE's are consolidated as well.

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Its possible to do due-diligence it just takes a ridiculous amount of time to get to the bottom of anything they own. I just have to assume that none of the hedge funds that own this have done any kind of work or have read a single line from an Alibaba annual report. Take for example their Best Inc. holdings, its held in Hangzhou Ali Venture Capital Co., Ltd which is owned 80% by Ma and 20% by Simon, not by the listco. They pledged their equity in the firm to one of the WFOE's so Hangzhou Ali Venture Capital Co is thus consolidated in the BABA annual report. That's not even disclosed in the BABA annual report, I ended up finding it in the Best Inc. reports.

 

Where are you seeing this in the Best annual report?  Under the Share Ownership footnotes the Best 20-F says Alibaba's stake is owned by Alibaba Investment Limited, which is wholly owned Alibaba Group Holding Limited, the ListCo...

 

The stock is a shell co., most of the business is run through its VIE.

https://www.qichacha.com/firm_ca73e5d4965cdf0c9c66938e38a3866c.html

 

Isn't this the case for all Chinese listed technology companies?  They all have the VIE structure, what's the difference?  Alibaba the ListCo owns Alibaba Investment Limited which owns shares in BSTI on the Nasdaq which are worth $500MM, so are you saying the public shareholders in BSTI own absolutely nothing but are paying $2.3Bn for it?

Welcome to Chinese ADR's you own an offshore shell company with contractual obligations not the actual Chinese operating assets.

You can thank Enron for changing how VIE's are consolidated as well.

 

Yes, but your original post implied BABA was trying to dupe the public markets through lack of disclosure that BABA owns 22% of Best Inc when really Jack Ma owns it.  There's no lack of disclosure, every investor in Chinese ADRs knows there is a VIE structure... 

 

The VIE structure is obviously a risk-factor, but your particular example of difficulty to understand BABA seems off, since a) in a paragraph or two we've determined pretty easily that BABA does in fact own 22% of BSTI but the VIE is controlled by a Ma entity... tomorrow BABA could sell it's BSTI stock and have $500MM in cash though... and b) this is so immaterial to the value of BABA that it's irrelevant.  (Note, I don't own BABA)

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Its possible to do due-diligence it just takes a ridiculous amount of time to get to the bottom of anything they own. I just have to assume that none of the hedge funds that own this have done any kind of work or have read a single line from an Alibaba annual report. Take for example their Best Inc. holdings, its held in Hangzhou Ali Venture Capital Co., Ltd which is owned 80% by Ma and 20% by Simon, not by the listco. They pledged their equity in the firm to one of the WFOE's so Hangzhou Ali Venture Capital Co is thus consolidated in the BABA annual report. That's not even disclosed in the BABA annual report, I ended up finding it in the Best Inc. reports.

 

Where are you seeing this in the Best annual report?  Under the Share Ownership footnotes the Best 20-F says Alibaba's stake is owned by Alibaba Investment Limited, which is wholly owned Alibaba Group Holding Limited, the ListCo...

 

The stock is a shell co., most of the business is run through its VIE.

https://www.qichacha.com/firm_ca73e5d4965cdf0c9c66938e38a3866c.html

 

Isn't this the case for all Chinese listed technology companies?  They all have the VIE structure, what's the difference?  Alibaba the ListCo owns Alibaba Investment Limited which owns shares in BSTI on the Nasdaq which are worth $500MM, so are you saying the public shareholders in BSTI own absolutely nothing but are paying $2.3Bn for it?

Welcome to Chinese ADR's you own an offshore shell company with contractual obligations not the actual Chinese operating assets.

You can thank Enron for changing how VIE's are consolidated as well.

 

Yes, but your original post implied BABA was trying to dupe the public markets through lack of disclosure that BABA owns 22% of Best Inc when really Jack Ma owns it.  There's no lack of disclosure, every investor in Chinese ADRs knows there is a VIE structure... 

 

The VIE structure is obviously a risk-factor, but your particular example of difficulty to understand BABA seems off, since a) in a paragraph or two we've determined pretty easily that BABA does in fact own 22% of BSTI but the VIE is controlled by a Ma entity... tomorrow BABA could sell it's BSTI stock and have $500MM in cash though... and b) this is so immaterial to the value of BABA that it's irrelevant.  (Note, I don't own BABA)

Most other retail investors I've talked to have no idea about the VIE structure.

BABA investors own the shell company in Best Inc., Jack and Simon own 27% of the operating assets. That seems pretty material to me.

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Its possible to do due-diligence it just takes a ridiculous amount of time to get to the bottom of anything they own. I just have to assume that none of the hedge funds that own this have done any kind of work or have read a single line from an Alibaba annual report. Take for example their Best Inc. holdings, its held in Hangzhou Ali Venture Capital Co., Ltd which is owned 80% by Ma and 20% by Simon, not by the listco. They pledged their equity in the firm to one of the WFOE's so Hangzhou Ali Venture Capital Co is thus consolidated in the BABA annual report. That's not even disclosed in the BABA annual report, I ended up finding it in the Best Inc. reports.

 

Where are you seeing this in the Best annual report?  Under the Share Ownership footnotes the Best 20-F says Alibaba's stake is owned by Alibaba Investment Limited, which is wholly owned Alibaba Group Holding Limited, the ListCo...

 

The stock is a shell co., most of the business is run through its VIE.

https://www.qichacha.com/firm_ca73e5d4965cdf0c9c66938e38a3866c.html

 

Isn't this the case for all Chinese listed technology companies?  They all have the VIE structure, what's the difference?  Alibaba the ListCo owns Alibaba Investment Limited which owns shares in BSTI on the Nasdaq which are worth $500MM, so are you saying the public shareholders in BSTI own absolutely nothing but are paying $2.3Bn for it?

Welcome to Chinese ADR's you own an offshore shell company with contractual obligations not the actual Chinese operating assets.

You can thank Enron for changing how VIE's are consolidated as well.

 

Yes, but your original post implied BABA was trying to dupe the public markets through lack of disclosure that BABA owns 22% of Best Inc when really Jack Ma owns it.  There's no lack of disclosure, every investor in Chinese ADRs knows there is a VIE structure... 

 

The VIE structure is obviously a risk-factor, but your particular example of difficulty to understand BABA seems off, since a) in a paragraph or two we've determined pretty easily that BABA does in fact own 22% of BSTI but the VIE is controlled by a Ma entity... tomorrow BABA could sell it's BSTI stock and have $500MM in cash though... and b) this is so immaterial to the value of BABA that it's irrelevant.  (Note, I don't own BABA)

 

It’s never irrelevant when you find a cockroach.

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Its possible to do due-diligence it just takes a ridiculous amount of time to get to the bottom of anything they own. I just have to assume that none of the hedge funds that own this have done any kind of work or have read a single line from an Alibaba annual report. Take for example their Best Inc. holdings, its held in Hangzhou Ali Venture Capital Co., Ltd which is owned 80% by Ma and 20% by Simon, not by the listco. They pledged their equity in the firm to one of the WFOE's so Hangzhou Ali Venture Capital Co is thus consolidated in the BABA annual report. That's not even disclosed in the BABA annual report, I ended up finding it in the Best Inc. reports.

 

Where are you seeing this in the Best annual report?  Under the Share Ownership footnotes the Best 20-F says Alibaba's stake is owned by Alibaba Investment Limited, which is wholly owned Alibaba Group Holding Limited, the ListCo...

 

The stock is a shell co., most of the business is run through its VIE.

https://www.qichacha.com/firm_ca73e5d4965cdf0c9c66938e38a3866c.html

 

Isn't this the case for all Chinese listed technology companies?  They all have the VIE structure, what's the difference?  Alibaba the ListCo owns Alibaba Investment Limited which owns shares in BSTI on the Nasdaq which are worth $500MM, so are you saying the public shareholders in BSTI own absolutely nothing but are paying $2.3Bn for it?

Welcome to Chinese ADR's you own an offshore shell company with contractual obligations not the actual Chinese operating assets.

You can thank Enron for changing how VIE's are consolidated as well.

 

Yes, but your original post implied BABA was trying to dupe the public markets through lack of disclosure that BABA owns 22% of Best Inc when really Jack Ma owns it.  There's no lack of disclosure, every investor in Chinese ADRs knows there is a VIE structure... 

 

The VIE structure is obviously a risk-factor, but your particular example of difficulty to understand BABA seems off, since a) in a paragraph or two we've determined pretty easily that BABA does in fact own 22% of BSTI but the VIE is controlled by a Ma entity... tomorrow BABA could sell it's BSTI stock and have $500MM in cash though... and b) this is so immaterial to the value of BABA that it's irrelevant.  (Note, I don't own BABA)

 

It’s never irrelevant when you find a cockroach.

 

What is the cockroach?  That a company controlled by Ma owns the operating assets and all that the BSTI shareholders own is a contractual right to the profits of those assets?There is nothing being hidden, everyone knows this and it's fully disclosed in every Chinese tech ADR.  Alibaba DOES own 22% of BTSI outright...  tomorrow, Alibaba could sell those shares and would have $500MM in cash.  What am I missing?

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https://www.cnbc.com/2018/09/19/jack-ma-alibaba-is-no-longer-planning-to-create-1-million-us-jobs.html

 

Jack Ma, founder of Chinese retail giant Alibaba, has recanted his promise to Donald Trump to create 1 million U.S. jobs.

Ma's statements come on the heels of a new round of tariffs from both the U.S. and China.

 

Experts have said that Ma's vow to create 1 million jobs linked to merchants selling their goods on the company's platform within five years was lofty to begin with.

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  • 1 year later...
  • 2 weeks later...

Is this guy a troll or something? Down the page on the blog, under the question labeled "$1 Trillion GMV" they state, "It’s even stranger that when you did your last Investor Call on February 13th, 2020, two weeks after the US cancelled all flights from China due to the COVID19 outbreak, when you were sitting in the epicenter of a global pandemic, that none of you, or any of the “analysts”, brought up or mentioned anything about the COVID19 impact on your business, not even once during the call." Yet, on the call almost everyone one of the analyst asked about it.

 

https://www.fool.com/earnings/call-transcripts/2020/02/13/alibaba-group-holding-limited-baba-q3-2020-earning.aspx

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  • 2 months later...

 

Interesting but do "regulators" even care?

 

Certainly not HK/China regulators. The SEC doesn't seem to mind much either. Plenty of accounting shenanigans and financial shams going on in the market with US based companies as well as US-listed foreign companies. But really, what action is being taken?

 

This is a golden age for white collar crime.

 

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