Alibaba’s Hong Kong-listed shares were up 4% on Monday morning.
Shen Qilai | Bloomberg | Getty Images
Alibaba Hong Kong-listed stock performance
In March, Alibaba announced a major restructuring of its business, which some analysts believe could be a sign that the Chinese government may loosen its grip on the domestic tech industry.
“However, (regulators) have also highlighted the need for broader industry-wide regulation to effectively regulate the industry as a whole,” Oshadhi Kumarasiri, equity analyst at LightStream Research, said in a note. Report Published on research platform Smartkarma.
“This suggests that optimism about ending the regulatory scrutiny may be premature, as new, broader regulation could be just as stringent,” Kumarahiri said.
Ronald Wan, non-executive chairman of Partners Financial Holdings, told CNBC’s “Street Signs Asia” that the growth rate of Alibaba and Ant Group “will be severely limited going forward.”
“Although we have seen good news that the regulatory dispute has been resolved, it means that in the future Ant Group may operate like a state-owned bank in China,” Wan said.
Yang Xiaoen, President of the Blue Lotus Research Institute Bullish on Alibaba Following the Ant Group fine.
“Considering that Ant Group owns 33% of the equity, we calculate Ant Group’s valuation to be US$89 billion, of which Alibaba’s stake is US$29.4 billion. We think this valuation has upside to consensus,” Yang said . Bloomberg’s valuation of Ant Group Only $22 billion to $57 billion.
“In our view, the (Bloomberg) valuation range is too low because Ant Group is comparable to PayPal. With the end of Ant Group’s regulatory overhang, we suggest that its valuation can adopt multiples more similar to PayPal, which indicates that Bloomberg valuation There is room for improvement,” Yang said.
On Saturday, Ant Group announced a share buyback that valued the company at $78.53 billion, According to state media CGTN. That’s less than Ant Financial’s $315 billion valuation in 2020 when it attempted to go public.
The buyback “raises some questions, especially if the company has plans for an IPO in the near future,” Kumarahiri said.
“If an IPO is imminent, the justifications for companies to buy back, including providing liquidity to existing investors and attracting or retaining talent through employee incentives, do not appear to be necessary.”
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