Alibaba Group (BABA), mcap=$235bn, price $87 vs $117

Pitch: The thesis centers on the premise that the Chinese gov is not aiming to overregulate BABA out of existence, as its core businesses are in no way antithetical to the goals of the party. Chinese tech sell-off has essentially treated all tech the same whereas regulatory risk varies from company to company. Substantial earnings growth and multiple exp in the years ahead with BABA‘s 55% share in online retail and 45% share in could computing.

Valuation: BABA Trades at 16x PE (net of cash). SOTP with 25xPE for Online Retail, 5xRev for Cloud, 25xPE for Ant, 5xRev for Youku, and $85bn in cash/public investments results in $268/share target.

Exp. gain: 130% to $268/share

Full BABA write-up (free guest account required):

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