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Alibaba's June quarter 2022 result is out, lets revisit the sum of parts again.
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Liliani in her substack did provide some numbers on Alibaba's sum of parts basing on their latest financing round. You can read her full article here. I think we should be more conservative.
Alibaba's market cap as of today is 240.29 bil usd.
Net cash: 50.8 bil usd
Use their cash + short term investments + escrow receivables + restricted cash minus all their borrowings.
Share investment equity value: 66 bil usd
"Equity securities and other investments" + "Investment in equity method investees"
Cainiao(63% stake): 17.64 bil usd
Latest cash injection valuation done by Alibaba and size it to 63% stake, article here. That was in 2020, it should be worth more now due to its growing topline and shrinking ebita losses. To be conservative we will use its 2020 valuation. The valuation of 28bil is lower than Liliani's valuation. 28bil is 3.8x Cainiao's topline. Cainiao is close to ebita profitability.
Alicloud + Dingtalk: 53bil usd
Annualized its revenue this quarter and give it a conservative 5x multiple. 1/3 of what Liliani's article is valuing it at. Almost half of Goldman Sachs' valuation in 2020(article here). Alicloud is ebita profitable, close to being operationally profitable.
Ant Group(33% stake): 22bil usd
This is dependent on the market cap they can IPO Ant Group at. The most bearish valuation I can find is Fidelity, article here at 67bil usd. At the peak of its IPO in 2020, Ant was valued at 313bil usd.
International Commerce(Lazada, Aliexpress, Trendyol): 20bil usd
From the latest financing round in 2021, during the peak of covid, Trendyol is already valued at 16.5bil usd, article here. Annualize this segment's revenue for this quarter and give it a conservative 2x multiple.
Reason I give a 2x multiple is because Alibaba already has the experience paving a path to profitability for their domestic ecommerce. So despite the competition and difficulty in adapting to different cultures and languages, the potential to profitability is still there.
Ele.me, Amap, Fliggy, Digital media, Innovation: 11bil usd
These businesses have unsubstantial revenue and unlikely to turn profitable anytime soon. I group their revenues together for this quarter, annualize it and give it a 1x multiple.
Meituan accounts for 67 per cent of the total market in China, while Ele.me has a 31 per cent share base on this article. Meituan is valued at 135bil usd so I am sure market has a value for Ele.me in the future.
Total sum of parts ex core business(Taobao, Tmall, Taocaicai, Taobao Deal) is 50.8 + 66 + 17.64 + 53 + 22 + 20 + 11= 240.44 bil usd(more than its market cap)
Despite being conservative, there might still be overestimation or errors in my calculation, but using a back of the envelop calculation, current price is valuing their core business(most prominent free cash flow churner) at zero. Own view.
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