How come companies like BYD went up hugely in value based on their earnings, if ALL chinese companies are non investable per your thesis? How about the competitors of Alibaba that outgrew Alibaba. How did they do it if chinese market is non investable? Alibaba seems like a non investable company because of deteriorating margins than anything else. Could have something to do with the chinese gvt as well, but that cannot be a general statement about all chinese companies.
You do know the entire Golden Dragon China Index is down a lot right ever since all the regulatory crackdowns started? Geopolitical risks clearly affect Chinese stocks the most. That's why foreign investments are leaving the Chinese market (hence everything is down so much). BABA is a prime example of getting affected by geopolitical risks and politics the most. There is Tencent Holdings too and many other major tech companies that are down. You have to live in China to really understand the politics there. BYD and Pindoduo are two exceptions, but they're super rare out of thousands of Chinese comapnies. I would say most of them are uninvestable (not all) simply because of all the geopolitical issues and regulations.
Alibaba has 30 USD in Cash. If you adjust stock price with cash, price / FCF is just 3.5, FCF Yield of 30% for a 10% growing business in bad environment.
@@rnegoro1 FCF per year is around 30 Billion USD, now calculate market cap 180 - cash 90 = 90, thats it. 90 / 30 = 3 So basically you receive 90 Billion Cash within the next 3 years if you own the full company and you just pay 90 billion now. They already buying back more stocks, 25 billion until 2025. But maybe they looking for big buy of another company in the future, meanwhile they receive 3-4 % interest on cash.
I remember when meta was really stupidly cheap and your video put me off of buying because of the words "value trap". I corrected that mistake with $WSM and am up 70% in less than a year when it too hit stupid lows, I've gone in hard on PYPL and hopefully that will be a decent winner as well. I don't think its (BABA) a value trap in terms of the fundamentals of the business, it's something else external to BABA and all chinese companies and that is that China and US relations could change everything and I am not a geopolitical expert to take that risk, add to that political considerations within China I can't invest in China eventhough I think outside of America it has the most tailwins of any country on earth. Meta was a really good lesson for me but eventhough my risk tolerance has increased since then China is still too risky.
Yeah, I agree with you. Sorry for putting you off. 1) I was definitely wrong about Meta. It’s not a value trap. I didn’t expect Zuckerberg would be able to turn around Meta’s ad business so fast (from the iOS App tracking option that allows users to turn off ad tracking). I did make several investing mistakes (although they’re small ones) in the past two years. For example, selling Meta. I did buy back Meta recently. But overall, if you check my past videos, you would notice I have been very bullish on AMD, Nvidia, Google, Microsoft, Apple, TSMC, ASML, etc for the past two years, so those companies have performed very well if you bought them below their intrinsic values. 2) Chinese companies like Alibaba, Tencent Holdings face many geopolitical risks and regulatory risks that are outside of these companies’ controls. And these geopolitic risks are unpredictable. For example, who knows whether the geopolitics between the US and China will improve going forward. I don’t think their relationship will improve anytime soon. 3) I’ll look into PayPal again. I want to know whether the new CEO can turn the business around. Like in all my videos, I like to share my analysis and perspectives, and be as objective as possible based on the information that’s available at that time.
The risk that china slides into a long term stagnation or even recession is very real and the chances are even more substantial compared to japan in the 80s and 90s because the leadership refuses to blame itself for all its mistakes, it's always someone else's fault
@@johnmonk3381 I've been hearing about china being on the precipice of collapse for 20 years, in that time it's America that looks closer to collapse with all the drug addicts, debt and border being completely overrun not to mention lost wars and idiots in charge.
People just like to pick up trash for the sole reason that it is CHEAP. That's why garage sales are so popular, people pipe dream of picking up a "treasure" for pennies on the dollar, but 99.99% of stuff bought this way end up worthless because NOBODY did any due diligence, or bother to analyze what or why they bought in the first place
Thank you for this video, though there are definite flaws in the argument when you talk about the long-term. Personally I’m waiting to receive the dividend and as long as I can receive dividends then I don’t care about the crazy low prices.
Geopolitical risk is not the sole reason, but a major one. Together with the fact that China is sliding away from capitalism and even closer to socialism/communism in terms of market structure. Even if consumer and macro conditions improve, most investors, especially institutional/global investors see better opportunities outside of China. Investing in China has been painful for literal decades, not 1-2 years. I would avoid markets with communist ideology and life time rulers, that should be a red flag for any investor. Baba and Ma are a sad story, sadder even more for the hardcore Baba fans who basically are poorer every year and in fundamental denial.
Yeah I agree. I’m from China so I kind of understand of the situation there. There are many great businesses there, but many of these great businesses have become uninvestable because of the regulations, geopolitics and capital market there (which is not shareholder friendly). If we invest in the businesses there, we are essentially betting that the geopolitics will improve going forward and less restrictions going forward, which I think is not going to happen.
Too much worrying. Chips can be produced for china from new sources in time. Us needs china economically. Everything we consune is made in China. Disentanglement from china woll be a long slow process. PDD is good but all companies have competition. Always hard to predict who will win.
lack of technical analysis gives wrong conclusions, the same was with META, fundamentals and assumptions are not enough, also ....video missed that Biden-Xi meeting signals a shift towards cooperation, potentially normalizing trade
The recent meeting between them does not really indicate their relationships will get better going forward (geopolitics are very unpredictable). The US doesn’t want China to achieve chip sovereignty. The US wants to slow down China’s AI development. The US will not ease all these AI chip export restrictions. I think it’s reasonable to expect there will be more chipmaking and AI restrictions going forward, so that’ll impact Alibaba’s cloud business.
About chips...it may be a short-term adverse factor for Alibaba as Chinese tech gains, as AMD (AMD) and Nvidia (NVDA) may soon introduce AI chips compliant with US export regulations. US and China are locked in a prisoner's dilemma, if they don't cooperate, everyone suffers. China is not a Russia with plenty of natural resources, China must import them (mainly energy), so it must act in civilized manner and develop the economy (barbarian Russia doesn't have to), so it needs US and rest, on the other hand AAPL has about 30% revenue from China
Yeah. What you said is likely right. They do need each other. The US wants to win in everything (not saying it’s right or wrong), and China of course wants to be the tech leader/chipmaking leader/manufacturing leader/economic leader, so I think they will continue to have many geopolitical issues (may be I’m being super bearish here). Given Alibaba’s current revenue earnings and FCF, Alibaba would be worth much more (probably between $700 billion and $800 billion like Meta) if it’s a US e-commerce company. But Alibaba is deeply discounted mainly because of the geopolitics and foreign investments leaving China.
@@TheIntelligentInvestor yes and I would be worried about the Chinese government strong arming a company into submission if it becomes to powerful/successful.
Yeah, there are two views: 1) It’s undervalued if you only look at its financials and analyze it using the value investing approach. 2) but we cannot look at Chinese companies the same way we look at US companies. Geopolitical risks make it a value trap.
👏👏👏👏👏For those of you who want and can support our channel, here is how you can help: www.patreon.com/IntelligentInvestorChannel
How come companies like BYD went up hugely in value based on their earnings, if ALL chinese companies are non investable per your thesis? How about the competitors of Alibaba that outgrew Alibaba. How did they do it if chinese market is non investable? Alibaba seems like a non investable company because of deteriorating margins than anything else. Could have something to do with the chinese gvt as well, but that cannot be a general statement about all chinese companies.
👏🤝
You do know the entire Golden Dragon China Index is down a lot right ever since all the regulatory crackdowns started? Geopolitical risks clearly affect Chinese stocks the most. That's why foreign investments are leaving the Chinese market (hence everything is down so much). BABA is a prime example of getting affected by geopolitical risks and politics the most. There is Tencent Holdings too and many other major tech companies that are down. You have to live in China to really understand the politics there. BYD and Pindoduo are two exceptions, but they're super rare out of thousands of Chinese comapnies. I would say most of them are uninvestable (not all) simply because of all the geopolitical issues and regulations.
Alibaba has 30 USD in Cash.
If you adjust stock price with cash, price / FCF is just 3.5, FCF Yield of 30% for a 10% growing business in bad environment.
@@Markus-il5dhis it that high? Doesn't make sense they are not buying back more aggressively. I doubt the p to fcf is that low.
@@rnegoro1 FCF per year is around 30 Billion USD, now calculate market cap 180 - cash 90 = 90, thats it.
90 / 30 = 3
So basically you receive 90 Billion Cash within the next 3 years if you own the full company and you just pay 90 billion now.
They already buying back more stocks, 25 billion until 2025. But maybe they looking for big buy of another company in the future, meanwhile they receive 3-4 % interest on cash.
Alibaba and INVITAE are my biggest stock positions ❤❤❤❤❤❤❤❤❤❤❤❤❤❤❤❤❤❤❤❤❤❤❤❤❤❤❤
@@Black-Circle dont worry.hold it for a very long time
hahaha good luck! update us again when it gets delisted okay?
@@TheMtBaldy yeah buddy i will
Baba should buy back more shares.
I need this video, just went all-in to BABA last week, hope fortune favors the brave 🤞 thank you for analyzing this stock!
I remember when meta was really stupidly cheap and your video put me off of buying because of the words "value trap". I corrected that mistake with $WSM and am up 70% in less than a year when it too hit stupid lows, I've gone in hard on PYPL and hopefully that will be a decent winner as well.
I don't think its (BABA) a value trap in terms of the fundamentals of the business, it's something else external to BABA and all chinese companies and that is that China and US relations could change everything and I am not a geopolitical expert to take that risk, add to that political considerations within China I can't invest in China eventhough I think outside of America it has the most tailwins of any country on earth.
Meta was a really good lesson for me but eventhough my risk tolerance has increased since then China is still too risky.
Yeah, I agree with you. Sorry for putting you off. 1) I was definitely wrong about Meta. It’s not a value trap. I didn’t expect Zuckerberg would be able to turn around Meta’s ad business so fast (from the iOS App tracking option that allows users to turn off ad tracking). I did make several investing mistakes (although they’re small ones) in the past two years. For example, selling Meta. I did buy back Meta recently. But overall, if you check my past videos, you would notice I have been very bullish on AMD, Nvidia, Google, Microsoft, Apple, TSMC, ASML, etc for the past two years, so those companies have performed very well if you bought them below their intrinsic values. 2) Chinese companies like Alibaba, Tencent Holdings face many geopolitical risks and regulatory risks that are outside of these companies’ controls. And these geopolitic risks are unpredictable. For example, who knows whether the geopolitics between the US and China will improve going forward. I don’t think their relationship will improve anytime soon. 3) I’ll look into PayPal again. I want to know whether the new CEO can turn the business around. Like in all my videos, I like to share my analysis and perspectives, and be as objective as possible based on the information that’s available at that time.
@@TheIntelligentInvestor That's ok we're all learning here. Each mistake will make us better in the long run.
The risk that china slides into a long term stagnation or even recession is very real and the chances are even more substantial compared to japan in the 80s and 90s because the leadership refuses to blame itself for all its mistakes, it's always someone else's fault
@@johnmonk3381 I've been hearing about china being on the precipice of collapse for 20 years, in that time it's America that looks closer to collapse with all the drug addicts, debt and border being completely overrun not to mention lost wars and idiots in charge.
How’s it going with PayPal
great video!! Thanks!!
I badly want to invest in either PDD or BABA, but I’m scared beyond belief. Yet BABA is calling my name!!!
Well if it scares, I think it’s best to stay away. Otherwise it’ll affect your sleep.
People just like to pick up trash for the sole reason that it is CHEAP. That's why garage sales are so popular, people pipe dream of picking up a "treasure" for pennies on the dollar, but 99.99% of stuff bought this way end up worthless because NOBODY did any due diligence, or bother to analyze what or why they bought in the first place
if you would have bought then you are at another all time low again
@@johnmonk3381 exactly and many others are moving up. this crap fallen down by 80 pct over the 5 years
Thank you for this video, though there are definite flaws in the argument when you talk about the long-term.
Personally I’m waiting to receive the dividend and as long as I can receive dividends then I don’t care about the crazy low prices.
Thank you Victor
I learned my lesson investing in Chinese stocks. Too many risks and unknowns. Sold my Baba stocks earlier this year
Same here, I too paid a lesson.
Be greedy when others are fearful.
How much of a loss did you have to incur?
heyyy it's actually christmas time for your christmas tree!
Your case can be used as a wonderful contrarian thesis
you can't buy Alibaba stock you're not Chinese
I'd be much appreciated if you do Ping An stock
The audience can only take so many value traps at once. :0
Geopolitical risk is not the sole reason, but a major one. Together with the fact that China is sliding away from capitalism and even closer to socialism/communism in terms of market structure. Even if consumer and macro conditions improve, most investors, especially institutional/global investors see better opportunities outside of China. Investing in China has been painful for literal decades, not 1-2 years. I would avoid markets with communist ideology and life time rulers, that should be a red flag for any investor. Baba and Ma are a sad story, sadder even more for the hardcore Baba fans who basically are poorer every year and in fundamental denial.
Yeah I agree. I’m from China so I kind of understand of the situation there. There are many great businesses there, but many of these great businesses have become uninvestable because of the regulations, geopolitics and capital market there (which is not shareholder friendly). If we invest in the businesses there, we are essentially betting that the geopolitics will improve going forward and less restrictions going forward, which I think is not going to happen.
Too much worrying. Chips can be produced for china from new sources in time. Us needs china economically. Everything we consune is made in China. Disentanglement from china woll be a long slow process. PDD is good but all companies have competition. Always hard to predict who will win.
sir make a video on Novo Nordisk which is a very good quality business which many overlook.
Thanks for the suggestion. I don't understand the healthcare/biotech industry enough, so I won't be analyzing Novo Nordisk.
lack of technical analysis gives wrong conclusions, the same was with META, fundamentals and assumptions are not enough, also ....video missed that Biden-Xi meeting signals a shift towards cooperation, potentially normalizing trade
The recent meeting between them does not really indicate their relationships will get better going forward (geopolitics are very unpredictable). The US doesn’t want China to achieve chip sovereignty. The US wants to slow down China’s AI development. The US will not ease all these AI chip export restrictions. I think it’s reasonable to expect there will be more chipmaking and AI restrictions going forward, so that’ll impact Alibaba’s cloud business.
About chips...it may be a short-term adverse factor for Alibaba as Chinese tech gains, as AMD (AMD) and Nvidia (NVDA) may soon introduce AI chips compliant with US export regulations.
US and China are locked in a prisoner's dilemma, if they don't cooperate, everyone suffers. China is not a Russia with plenty of natural resources, China must import them (mainly energy), so it must act in civilized manner and develop the economy (barbarian Russia doesn't have to), so it needs US and rest, on the other hand AAPL has about 30% revenue from China
Yeah. What you said is likely right. They do need each other. The US wants to win in everything (not saying it’s right or wrong), and China of course wants to be the tech leader/chipmaking leader/manufacturing leader/economic leader, so I think they will continue to have many geopolitical issues (may be I’m being super bearish here). Given Alibaba’s current revenue earnings and FCF, Alibaba would be worth much more (probably between $700 billion and $800 billion like Meta) if it’s a US e-commerce company. But Alibaba is deeply discounted mainly because of the geopolitics and foreign investments leaving China.
lol!!! hows your portfolio doing then
out in time and ready to get in again, thanks to technical analysis
Undervalued Trap!
Admiral Ackbar (Star Wars): It's a Trap!
It’s “cheap” but is it quality? I would say no because I can’t reliably predict their future due to the Chinese government.
Yeah, no one knows what will happen next, especially the geopolitical tensions.
@@TheIntelligentInvestor yes and I would be worried about the Chinese government strong arming a company into submission if it becomes to powerful/successful.
Ur fellow Singaporians like master leong and Tay Chi Keng are bag holding this shit for 3 years. Pls don’t be one of them lol
lol I don’t know who they are. If they still hold I respect them.
undervalued AND value trap
Yeah, there are two views: 1) It’s undervalued if you only look at its financials and analyze it using the value investing approach. 2) but we cannot look at Chinese companies the same way we look at US companies. Geopolitical risks make it a value trap.
Babe fundamental are still very strong, don't really care what you have to say. Lol
😂 I’m totally okay my friend. Nothing is wrong.
You don't actually own the share, not worth the risk reward.
I used to own it a long time ago, but not anymore after all the regulatory crackdowns started.
Alibaba has a cow business? What?
lol 😂
to me its a massive con
month before the russian-ukrain war broke out the russian stockmarket crashed. Just saying, for konth the chinese stockmarket is dropping.
So, when Ukraine will end within next 9 months, what gonna happen with chinese stock markets
This stock will crash to zero ...
lollllllll