Investing.com UK - Financial Markets Worldwide
50% Off! Beat the market in 2025 with InvestingProCLAIM SALE

Alibaba's Restructuring Likely To Unlock Significant Value, Morgan Stanley Sees Over 100% Upside In Bull Case Scenario

Published 29/03/2023, 17:41
© Reuters. Alibaba's Restructuring Likely To Unlock Significant Value, Morgan Stanley Sees Over 100% Upside In Bull Case Scenario
MS
-
BABA
-

Benzinga - Morgan Stanley analyst Gary Yu reiterates an Overweight rating on Alibaba Group Holding Limited (NYSE: BABA) with a $150 price target.

Alibaba will reportedly split into six units: Cloud Intelligence Group, Taobao Tmall Commerce Group, Local Services Group, Cainiao Smart Logistics Group, Global Digital Commerce Group, and Digital Media and Entertainment Group.

Each business group CEO and board will manage the corresponding unit and each business group. According to Chair and CEO Daniel Zhang, the company may pursue independent fund-raising and listings in time, except for Taobao Tmall Commerce Group, which will remain a wholly owned unit of Alibaba Group.

Yu thinks the news will be a significant positive catalyst for Alibaba's share price.

Alibaba is trading at a significant discount on the analyst's SOTP value. The SOTP valuation for the bull-case factors in the values of Alibaba's principal consolidated subsidiaries. The valuation also includes Alibaba's private and public equity investments.

The analyst's bull-case value is $530 billion ($200 per share). He sees potential for more than 2x upside to his bull case of $200 per share.

The $200 per share valuation encompasses Marketplace-based core China commerce($128 per share), Direct sales ($5 per share), AliCloud ($21 per share), International retail ($11 per share), Local services ($9 per share), Logistics, Digital Media & Entertainment, AliHeath ($6 per share) and Equity investments ($9 per share).

Yu believes the market is still under-appreciating Alibaba's non-core businesses by assigning zero value to its listed equity investments and all other consolidated businesses.

With gradual consumption recovery in China (turnaround of CMR in F1Q24) and the potential catalyst of corporate restructuring, Yu reiterates BABA as the top pick in China's Internet.

Price Action: BABA shares traded higher by 1.52% at $99.90 on the last check Wednesday.

Latest Ratings for BABA

DateFirmActionFromTo
Feb 2022BarclaysMaintainsOverweight
Feb 2022StifelMaintainsBuy
Feb 2022CitigroupMaintainsBuy
View More Analyst Ratings for BABA

View the Latest Analyst Ratings

© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Read the original article on Benzinga

Latest comments

Install Our App
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.