PDD

$BABA-W(09988.HK)

Is Alibaba Actually Expensive or Is the Market Betting on Growth?🤔

I am a Alibaba shareholder. This is the question i always ask myself.

At first glance Alibaba looks pricier than its peers. Its trailing P/E ratio stands at 24.6. That is about 1.7x Tencent at 14.1x. It is nearly 2x JD.com which ranges from 12.7 to 16.2x.

Furthermore, it is roughly 3x PDD Holdings at 8.1x. On price to book(PB Ratio), Alibaba trades at 1.6 to 1.7x compared to JD at 1.1x.

Alibaba also pays a modest dividend yield of 0.95% while JD offers 3.9%.

So why does Alibaba trade at a premium?

The answer lies in how earnings are being calculated. Trailing earnings have been pulled down by fair value losses on investments and heavy spending on AI infrastructure.

In fact net profit dropped 74.2% in the first quarter of FY2027. This makes the trailing P/E look much higher than it really is.

If you look ahead the market expects earnings to bounce back. The forward P/E falls to around 17.3x once earnings normalised.

Revenue growth is projected to pick up to 14.5 percent year on year. Investors are not paying extra for today’s lower profits.

They are betting that Alibaba’s expansion in AI and cloud will drive strong gains in the future.

Do you believe in Alibaba’s AI turnaround? I am with Alibaba. I believe the strategy and the light to the tunnel is coming ☺️

It's coming to the end of the month - also where most of the major companies have already reported earnings. As expected, the earnings season has seen some companies rally after posting magnificent results while others slump after posting weaker guidance or simply just due to traders taking profit. It is important to monitor and read in depth into the earnings report of your holdings, but also sometimes the share price don't go as expected due to fear (of say higher capex for e.g.) or just because it was already priced in.

Frencken’s private placement has diluted the share price but I think there is no need to panic. The new capital will give the company a more solid financial position to pursue expansion and mergers and acqusitions.

It will be Fed chairman Warsh’s first speech at Jackson’s Hole and the market will be closely trying to figure out his stance. Hawkish or dovish? I don’t think he will say much but maintain that the Fed will do what is necessary yadah yadah. 🤓

The triple kaiju week is finally ending and the pent up cautious sentiments would be partially, if not fully released. All eyes on the new Fed chair on his lean towards hawkiness or dovishness. It shows the muscle of the market is still the bond market.

Curious and excited for the brand new Fed Chair speaking tonight. Looking out if interest rates drop, will the market respond and SREITS price go up as borrowing costs drop.

Jackson Hole has my attention. With the 30-year yield above 5%, I’m watching how Kevin Walsh responds. This isn’t just a bond-market story—higher long-term rates mean more expensive mortgages, loans and corporate refinancing. If yields stay here, the Fed’s job gets a lot harder.