The Eve Of Listing: Hong Kong Stock Restless Ali Group Anxiety

Alibaba, the most powerful IPO of HKEx this year, is back.

In November 26th, the grand opera "Ali returns to Hong Kong stocks" will eventually come to a close. This Hongkong IPO, Alibaba will issue 500 million shares, the issue price will be HK $176 / share - 50 times when Hongkong was delisted in 2012.

Ali will be the first China Internet Corporation to list in Hongkong and New York.

At the age of 15, the Alibaba turned to American stark because the Hong Kong stock did not accept "the same rights". On the day of the bell, Ma Yun once said, "as long as conditions permit, we will come back. This idea has not changed."

There is reverberation in mind. The marriage between Ali and HKEx rejoined: listing in 2007, delisting in 2012, passing by in 2014 and returning in 2019.

In the past few days, Zhang Yong, chairman and chief executive officer of Alibaba's board of directors, said in a letter to investors, "Alibaba launched a listing in Hongkong today, which is a new starting point for the 20 year old Alibaba."

The new starting point also corresponds to new troubles. The 20 year old Alibaba has grown into an empire and is no longer as light as a teenager.

　　 B2B Hongkong delisting with ALI group returns

In 1999, Ma Yun set up a Alibaba in his home in Lakeside Garden District, Hangzhou suburb. The first website of the group was Alibaba, the world's wholesale trade market in English. In the same year, it launched a platform for focusing on domestic wholesale trade (now called "1688").

B2B retail platform has become the earliest main business of Alibaba.

At that time, the international manufacturing industry was transferred to China, and the B2B business with convenient business mode and low cost was very popular. In 2001, the number of registered users of Ali B2B business platform was 1 million, and the cash flow was positive at the end of 2002.

In 2007, global technology stocks were hot, and Hongkong's investment hot money was expanding. In November of that year, Alibaba landed at the Hong Kong stock exchange with B2B flagship business. Stock code 1688.HK, financing $1 billion 700 million, a Hong Kong stock financing record, the market value of over $20 billion.

Although the global financial crisis has been "tough and rigid", Alibaba's stock price performance remains high, which is 192% higher than the Hong Kong issue price of HK $13.5. In December 3rd, Ali's stock hit a high level after hitting HK $41.8. In October 2008, it even dropped to HK $3.46.

In February 2012, Alibaba, which lingered for a long time, finally proposed the privatization of 1688.HK, which was repurchased from the HKEx 5 years ago at the issue price (HK $13.5). But this "one go in and one out" has laid the foreshadowing for Ali's subsequent efforts.

In 2003, B2B business was stable and profitable. Alibaba set up Taobao network to expand its business to C2C domain, and launched Taobao platform Taobao mall in 5 years (renamed Tmall in January 2012).

Then, Alibaba repeatedly added Taobao investment, but at that time Taobao has been burning money, and has not yet found an independent profit model. The market's doubt is that Ali is holding unlisted 2C business with the funds raised by 2B.

Until 2009, the loss of Taobao suddenly changed. At that time, Zhang Yong, the leader of Taobao CFO, planned the first double 11, and only 27 brands participated. There are only one rule: half off.

The means of sale are simple and crude, and are not favored by most people, but the result is unexpected. 24 hours, Taobao mall trading volume reached 52 million yuan, which was 10 times the daily transaction. Since then, Ali 2C business has officially taken off.

The birth of double 11 online shopping Carnival also marked the transformation of online trading form from one of the previous retail supplementary channels to the main form of stimulating domestic demand in China, and began to push the upgrading of traditional retail formats in a comprehensive way.

In the 2011 fiscal year, Alibaba group earned $2 billion 345 million, of which B2B business contributed $961 million, while the rest of the business (mainly from B2C and C2C) contributed about $1 billion 384 million. The latter has become the main source of income for Alibaba group.

From the Alibaba's first quarter 2012 data, we can see that its B2C/C2C business has entered a rapid growth period from the incubation period, and has gradually become a super profitable asset.

Although the composite growth rate of more than 50% in the first 8 years, Ali's B2B business has gone through the stage of high growth and entered the stage of platform transformation. Privatization delisting can prepare for the overall business listing.

In this regard, Guoxin Securities pointed out in the Research Report: on the one hand, Ali integrated the B2B business and management system into an integrated whole ecosystem in order to be listed as a whole. On the other hand, privatization can avoid the announcement pressure of listed subsidiaries, reduce stock price volatility and market weakness, and have a negative impact on brand and investor confidence.

A month after the privatization of the Hong Kong stock market, the Alibaba group announced the upgrading of its subsidiary business into seven business groups, namely, international business, small business, Taobao, Tmall, Juhuasuan, Yi Tao and Ali cloud.

When the US stock was listed in 2014, other businesses of Alibaba were injected into the listed assets package, except for Alipay, a domestic holding company and the newly established rookie network.

　　 After leaving the Hong Kong stock exchange, Ali came to the great era.

Farewell to the Hong Kong Stock Exchange in 2012 is a delicate time.

According to relevant reports, as of the end of December 2012, China's Internet users reached 564 million, and the Internet penetration rate was 42.1%. Among them, the number of mobile phone users is 420 million, which has surpassed Internet users who use desktop computers to access the Internet in the year.

Online penetration has been strengthened, and the electricity supplier has also produced crowding out effects on the physical industry, such as the department store industry has been in urgent need of transformation since 2012. From this point on, Ali came to the great era.

The Alibaba has carried out an ecological strategic layout, including core businesses (electricity providers, local services, logistics services, etc.), cloud computing, media entertainment and innovative businesses.

In the above ecosystem, all links are closely linked and mutually promoted, which not only embodies the depth of Ali's penetration of Commerce, but also reflects the stability and expansion of the system.

In the 2019 fiscal year (2018/4/1 - 2019/3/31), the GMV of Taobao + Tmall reached 57270 billion yuan, accounting for 61% of China's online retail business.

GMV= month live X passenger price, the popularity of hardware to drive the number of Internet users increased, the growth rate of hardware declined, the Internet dividend disappeared, while the retail end was restricted by category penetration, the monthly growth rate declined, and the Internet retail giant represented by Alibaba and Jingdong increased the cost of passenger significantly.

China Merchants Securities has compared Alibaba's monthly growth rate and Tmall GMV growth rate. It is found that the increase in Tmall growth in 2017 is mainly due to the promotion of the overall passenger price, and the scissors difference between GMV growth and monthly growth rate is widening.

From this we can see that finding the incremental market has become an urgent task for Alibaba.

　　 Return to solve growth anxiety

The return to the HKEx, Alibaba clearly stated that IPO raised funds are mainly used to drive user growth and enhance participation. The implication is that Ali wants to gain new growth momentum by increasing user growth and user stickiness.

Growth anxiety, first of all, is the collapse of the "one family" pattern.

When the Alibaba closed the market in 2012, the volume of online shopping in China was only 1 trillion and 200 billion yuan, the PC end trading accounted for 94.2%, and mobile terminals accounted for 5.8%.

Two years later, Tmall double 11, one of the themes is "wireless". Mobile phone Taobao and Tmall mobile are leading the trend of mobile Internet shopping. In the electricity market share of the year, Ali was the largest, accounting for 86.2%. Mobile phone Jingdong (4.2%) and mobile vip.com (2.1%) were far behind.

Five years have passed, and the business world is changing. As of the two quarter of this year, online shopping transactions exceeded 8 trillion yuan, mobile terminals accounted for 83.1%, PC accounted for only 16.9%. Among them, Taobao Tmall accounted for 61%, Jingdong 24.2%, suning.com 6%.

"Traditional business" chess game, Ali has no advantage, but also to fight half way out of the "new business" to fight a lot. In 2018, the amount of annual turnover was 471 billion 600 million yuan, although it could not be on the top list for the time being, but it had a magic attraction for the "five rings" crowd.

The rise of competitors, the market share, Ali core business growth is blocked. In fiscal year 2013-2019, GMV of China's retail business grew from 1 trillion to 5 trillion and 700 billion, while the growth rate dropped from 62% to 19% over the same period.

Although the growth of electricity business is slowing down, the proportion of the group's revenue has always been at 85%. The vast empire of Ali has put most of its eggs in one basket. It is still unknown when cloud computing, digital media and entertainment, new retail and other businesses will be profitable.

GMV growth slowed down, Ali's category anxiety is also serious. 3C is not good at all the mainstream high-frequency online shopping categories such as household appliances, clothing, daily necessities, home appliances and fresh products.

3C appliances, which are just needed, highly standardized and stable in performance, are the category of high penetration of e-commerce online shopping, which has reached 37.8% in 2017. And the leading position of this business has been occupied by Jingdong for a long time.

The three quarter report of Chinese household electrical appliances industry in 2019 showed that 3C sales accounted for the proportion of household appliances online. Jingdong is still the oldest, accounting for 37.4% and Suning 31.8%. Tmall made the 3C appliances late, accounting for 23.3%, and the gap between the top two was larger.

Compared to 3C appliances, Tmall's "gene category" dress has a stronger online fitting property, and the penetration rate of online shopping is 31%. Tmall Taobao has strong voice in the field. For example, the sales volume of Tmall platform is above 70%.

But Jingdong is also constantly making efforts to make up for clothing. In the first quarter of 2017, Jingdong clothing category increased by 92%, and then slipped. In December, Tencent and Jingdong invested 7% and 5.5% of vip.com's strategic investment.

In June of next year, Jingdong increased vip.com to 7.6%. The outside world interpreted the Jingdong action as a way to make up for the short board of clothing category by way of vip.com.

While Tmall and Jingdong snatch each other's daily consumption, many later came to be aggressive. With the "dislocation class + dislocation market + huge subsidy + social networking" mode, many have gained a strong voice.

In summary, from the perspective of electricity supplier competition and category structure, Ali business providers are experiencing growth bottlenecks, which must be driven by a new round of growth drivers by mining user increments and enhancing user viscosity.

　　 Sinking and going to sea are Ali's aim.

In order to sink into the sinking market, Ali has been trying to revive the long dead Juhuasuan at the beginning of this year. But the fact that it has to face is that the sinking market is a lot of main positions.

QuestMobile data up to March 2018 showed that Taobao accounted for 34.6% of users in four and below, with a total of 38.4%. We can see that the degree of subsidence is much higher than that of Taobao.

In terms of user fission, more momentum is needed than Ali and Jingdong. By 2019, the number of active users of Q2 has reached 500 million, catching up with Jingdong (321 million) and approaching Ali (674 million).

On the other hand, the attraction of many new users is catching up with Taobao. The number of young Z generation users under the age of 24 is 39%, which is 2.8% less than that of Taobao.

A lot of strong siege, Ali is another resistance to sink, the cost of getting passengers continues to climb. In 2015, Q1 was 158 yuan, and Q2 was 535 yuan this year. By contrast, the cost of acquiring Q2 is only 154 yuan.

The high cost of acquiring passengers will eventually be shared among merchants. One of the important reasons for the rise of the year is Taobao traffic spillover. In 2015, Taobao's counterfeiting led to a large number of small and micro businesses that were nowhere to be placed. In recent years, the strategic focus of Ali's business strategy has shifted to Tmall. Taobao traffic is mostly used to support Tmall's development, and more Taobao businesses are being marginalized.

If sinking is to seek increment in 1 billion 300 million people, going out to sea is going to salvage opportunity to 7 billion 600 million people in the world.

Ali went to sea to invest in the local mainstream business platform, mainly in 2016-2018 years. The key areas are Southeast Asia and South Asia. These areas are characterized by densely populated, low degree of electricity supplier and relatively wide space.

Lazada is the largest integrated electricity supplier in Southeast Asia, mainly covering Thailand, Malaysia, Indonesia and Philippines. There are 11 countries in Southeast Asia with a total population of about 650 million, roughly equivalent to half the population of China. Among them, the age group of 20-45 accounted for more than 45% of the total population.

Snpadeal, Paytm and Tokopedia cover the South Asian region dominated by India. In 2018, the population of India reached 1 billion 353 million, and the electricity market grew by 19.9%, ranking first in the world.

Ali stepped out to sea, how about incremental contribution? The answer is temporarily limited.

2020 financial year data show that Q1 Ali's international retail business revenue is 5 billion 567 million yuan (811 million U.S. dollars), an increase of 29% over the same period of 4 billion 316 million yuan in 2018, but it only accounts for 5.6% of the total electricity sales of the group (99 billion 544 million yuan).

(Note: the Alibaba fiscal year starts from April 1st every year and ends in March 31st of second).

In the electricity business sinks and sea performance needs to be improved. Now, to build a larger incremental pool, we need to rely on the whole ecosystem of Ali.

Ali has become a new infrastructure for life, consumption and commerce, covering more and more dispersed users. In the ecosystem, business can be transformed into each other, or it can send users to Tmall Taobao core business.

From the current report card, Ali many business losses are narrowing. Among them, Ali's most worthwhile investment, Ali cloud computing, the EBITA loss rate reached 10.4% in the 2018 fiscal year Q2, Q1 has dropped to 2.1% this year, while revenue growth is over 77%.

Predictably, for a long time in the future, Ali's work will still focus on solving "growth anxiety". According to the 5 year general goal announced this year, it aims at more than 1 billion of Chinese consumers, creating more than 10 trillion yuan consumption scale.

By 2036, we will serve 2 billion of the world's consumers, create 100 million employment opportunities and help the 10 million small and medium enterprises to make profits.

It is only a necessary link to achieve the goal of the HKEx today. Ali is no longer the same Ali, and the world is no longer the same old world.