Jefferies slashed its price target by 23 per cent to HK$140 from HK$181 on Friday while maintaining a buy recommendation, after revaluing the sum of all parts in the group’s business. CICC, China’s biggest investment bank, lowered its stock valuation by 20 per cent to HK$109 from HK$137.
“The market’s initial response will be negative,” John Choi and Robin Leung, analysts at Daiwa Capital Markets, said after the announcement. “To drive a re-rating on the stock, we need to see an aggressive shareholder return enhancement, either share buyback or dividend, which we believe will be funded by offloading some of its non-core assets.”
Alibaba is the owner of the South China Morning Post.
Jack Ma’s office says he is ‘very positive’ about Alibaba despite sell-off
Jack Ma’s office says he is ‘very positive’ about Alibaba despite sell-off
Alibaba rebounded 1.4 per cent to HK$74.30 in recent trading on Monday, while the broader market climbed 0.9 per cent. The stock plunged 10 per cent in Hong Kong on Friday, the worst sell-off since October last year, compounded by US filings showing founder Jack Ma’s family trusts were planning to reduce their holdings.
Despite the target price cuts, most analysts stuck to their buy recommendations. Other brokers raised their outlook, with China Securities bumping up its 12-month price target by 3.4 per cent to HK$117.98 and China Galaxy boosting its estimate by 1.7 per cent to HK$175.
“Valuation remains attractive,” Charlene Liu, head of internet and gaming research at HSBC, said in a note on Friday. “However, the stock may lack catalysts to re-rate in the near term. The market is likely waiting for management to deliver its promise to shorten the turnaround timeline for [unprofitable] businesses.”
