Andrew Macken of Montaka Global Investments presented his investment thesis on Alibaba (US: BABA) at Asian Investing Summit 2022.

Thesis summary:

Andrew believes the market is overestimating the risks associated with investing in China and the regulatory headwinds in the Chinese internet sector.

Alibaba’s operating enterprise is on offer for approximately US$180 billion. For this “price” an investor receives the following value: a leading Chinese domestic (and international) consumer ecommerce business with free cash flow power of $11-19 billion per annum, with medium-term annualized growth in the teens.

In addition, an investor receives China’s largest cloud computing business. This business is breakeven at the moment. However, the long-term structural growth and economics of this business are so favorable that Andrew believes this business alone is worth at least Alibaba’s entire operating enterprise value.

Finally, Alibaba continues to aggressively buy back its own stock – a capital allocation action that is consistent with Andrew’s view of Alibaba’s value relative to the market quotation.

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About the instructor:

Andrew Macken is the Co-Founder and CIO of Montaka Global Investments, a global equity manager based in Sydney and New York. Prior to establishing Montaka, Andrew worked as a senior member of Jim Chanos’ research team at Kynikos Associates, a global equity long/short fund based in New York. Andrew holds a Master of Business Administration (Dean’s List) from the Columbia Business School in New York. Andrew also graduated with High Distinction with a Master of Commerce; and First Class Honours with a Bachelor of Engineering from the University of New South Wales in Sydney.

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