Sunday, 8 August 2021

Alibaba - Is it time to buy ??

 Happy National Day Singapore.

It is a long weekend here and I just want to share my thoughts on this counter BABA listed in NYSE and as well as HKSE (9988). There have been many sharing of is it time to buy in the social media when Alibaba crashed more than 40% due to the hard handed by the Chinese Government. I am not interested in any country's politics thus I shall not comment on this aspect. I am more interested in if there are coffee money to be made from this crash.

In stock investment, all of us know that there are risks involved as the equities returns are high. This principle applies to all market, including the chinese. Having understood this, then let's look from FA and TA perspective at how we can take advantage of this crash using our spare cash. By spare cash, I mean you dont lose sleep if you lose the entire stake.

Fundamental Analysis

Over the last 5 years, on average the EPS is about 5.5. This is about 30% discount to the last reported earnings. This is to ensure there is some margin of safety.  Using this; the estimated stock price at

PE 22 = USD 122

PE 34 = USD 188

PE 45 = USD 247

So at the current price, would you go in??

Technical Analysis

Looking at the TA, there are no indications that the correction has slowed or stopping. Do a comparison with Jan 2019 when the correction happened and it reversed up when MA and TA indicators moved up.

The above is to record my thought process for me to reference in future, not a recommendation of any sort. 

1 comment:

SGHedgehog said...

The stock is down due to bad sentiment but fundamentally nothing changed yet. So if you are confident that the bad sentiment will be over then should add more.