Incredibly there are some investors in the West who haven't heard of Alibaba. Later this month it'll be tough to find anyone who hasn't. The long awaited IPO is being billed as one of the most exciting of recent years and we now know the price: between sixty and sixty six USD. Saxo Bank's Head of Equity Strategy Peter Garnry thinks this estimate is "too conservative" and justifies his view by comparing the price with other internet giants such as Facebook and Amazon. Peter says the growth potential of Alibaba far outstrips near rivals: "The EBITDA margin has exploded from 21% in fiscal year 2010 to 58% in the last 12 months highlighting that the company has surpassed its inflection point where the operational size of its business creates huge economics of scale. With fiscal year 2015 revenue expected to be around RMB 77 billion, the annual compounded growth since 2010 will be 63%."
Peter also repeats his call from early July that Yahoo shares offer investors an early-bird opportunity for those impatient to get a slice of the Alibaba action: "Based on the latest financial data from Alibaba and its projected valuation. investors should be buying Yahoo shares as you get almost one-for-one exposure to Alibaba prior to the initial public offering and get the operations for free."
Alibaba results
- Year to March 2014 7.3 Billion USD revenue
- +55% growth year on year
- EBITDA margin 68% vs. 51% at Facebook
- 255 mn active buyers on platform vs. 172 mn a year ago
