Alibaba's Variation

Author | Liu Baodan Editor | Ma Yun, founder of Zhang Xiaoling, reduced his holdings, the cloud business stopped pushing for a complete split, and the listing of Box Horse was suspended. At the time when Alibaba's second-quarter financial report was released, a series of shocking news disclosures cast a shadow over Ali's soaring one-split-six changes. On November 16, Arime stocks fell sharply by nearly 10%, indicating doubts and concerns in the capital market. For Cai Chongxin and Wu Yongming, who have just taken over Ali's chairman and CEO scepter for 68 days, the challenge seems to come a little fast, but they have made full preparations. On the evening of November 16, Wu Yongming, as CEO of Alibaba Group, attended the financial report conference for the first time, fully explaining the strategic plan of Alibaba's new development stage. The core is still around users and AI. As the fourth generation CEO of Ali after Ma Yun, Lu Zhaoxi and Zhang Yong, Wu Yongming's burden is not light. The rapidly changing market and environment mean that Ali's road back to the top is full of obstacles. Split Plan Changes Alibaba, China's largest Internet giant ship, is sailing on a sea full of risks and unknowns. On the eve of the second quarter earnings report, the news that Ali was once again reduced by the founder was widely concerned. On November 14, local time, two 144 forms disclosed on the official website of the US Securities Regulatory Commission showed that Ma Yun's family trust JC Properties Limited and JSP Investment Limited planned to reduce their holdings of 5 million Alibaba founder shares respectively on November 21. Based on the closing price on November 15, the market value of the shares involved is about US $0.87 billion (equivalent to about 6.3 billion yuan). Alibaba said it would not respond to the news of the above reduction. This is not the first time Ma has sold shares in Ali. Three years after Ali went public in the United States, Ma Yun reduced his holdings by about 5%. In the following years, Ma Yun's family trust has repeatedly reduced its stake in Ali. Ma Yun's shareholding in Ali is mainly realized through several overseas entities. According to the financial report, as of March 2020, Ma Yun personally holds only 0.02 percent of Ali's shares, while the rest is through the Ma Yun Charitable Foundation, the Ma Yun Family Trust and APN Ltd, in which Ma Yun holds 70 percent of the shares. Hold. Ma Yun directly and indirectly holds nearly 4.8 percent of Ali's shares. After the Ma Yun family trust is reduced again, the proportion of its shares in Ali as the founder will be even smaller. If Ma Yun's reduction has released an uncertain signal, then the vigorous proposal to split up and list only half a year, the listing of Box Horse will be suspended, and Aliyun will no longer promote a complete split, deepening the market's doubts. This means that Alibaba's spin-off plan is not going well, some force majeure factors have occurred, and the external environment has undergone major changes. In March of this year, Jack Ma, who had not appeared for a long time, returned home with in-depth thinking for several years, and led the launch of the biggest organizational change in Ali's history, announcing the "one demolition and six", and each business will be listed independently. On May 18, Ali clearly put forward the listing schedule of Cainiao, Aliyun and Box Horse in the 2023 financial report. On the evening of September 26, Cainiao took the lead in submitting the listing application documents to the Hong Kong Stock Exchange. The other two businesses have seen significant changes. Box horse listing suspended, Aliyun no longer promote a complete spin-off, which means that the independent listing will also be indefinite. Ali said in the financial report that the recent expansion of restrictions on the export of advanced computing chips in the United States has brought uncertainty to the prospects of Cloud Intelligence Group. The Company believes that a full spin-off of Cloud Intelligence Group may not enhance shareholder value as originally envisaged and has therefore decided not to proceed. Just a few days ago, Aliyun had a technical failure, "down" for about two hours. It is not known whether the spin-off was affected by this incident. Ali said that it will resolutely increase the intensity of investment in Alibaba Cloud, so that it can focus on the "AI cloud computing" development strategy without distractions, and minimize the adverse impact of uncertain factors on future development. In this regard, the analysis of people close to Ali, to better grasp the opportunities of the era of AI, the most determined investor is undoubtedly Ali Group. No longer promoting a complete spin-off, Ali will continue to increase strategic investment, which is the most favorable decision for Aliyun's future development and the realization of shareholder value. At the call, the management did not explicitly answer whether the spin-off listing of Alibaba Cloud would be suspended, nor did it give an expectation of future listing. It only means that there are many other ways to improve shareholder returns. Obviously, Alibaba, which started its ambitious capitalization spin-off six months ago, is facing a more complicated situation and the company's prospects have become more uncertain. * * Future strategy emerges * * In the unpredictable storm, fortunately, Ali's performance has remained stable. The second quarter financial report showed that Ali achieved revenue of 224.79 billion yuan, a year-on-year increase of 8.5 percent, exceeding market expectations; adjusted net profit of 40.188 billion yuan, a year-on-year increase of 19%. As the basic plate, Tao Tian's revenue was 97.665 billion yuan, up 4% year-on-year. In addition to Aliyun's growth rate of 2%, the income growth rate of international digital business, local life, rookie and big entertainment all exceeded 10%. International business performed particularly brightly, with a growth rate of 53%, making it the fastest growing business. But it is clear that Ali's new management will not stand still. "No matter how successful the business model of the past has been, we must turn the page to zero and awaken the mentality of re-entrepreneurship." Wu Yongming said on the phone. Wu Yongming also disclosed Ali's detailed new strategy, facing the future will have three important priority directions: technology-driven Internet platform business, AI-driven technology business, global business network. Next, Ali will firmly invest in the core business, that is, the six businesses after the split. Wu Yongming stressed that Tao Tian Group did not position itself as a retail company, but insisted on the positioning of the Internet consumption platform. Ali will also strategically invest in innovative businesses, that is, seed-type companies hatched for the future. Wu Yongming announced Ali's first batch of strategic innovative businesses, including 1688, idle fish, DingTalk and quark. In the future, the above-mentioned companies will operate as independent subsidiaries and use more independent strategies to face the broadest market. The group will continue to invest in a 3-5 year cycle. Behind the new strategic blueprint is Ali's sense of crisis. In the past 24 years, Ali has undoubtedly been the most successful Internet company in China. Taobao has completely changed the way Chinese people shop. However, with the changes in the market environment, Ali's advantages are weakening, and competitors such as Douyin and Pinduoduo have appeared one after another. In fact, Ali's market position has continued to decline in the past few years. According to the Goldman Sachs Global Investment Research report, Taobao's Tmall market share fell from 66% in 2019 to about 44% in 2022. The Internet Jianghu, which BAT has dominated for many years, is also changing rapidly. In the first half of this year, Douyin's revenue has surpassed Tencent's, threatening Ali. This is all forcing Ali to make changes. Wu Yongming should not only hold on to the country, but also open up new possibilities on this basis. Standing at the current node, analysts believe that Jack Ma's reduction and spin-off will not affect Ali's development. From Jack Ma to Zhang Yong to Cai Chongxin and Wu Yongming, what kind of story will Ali, China's largest Internet company, continue to write under the leadership of the new team. This not only represents the future of Ali, but also to a large extent, Change the competitive landscape of e-commerce, Internet, and technology industries.