January 19th, 2021 | 10:36 CET
Alibaba, AdTiger, Baidu - Buy China!
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"[...] Recovery rates of more than 90% rare earths are another piece of the puzzle on the way to the economic viability of our project. [...]" Craig Taylor, CEO, Defense Metals
Trade war requires rethinking
It is true, Donald Trump's presidency is now over. However, the relationship between the two largest economies is likely to remain chilly. New President Joe Biden emphasized that the US wanted to continue to toughen its stance on China in trade and technology matters. A sign for Chinese companies not to rely solely on doing business with the United States. The Chinese advertising platform AdTiger successfully expanded its target markets. AdTiger's business model connects Chinese advertisers operating globally with the largest social media platforms and apps, primarily from the United States.
AdTiger is a China Export Partner of Facebook and ranked first among Facebook's 23 CEPs in terms of ad spend on Facebook's ad inventory in 2019. There is also an agreement with Google in the AdWords Reseller Program. At Baidu, AdTiger is an authorized Snapchat sales representative. Direct collaborations are also in place with Yahoo.
Back to China and on to India
The Company is now stepping up its advertising activities in its home market of China. Here, there is direct cooperation with the hottest social media platform, TikTok. The Company is also a direct reseller of the Internet giant Baidu. The management expects the greatest growth from an expansion of the advertising network to India. With a population of almost 1.4 billion, India is one of the fastest-growing advertising markets globally. On the technical side, AdTiger plans to invest further in its self-programmed AdTensor software.
The software uses artificial intelligence to perform ad optimization and ad management automatically and in real-time. AdTensor's Big Data and AI capability makes it possible to achieve the optimal advertising goals for advertisers. The Company currently has a market capitalization of nearly EUR 80.0 million. In addition to its powerful partner network, AdTiger currently has a whopping EUR 23.0 million in cash.
Electric car innovation
Chinese electric car manufacturers are likely to contribute a larger share to economic growth next year. In addition to the already well-known brands BYD, Nio and Xpeng, another big player is joining. The IM or "Intelligence in Motion" brand, a joint venture between Internet giant Alibaba and SAIC Motor, has unveiled prototypes of its first two electric models. The sedan and SUV produce 400 kW and will be available with either 93 or 115 kWh battery capacity. State-owned SAIC Motor is China's largest automotive Company and a cooperation partner of German automakers BMW and VW.
Currently, it has become somewhat quieter around Alibaba. After positive signs came from the US on Friday that the three Chinese Big Techs Alibaba, Baidu, and Tencent may continue to be traded on the NYSE, the Jack Ma share could establish itself again well above the EUR 200 mark. We expect that despite stricter regulation as announced by the Chinese government, the giant Chinese internet companies will be the major beneficiaries of economic growth. Alibaba will continue its growth trajectory despite the postponement of the IPO of its Ant Group subsidiary. In the long term, the stock is a buy at current price levels.
In the fast lane
The situation is similar for Internet group Baidu. Together with Geely, one of China's largest carmakers, the search engine operator wants to produce smart electric cars in the future. Baidu is one of the leading Chinese developers of autonomous driving systems. The US investment bank JP Morgan sees the plans of the Internet giant positively. The analysts confirm their rating for Baidu shares at "Overweight" and increase the price target to USD 290.0. At a current price of USD 235, this results in a potential of 23%.
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