December 14th, 2021 | 11:40 CET
Alibaba, Hong Lai Huat, Baidu: Asia now in turnaround!
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Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Alibaba - Sentiment remains depressed
Last week, the pressure on the Alibaba share eased somewhat; it even managed a small upward rally. The short recovery attempt went in the direction of EUR 115 but was already partially corrected again in the middle of the week. However, the sell-off may have produced a temporary low of EUR 96.70 on 3 December 2021 - what had happened?
Like Alibaba and various other tech giants before it, Weibo is now listed in Hong Kong in addition to the US listing. It is a move mainly due to the delisting discussions surrounding Chinese companies in the US. Nevertheless, the mood at the debut was anything but good. Weibo lost 7% in Hong Kong at the open from its issue price of HKD 272.80, adding up to a hefty 52% loss in value since its peak in July. Alibaba is the largest shareholder in Weibo, along with investment firm Invesco, with a package of about 6%, according to Bloomberg data. Thus, the initial Weibo listing was naturally a negative event for Alibaba.
What applies to Weibo will probably also establish itself as a reliable future scenario for Alibaba & Co because fundamentally, the political situation in China is not new. In turn, this means a significant clouding of market sentiment for the current situation. However, such points have often been good entry points in the past. In the case of Alibaba, the Company is still growing at about 25% per year, and the net book value is about EUR 43, which is about 40% of the current stock market listing. Historically, the Alibaba share has thus never been so cheap. It, therefore, remains attractive in the medium term, despite the recent rollercoaster ride, in our opinion. Collecting in the EUR 105-115 range should form a promising starting position.
Hong Lai Huat - A real estate stock with a focus on Cambodia
An up-and-coming region in Asia is offered by the city-state of Singapore, a major Asian city with a Western flavor. Clean, safe and highly-priced compared to the rest of Asia, it offers a living of the highest standard. The Asian metropolis has an area of only 725 sq km, but the population density is relatively high, with 5.8 million inhabitants. No wonder that real estate prices have been rising for years, and building land is becoming increasingly scarce. With a GDP of USD 364 billion, Singapore ranks 35th globally, and the entire region is currently booming, especially in the real estate sector.
The local Hong Lai Huat Group Limited is a renowned real estate and property development company with a 31-year track record. Since its establishment in 1988, the Group has completed numerous projects in Singapore, ranging from public and private residential developments to commercial and industrial buildings. Some of its notable projects in Singapore include D'Ecosia, D'Fresco and D'Castilia. It was listed on the main board of the Singapore Exchange in 2000.
In 2008, the Company made a major strategic move and diversified into the agricultural sector in its northeastern neighbor, Cambodia. There, they completed the development of approximately 10,000 hectares of farmland where fresh cassava is grown and processed. With the successful launch of its first property project, D'Seaview, the Group has now also kicked off its real estate project business in Cambodia.
D'Seaview is one of the first and largest mixed-use projects in Sihanoukville, comprising 737 residential units and 67 commercial units. Initial realizations led to the sale of D'Seaview Hotel to Sihahotel Group Co. Ltd. in mid-November. Following the success of D'Seaview, the Group has already launched its second mixed-use project, "Royal Platinum," in 2019, which is being developed in the Toul Kwok district of Phnom Penh, the capital of Cambodia. The new project is expected to include 851 residential units and 50 commercial units, and the project site is located just 20 minutes from Phnom Penh International Airport. With this lineup and other land projects, the stage is set for solid growth in the coming years.
The Hong Lai Huat Group Pollux share is currently capitalized at SGD 51 million and can be considered undervalued given the high intrinsic value. The Company has now been listed in Frankfurt since December. The share is still relatively undiscovered; setting a limit is strongly recommended when entering.
Baidu - Taken into custody
Back to China. After the three-day annual Central Economic Conference in China, it is now clear that the guiding principle for the coming year is stable economic growth. Thus, China's decision-makers emphasize the word stability in particular with conspicuous frequency. While the commercial housing market is to be further supported to "meet residents' needs," this does not mean that China Evergrande can hope for a government bailout.
Meanwhile, Baidu is making its presence felt again. With its new "Land of Hope" platform, the tech giant is unveiling a new AI app, joining the current Metaverse bandwagon. The new app is supposed to be able to take 100,000 conference participants on board at the same time and is causing quite a stir at its launch. That is because Baidu is catching up to rivals Tencent and NetEase with its new Metaverse capabilities, while Chinese state media is warning against hype around the concept. The app will be unveiled at an artificial intelligence developer conference in late December and will launch before the end of 2021.
The Metaverse has generated a lot of hype this year, with some heralding it as the next iteration of the Internet. The technology can be roughly defined as a shared 3D space where people interact virtually. The concept gained wider attention in October when Facebook renamed itself, Meta. The US Company recently announced that it would make its virtual reality product, Horizon Worlds, available to anyone over the age of 18 in the US and Canada. Here, too, a new era is currently beginning.
Baidu is at the launch pad in China with its latest technical achievements. Although government limitations hamper development opportunities here in the short term, the train will nevertheless pass the regulators at high speed. The Baidu share has been put in the same category as the general development of Chinese shares with its latest sell-off. Of course, the hang-up around China Evergrande is also weighing. Given the good positioning and low valuation, one should take a closer look at the search engine professional Baidu at the current level of EUR 130. However, a possible price increase of China Evergrande will weigh heavily on the stock market prices in the short term.
Chinese regulators are making life difficult for the Internet giants. Nevertheless, technological developments continue, and the remaining foreign investor capital can still be used for growth projects. The Hong Lai Huat Group is currently operating very successfully in Cambodia from Singapore. It is far from Beijing and offers excellent opportunities because of the prevailing development backlogs.
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