February 28th, 2022 | 12:43 CET
Alibaba, Hong Lai Huat, BYD - Asia as a safe haven for investments?
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"[...] We know exactly what we are doing and are implementing what we consider to be a proven technology in an industrially applicable and scalable way. [...]" Uwe Ahrens, Director, Altech Advanced Materials AG
Alibaba - Are the investments paying off?
Alibaba has been under constant pressure over the past 18 months as the Chinese government has repeatedly imposed new regulations that the Company has had to respond to. China's Amazon suffered from the squeeze because investors were too uncertain about the outlook. The fundamentals were very favorable by industry standards. Even investments by Charlie Munger only helped the stock to brief recoveries. But despite some bad news, the share price has hardly fallen in recent months.
Even when the Company presented its quarterly figures on February 24 and reported the slowest growth in years, the share hardly reacted. Sales were up just 10% YOY. A year earlier, the figure was still 37%. CEO Daniel Zhang assumes that the Company has penetrated the Chinese market to the maximum and no longer has much growth potential. That means the Company is now focusing on the international markets. There is still a lot of development potential here. The cloud and logistics area, as well as international e-commerce, have developed positively.
The Company had already indicated its intention to invest in the future in the past quarter. Whether these will pay off in the long term remains to be seen. The management has recognized the signs of the times and is pursuing a plan to make the Company more successful. The share reacted to the gap-down after the figures with strong buying and is currently trading at USD 107.94. In order to break the existing downward trend, the value would have to exceed USD 129.40 on a closing price basis. Until then, one should wait and see.
Hong Lai Huat - Cambodia Agri-Hub picks up speed
Singapore-based Hong Lai Huat Group is a real estate developer and builder with 30 years of experience. In addition to Singapore, it is active in Cambodia and has started two major construction projects there in recent years. After the difficulty in Cambodia for the last 2 years due to the Corona Crisis, the country has now opened up entirely again. Angelina Jolie's visit to the country for the first time since the Corona Crisis is further evidence of this. The D'Seaview project has been completed, and in the ongoing Royal Platinum project, the Company owns 50% of the shares. The properties each have at least 737 residential and 50 commercial units. In addition, the Company owns the rights to a 100 sq km Agri-Hub project.
There, the Company announced on February 18 that it is working with the Singapore Manufacturing Federation (SMF). It will give the Company access to 5,000 members of the SMF. In return, SMF companies will gain access to Cambodia and be able to draw on Hong Lai Huat's local expertise. The Agri-Hub area is tsunami safe 130m above sea level and will include everything from factories, logistics centers, plantations, livestock and housing. Electricity is to be generated by renewable energy, and water treatment plants are also planned. The development is divided into 3 phases and will no doubt take several years to complete.
Group General Manager and Executive Director Dylan Ong put the value of the project's first phase at USD 1 billion during his presentation at the International Investment Forum. The market capitalization is a favorable 48.7 million Singapore dollars (SGD), most of which is covered by cash holdings and real estate. Since September last year, the stock has been running sideways between SGD 0.092 and SGD 0.104. It is currently trading at SGD 0.094. Before Corona, the stock was trading at SGD 0.25. The main shareholder of the Company is the family of the founder. It holds over 47%. With the Corona pandemic subsiding and new opportunities to accelerate the development of the Agri-Hub, this offers a good risk-reward ratio.
BYD - International expansion and good sales figures
In China, the electric vehicle (EV) market is humming. According to the China Passenger Association, sales in 2021 increased to 2.99 million cars or 169%. That means that 14.8% of all new vehicles are electric, and an increase to 20% is expected in 2022. One of the beneficiaries is BYD, which manufactures cars of all types with electric drives. The Chinese group, which is also active in the battery market, is pushing the international expansion of its electric vehicles. Having taken the step into Europe in Norway and been very successful, Down-Under is next on the agenda.
The Company is exporting a low-cost zero-emission SUV to Australia. In China, the vehicle was sold under the name "Yuan Plus"; in Australia, the vehicle will be launched in showrooms as the "Atto 3". The electric SUV scores with up to 480km range and costs between 31,500 and 34,000 Australian dollars, depending on the battery. The installed Blade batteries are considered the leader in the EV market.
Despite 362% more vehicles sold in January than the previous year, the share price recently took a bit of a hit due to the geopolitical tensions on the stock markets. The stock is currently trading at EUR 27.12. Twice in the past month, the share has tested the support from September 2021 at EUR 25.05. In order to break the downward trend, prices above EUR 30.24 on a closing price basis are required. To do this, the resistance at EUR 28.69 must first be overcome. The EV market is not saturated either in China or internationally.
At the time of writing this article, the news came in that China wants to hold a military exercise near the border with Taiwan in the coming days. With that, one should first wait for this exercise before investing in Alibaba or BYD. Singapore and the Hong Lai Huat Group are not affected by this and seem to be an exciting investment from a fundamental point of view, especially since Cambodia is one of the fastest-growing countries in the region.
Conflict of interest
Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.
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