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January 20th, 2022 | 12:51 CET

Alibaba, Hong Lai Huat, Tencent: Now things are really taking off!

  • Investments
Photo credits: pixabay.com

The Asia region remains on the growth path. The economies of China, Singapore, and Indonesia achieved 4.5 to 6.5% growth in 2021. Prosperity is not yet comparable with the West. But the developed zones around the metropolises have already shown high momentum for years. The real estate market, in particular, is booming in China as well as in Hong Kong, Singapore and Japan. It is uncertain how long the low interest rates will continue to support these markets because the Federal Reserve has already announced that it will exit the liquidity bubble. Who can surprise in the current environment?

time to read: 4 minutes | Author: André Will-Laudien
ISIN: ALIBABA GR.HLDG SP.ADR 8 | US01609W1027 , HONG LAI HUAT GROUP LIMITED | SG1EE1000009 , TENCENT HLDGS HD-_00002 | KYG875721634

Table of contents:


    Alibaba - US authorities investigate cloud service

    The Alibaba share was just about to start its upward journey, but now a major investigation by the US authorities is putting pressure on the price again. The share price fell to EUR 96.70 at the beginning of December, with a considerable volume traded on the stock exchange. A classic sell-off!

    It then went dynamically upwards at the beginning of January, with some brokers blowing the whistle to get in under the motto: "Buy the worst stocks from 2021!" In the last stock market year, Alibaba had shone with a negative performance of 50% after being eliminated from many US technology funds due to regulatory issues.

    The US government is evidently ensuring that Alibaba's most important growth area is currently being closely scrutinized. The cloud business is being reviewed for a potential threat to the country's national security. Several news agencies report this with reference to insiders. According to the report, Alibaba is being investigated for how it stores sensitive data and whether US users could be cut off from their data in the cloud by regulators in China. The US Commerce Department has not yet commented publicly on the report. After Amazon, Microsoft and Google, Alibaba is the world's number four cloud business.

    Alibaba Group is still growing at about 25% per year, and its net book value is about EUR 49, just under half of its current listing. Historically, the Alibaba share has thus never been so cheap. Therefore, despite the recent roller coaster ride, we believe it remains interesting in the medium term. Pick up pieces in the EUR 100 to EUR 115 range - because the shaken Asian technology stocks could become the pick of 2022.

    Hong Lai Huat - News from Cambodia at the start of the year

    Real estate developer Hong Lai Huat Ltd. operates out of the burgeoning Singapore region, a major Asian city with a Western flavor. 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 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 has been booming for years.

    Singapore Exchange mainboard-listed Hong Lai Huat Group Limited provided an overview of its operations in Cambodia at the beginning of the year. The Company is well on schedule with the main construction works in the Royal Platinum project and has already reached the tenth floor of the total 28 floors in early 2022. The project, which comprises 851 residential units and 50 commercial units, is the Group's second mixed-use project in Phnom Penh, the capital of Cambodia.

    The commercial units and all the penthouse apartments have already been 90% sold to local and international buyers. With a total gross development value of USD 220 million, sales are progressing rapidly. The Group remains very optimistic about further opportunities in fiscal 2022, especially after the Cambodian government announced quarantine-free status for fully vaccinated travelers in the fourth quarter of fiscal 2021. As a result, property transfers are now proceeding smoothly.

    In September 2020 and November 2021, the Group acquired its third and fourth properties in the capital Phnom Penh and Sihanoukville province, respectively. Both projects are currently undergoing their respective feasibility studies and planning phases. Based on preliminary estimates, both projects will reach a total gross development value close to USD 400 million. The Group's revenue and profit are expected to continue their strong upward trend.

    Hong Lai Huat Group's stock is currently capitalized at SGD 49.7 million, which is a clear buying opportunity given the pipeline at hand. Since December, the stock has also been traded in Frankfurt. Due to the tight market, it is advisable to set a limit on entry. The Company will also present at the International Investment Forum (IIF) on February 17, 2022 with Executive Director Dylan Hong (ii-forum.com).

    Tencent - The gaming giant could become interesting again because of Metaverse

    Back to China. Tencent is restructuring its online and gaming holdings after the Chinese regulator wants to crack down on some business models again. Earlier this year, Tencent already sold 14.5 million shares of its Sea holdings for about USD 208 apiece, totaling approximately USD 3 billion. The Chinese gaming giant thus already reduced its share from 21.3 to 18.7%. For some time now, Tencent has also been selling off shares in JD.com and reconsidering its future investment strategy. Tencent is now one of the best-positioned companies to benefit from the new Metaverse.

    While US-based Meta dominates social media globally with its Facebook and Instagram platforms, Tencent dominates the Asian market with its WeChat app. More than 1.26 billion people use the social media app. And Tencent outperforms Meta when it comes to mobile games. It is currently the number one game maker in China and continues to be a significant investor in future technologies and developer studios.

    Tencent stock is also one of the losers of the 2021 stock market year, down about 30%. However, with a market capitalization of EUR 509 billion, the Company is still one of the largest Asian stocks. With a growth of almost 20% per annum, a 2023 P/E ratio of 18 is not too expensive. Looking back over 5 years, the stock is still up 115%. The share is currently trading at EUR 51, which from an analytical perspective provides an opportunity of 20-30% for the current stock market year.


    Selecting the right growth stocks is not always easy. There are often influences from outside, such as the Chinese regulator, which can have a lasting negative effect. Alibaba and Tencent have already felt this pinch. Hong Lai Huat from Singapore operates an exciting real estate development business in emerging Cambodia and is still valued low.


    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.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    André Will-Laudien

    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.

    About the author



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