19. November 2021 | 12:05 CET
Alibaba, TalkPool AG, Baidu, Tencent - Brutal sell-off, what is next here?
The sell-off of Chinese tech giants is now entering the next round. This time it is not the regulator but a cautious outlook for the future. Alibaba's share price felt the negative sentiment yesterday and is firmly back in the grip of the bears after an interim recovery of over 30% since summer. The NASDAQ has been unimpressed with Chinese company forecasts for weeks, sending its own growth stocks from high to high. We take a look at the dynamic sector.
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ISIN: ALIBABA GR.HLDG SP.ADR 8 | US01609W1027 , Talkpool AG | CH0322161768 , BAIDU INC.A ADR DL-_00005 | US0567521085 , TENCENT HLDGS HD-_00002 | KYG875721634
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 Group - The outlook fails to inspire
It could have turned out better. Even in recent weeks, Alibaba shares were able to gain a whopping 10% in the run-up to the announcement of the figures. Yesterday, it then came to a crash after the 6-month results came to publication. The share price fell by over 9% below the EUR 130 mark, threatening to enter the downward spiral again.
Alibaba's revenues did rise by almost 30% in the second fiscal quarter to just under CNY 201 billion. However, excluding the revenues of the supermarket chain Sun Art, which was acquired about a year ago, the increase was only 16%. Alibaba thus missed analysts' expectations as well as the targets it had set itself. Only in the cloud business did the group exceed expectations. Alibaba's rival JD.com also reported figures and was able to surprise positively. Here it went up by more than 5%. Alibaba's investments in new platforms weighed heavily on earnings. Adjusted EBITDA amounted to CNY 34.8 billion, corresponding to an unexpectedly high decline of almost 27%. Shareholders were left with a net profit of CNY 5.4 billion, a good 80% less than the previous year.
Many professional market participants were disappointed and revised their growth expectations downward, in some cases sharply. After a sustained downward trend, the share has also been kicked out of many technology funds. Technically, the share price should now not slip below the previous low for the year at EUR 119; otherwise, there is a threat of trouble.
TalkPool AG - The convergence of network services and IoT
TalkPool AG is going in exactly the opposite direction. It has recently accelerated its turnaround and reported quarterly revenues of EUR 5.8 million and the highest profit since the IPO in May 2016 with the latest figures. Thanks to a fast and efficient integration of Nordic PropTech into the group and significant investments in global sales, implementing the strategy communicated in the Grand Master Plan II in May could already start successfully in the third quarter.
TalkPool continues to expand its market presence and range of services in Germany. The current range of services extends beyond the planning and documentation of classic copper cable home connections to network planning and documentation of fiber optic home connections for private homes, schools, office buildings and 5G sites. In Germany, for example, they offer indoor air control and cleaning systems, which have high public relevance, especially in the Corona Crisis. Within the set goals, TalkPool is purposefully developing into a leading digitalization solutions and services provider for buildings and communication infrastructures. The focus is clearly on the management of energy, water and air.
Due to the demand for services for the expansion of IoT mobile networks and the massive need for planning and construction services for 5G mobile sites in Germany, TalkPool has hired additional employees for the Network Services division. The convergence of network services and IoT in a 5G environment is one of the main drivers in TalkPool's new digitalization strategy. Recent order wins in Germany, Pakistan, Sweden, Haiti and the Netherlands, and new sales opportunities in the US and the Caribbean, set the stage for sustained organic growth in the coming quarters. TalkPool has a long track record of providing mobile services to carriers and operators in the Americas and can now re-enter the US market through its operating subsidiary TalkPool Services LLC (Miami).
TalkPool shares are currently trading between EUR 1.50-1.60 in Frankfurt, with the main listing on the Nasdaq First North growth exchange. The attractive TalkPool business model shows its strengths and should appeal to investors in the home region D-A-CH in the long term.
Baidu versus Tencent - Who has the better cards?
Another extended look at the Asian technology giants. Against the wishes of the Chinese government, the IT groups are making a solid effort to attract foreign investor funds. In recent months, however, it has become apparent that the intervention of government regulators is harming the goals of Chinese technology companies. Larger US funds, such as star manager Cathie Woods' ARK Invest, have successively abandoned these stocks because of the high risks involved.
Overall, however, it should not be forgotten that the Internet economy in China is growing strongly, even if the supervisory authorities are demanding more transparency in the business models. The technical development around the Internet will ultimately not be stopped. In recent years, the search engine Baidu has dramatically expanded its field of activity into the areas of media content, remote learning, and its communication platforms. Baidu is very successful and popular among users because it offers a viable alternative to Google.
The competition inevitably includes the Chinese Internet company Tencent, which operates one of the largest and busiest service portals in the People's Republic. The Company offers a wide range of Internet and mobile communication solutions, from messenger to social media channels and gaming platforms. The Company holds several technology patents in instant messaging and e-commerce and has its own mobile payment solutions.
The Tencent share is one tick ahead of the two stock market darlings Baidu and Alibaba, from a chart perspective. Here, a low might have been reached at EUR 46; Alibaba and Baidu had to experience a trend reversal downwards again yesterday. Therefore, remain on the sidelines for the time being.
Alibaba, Baidu and Tencent are the most popular Chinese Internet giants on the NASDAQ. They do not have an easy business because of regulatory intervention. The long-term growth argues for an investment, but the stock trends are sustainably battered. TalkPool has a high probability of positive surprises because the 5G standard is being rolled out worldwide.