Welcome to China Business News, NEO’s weekly roundup of top business developments as reported by news outlets in China and the region.
This week’s highlights:
- Alibaba released its financial results for Q1 2023. Despite being one of the Chinese IT companies most severely impacted by the epidemic, Alibaba’s key performance indicators exceeded expectations and injected confidence into the market. The firm’s revenue for the first quarter accounts for RMB 205.5 billion, a slight decline of 0.1% year-over-year, though there had been pessimistic market expectations that Alibaba would post its first year-over-year revenue decline. Despite overall industry growth facing pressure due to the impact of the epidemic in April and May, Alibaba’s revenue remained stable in the third quarter, with adjusted EBITDA falling by 18% year-over-year and non-GAAP net income showing a decrease of 30% year-over-year. (Royal Flush Finance)
- Shares of AMTD Digital (NYSE: HKD), listed on the New York Stock Exchange on July 15, soared by a factor of 214 and surpassed the combined market value of Alibaba and Pinduoduo as of market close on August 2. After the surge, the stock price fell down the following day. According to analysts, AMTD Digital share prices are “exaggerated,” and the fair value of the firm’s shares, which earned less than $200 million in revenue last year, should be just over $30 for a share, instead of around $1000. As of August 3, AMTD Digital’s market capitalization fell back to $203.55 billion, but was still close to Alibaba’s market capitalization of $253.48 billion on the same day. In 2019, AMTD Group spun off its core investment banking company, AMTD International, for listing in the U.S; AMTD Digital was established under the laws of the Cayman Islands as a financial technology investment company under AMTD Group. In January 2022, AMTD International completed the acquisition of AMTD Digital. AMTD Digital divides its business into four segments: digital financial services, SpiderNet ecosystem solutions, digital media content and marketing, and digital investments. Sources familiar with the matter told Caixin that AMTD Digital’s approach to investing in fintech companies has been questioned by the market, as it does not invest in startups the way a venture capital fund would and uses a number of derivative-linked products instead. (Caixin)
- Alibaba was included in the SEC’s “provisional delisting list” after it published its FY 2022 annual report. Earlier this week, Alibaba announced on the Hong Kong Stock Exchange that it would continue to monitor market developments, comply with the laws and regulations, and strive to maintain its dual listing status on both the New York Stock Exchange and the Hong Kong Stock Exchange. By the end of June 2022, the SEC placed 155 Chinese stocks that had disclosed their 2021 financial results on the “provisional delisting list”. They will be mandatorily delisted after they enter the list for the third time in 2024. The U.S. and China were expected to negotiate over the matter for at least two more years, thus giving Chinese stocks time to “find their own way out” of the situation. However, the collective delisting date for Chinese stocks has been moved to early 2023 with disclosure of 2022 financial results. If both sides don’t reach a consensus, all 192 Chinese companies are destined to be delisted in early 2023, and Chinese stocks will bid farewell to the U.S. market. (Caixin)