Investments #17/364
Deposited another $200. Just to close the topic with Alibaba and Chinese stock market. Last week, I visited seminar organized by UBS. Their main comment on Chinese economy and Chinese stock market was that consumption has not recovered since COVID-19. People are not spending as much as they spent before COVID + high unemployment ratio. As per UBS assessment, it could take another 2-3 years to fully recover 🤷♂️
But, as a long-term investor, I’m not looking at current price fluctuations. I’m more interested to know how much cash the company can generate.
For example, if Jack Ma offers me to buy Alibaba and keep it for 20 years - would I agree or not? Current purchase price (market capitalization) is US$189.83 billion (19 Feb 2024).
To buy any Company, everyone would agree that we need to understand how much cash the company could generate for the next 20 years. Based on expected free cash flows, adjusted for expected interests payments, Alibaba could generate US$3.5 trillion in the next twenty years (discounted).
So, buying Alibaba now and paying US$189.83 billion, Alibaba will generate US$3.5 trillion in the next twenty years (which is 18.5 times of current market capitalization). Even if I’m wrong in my calculations by two times, and Alibaba could generate only US$1.8 trillion, it is still 10 times from current prices 🤷♂️.
My plan is to add more Alibaba shares at a price below US$100, at the same time keeping Alibaba share below or at level of 40% of my portfolio.
Disclaimer: it is not a recommendation, just my thoughts which could be wrong 🤷♂️
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
Read more
Comment
Sign in to post a comment
Common sense investor. I invest in companies which can give return of 15% on my investment + FCF to double my investment
79Followers
33Following
347Visitors
Follow
Fundamentalist : Interesting.