The iconic events of this year's capital markets have begun

Summary: The rumors of Alibaba's privatisation have finally been confirmed, this year's capital market signs of the event has begun. Alibaba (1688.HK) announced 21st, has received its holding parent company Alibaba Group (hereinafter called Ali Group) to

The news of Alibaba's privatisation, which has been rife with rumours, has finally been confirmed, and the landmark events of this year's capital markets have begun.

Alibaba (1688.HK) announced 21st, has received its holding parent company Alibaba Group (hereinafter called Ali Group) an offer, will be a full purchase of its shares issued in cash, so as to achieve the privatization of the listed company. According to the relevant rules, Alibaba has set up an independent board of directors on this matter, the bulletin said. Rothschild, Credit Suisse and Deutsche Bank were identified as joint financial advisers for the privatisation.

Will cost HK $19 billion

If Alibaba succeeds in privatisation, it is expected to cost about 19 billion HKD. During its 2007 IPO, the total amount of money raised was only about HK $13 billion.

According to the announcement, Ali Group gave the final return purchase price of 13.5 Hong Kong dollars per share, compared with the last 60 trading days before the February 9 suspension of the average closing prices of 60.4%, than the last 10 trading day average closing premium of 55.3%.

According to the previous Grand network privatization case of 23.5% of the premium, Ali Group of the 60.4% premium should be the largest in the near future. Since last year, the privatization of stocks and shares of overseas listed companies has been surging. Up to now, a total of about 26 Chinese companies from the three major U.S. market retreat, the privatization price than the average market premium margin between 20% to 30%.

According to related accounting, such as Alibaba privatization success, is expected to cost about 19 billion HKD. During its 2007 IPO, the total amount of money raised was only about HK $13 billion.

In the past few years, Alibaba has two times a total dividend of 2.11 billion Hong Kong dollars, creating the internet history of the largest share dividend. 2009, the 10 anniversary of the establishment of Alibaba, a special dividend of 1.01 billion Hong Kong dollars, more than the first half of the year, the entire business-to-business business profits. In 2010, Alibaba paid 1.1 billion Hong Kong dollars in cash, equivalent to 0.22 HKD per share dividend.

Alibaba was listed in the Hong Kong HKEx in 2007, code 01688, the second largest IPO case in the global Internet industry. Market opinion says that if it succeeds in privatisation, it will be the most important event in the capital market this year.

One, from then on the Hong Kong exchange market, 1688 this code will become history.

Since its listing, Alibaba has maintained its position as the market share and profitability first in China's business-to-business industry. In Ali Group's core business layout, it and the day cat, Taobao, etc., are strategic assets. And because of its strong profitability, and previous years to Ali group other business synergy and fostering role, within the Ali Group, has been known as the "family of Big Brother."

Because Ali Group is not listed company, its overall financial statement status is not known, but the industry generally believe that as of 2011, Alibaba is still the largest source of profits, Ali Group is also the most stable core operating assets.

According to its latest 2011 financial report, Alibaba's revenues rose 15.5% to 6.42 billion yuan Year-on-year, while net profit grew 16.6% to 1.71 billion yuan. Alibaba listed in 2007, its total income reached 2.163 billion yuan, to achieve net profit of 967.8 million yuan (including the IPO of the one-time freezing interest of 289 million yuan).

Compared with its absolute leading position in the market, and strong profitability and return ability, Alibaba shares have been under the pressure of the overall macroeconomic situation and the Hong Kong capital market to invest in the cold reality, After the IPO of HK $13.5, its share price soared to 40 Hong Kong dollars, but in the last two years, it has been floating up and down the axis of HK $10 in the financial crisis with a minimum of about HK $3.

Facilitate strategic transformation

Business-to-business business and assets because of the reasons for listed companies, it is difficult to seamlessly integrate and receive Alibaba Group's strategic development ideas and development plans.

Analysts say Alibaba's share price has long deviated from its core value and does not accurately reflect its real valuation, which is at the heart of the privatisation, given the pressing demand for earnings and growth from listed companies and the difficulty of implementing its transition strategy.

"Business-to-business business and assets because of the reasons for listed companies, it is difficult to seamlessly integrate and to receive Alibaba Group's strategic development ideas and development plans." Lubberg, a senior Internet analyst, said that Alibaba Group, which has been taking China's e-commerce into the fast lane in the past few years, is taking its business-to-business assets into account throughout the industry chain, and rebuilding the e-commerce industry chain should be the first consideration. "All of this is only possible if business-to-business companies are privately owned," he said. ”

Alibaba (1688) early business model focused on increasing the number of registered users to collect membership fees, to achieve a growing income. Alibaba's members are mainly manufacturers, trading companies and wholesalers, who sell goods through Alibaba's trading platform. Since last year, the company has implemented significant adjustments to shift its focus from increasing the number of users to improving the user experience of buyers on the trading platform. As a result, the rate of increase in the number of paid members has slowed to some extent.

In fact, since LU the CEO of Alibaba, within the company, for the relevant line of business transformation and adjustment, has been much progress.

It is understood that Alibaba has been adjusting the structure of income, trading and effect-oriented new services have made satisfactory progress, value-added services in the overall revenue structure of the proportion continues to grow.

Alibaba concept, Alibaba paid users will be the future of fees and users linked to the effect, corporate customers in Alibaba's platform to obtain more orders, more revenue, the more pay.

But at the same time, a number of Alibaba executives said on various occasions, the strategy for upgrading the industry will still take a long time to implement, which could affect the short-term profitability of its business, while "the uncertainties of the global macroeconomic environment will have a lasting negative impact on China's export trade component." ”

Earlier, Alibaba CFO Wu Wei at the analyst meeting also said, "We hope to make the platform bigger, and then put our special value reflected, the company has done ' next year's profit margin has been reduced ' preparation, in order to look forward to future profit returns. ”

Investment bankers say Alibaba's quest for privatisation is an important step in the right direction at the right time. If privatization succeeds, Alibaba is pushing the transformation and upgrading work will be more stable and long-term development, Ali Group will be able to take long-term interests as a strategic decision, and will not be exposed to public companies involved in the market expectations, profitability visibility and price fluctuations in the pressure.