US investors ' view of Yahoo's status: Asia shares potential

Lead: US activist investor, hedge fund Third Point fund manager Dan Le Boux (Dan Loeb) plans to write a letter to investors in Tuesday about Yahoo's current state of view. According to an earlier letter from the US media, Loeb made a special mention of Yahoo's huge profit on Alibaba Group investment. In his view, the after-tax value of Yahoo's Asian assets, Alibaba Group and Yahoo Japan, amounted to $11 per share, accounting for 73% of Yahoo's market value.

The following is a summary of this letter:

As investors know, Yahoo's operations and business strategy were in trouble during the tenure of former CEO Bartz Carol Bartz, and the company's share price tumbled last August, and we were looking to buy a lot of Yahoo shares. At first, we were interested in Yahoo simply because its real value was seriously underestimated. Last September, we held a 5.2% stake in Yahoo and explained why Yahoo's valuations were undervalued.

While the problems of "Yahoo's core assets" have been the subject of widespread media attention, it accounts for only a small part of Yahoo's real value: The value of Yahoo's core assets is just 2 dollars per share, calculated at the 14.49 dollar closing March 12, 2012. The after-tax value of Yahoo's Asian assets, Alibaba (microblogging) group and Yahoo Japan, amounted to $11 a share, accounting for 73% of Yahoo's market capitalisation.

The most important reason why we invest in Yahoo is because of the huge potential of Yahoo's assets in Asia. Yahoo now holds 40% per cent of Alibaba Group. According to iresearch, a market research firm, in 2011, Alibaba Group has a 49% share in China's business-to-business e-commerce market, four times times its second-largest competitor, a 90% per cent share of China's Consumer-to-consumer E-commerce market, and a 53% per cent share in the E-commerce market.

In addition, the Alibaba Group's Alipay has a 49% share of China's online payment market, while holding the second-highest spot in China's online advertising market, with a 17% per cent second only to Baidu's 28%. In particular, the Alibaba Group's Taobao Mall, recently renamed the Cat (Weibo), has become a bellwether for China's fast-growing market for business.

According to Iresearch's statistics, the number of Chinese online shoppers reached 187 million in 2011, surpassing 170 million in the United States. In a report on the world's next E-commerce superpower in November last year, the Boston Consulting Group said the total amount of e-commerce transactions in China could overtake the US and be the world's top figure by 2015. Compared to the United States, China's e-commerce development has a variety of advantages, such as relatively low freight, physical store service coverage Limited.

Boston Consulting Group in the report highlighted the "Taobao phenomenon", and highlighted 2010 Taobao Mall product sales have surpassed the total of China's top five entity retailers.

The size and pace of China's e-commerce market, coupled with the market dominance of Alibaba Group, has made the company's future trends extremely interesting. With Alibaba steadily advancing its IPO, the company should quickly become the dominant Chinese internet market with Tencent ($ 47 billion trillion) and Baidu ($ 48 billion).

Makio Inui, analyst at UBS Group, said in a November 2011 report that Alibaba Group's valuation has reached $63 billion trillion. If the 2012 will be the year of Facebook, then once listed, Alibaba Group will usher in an important development opportunity in 2013.

In October 2011, it was reported that Silver Lake, Temasek and Yunfeng fund bought some of the shares held by Alibaba Group employees at a 35 billion dollar valuation. According to the acquisition price, Yahoo held Alibaba Group shares value of 7.6 U.S. dollars per share (after-tax). This suggests that Yahoo's stake has risen at a rate of 55% a year since its investment in Alibaba Group in October 2005, so Yahoo's market capitalisation comes mainly from its holdings of Alibaba Group.

It is clear that the above evidence shows that Yahoo owns Alibaba Group shares have a huge appreciation space. While the media are reporting on the dramatic process of talks between Mr Ma and Yahoo, Wall Street ignores the potential value of the Alibaba Group, which is rarely reported and analyzed by the media. There are certainly many convincing reasons why Mr Ma is interested in buying back Yahoo shares.

Over the past 6 months, we have seen Yahoo's board of directors make a "strategic assessment" of the company, but so far only appointed the new CEO, Scott Thompson Scott Thompson, and Jerry Yang's resignation and chairman Bostock (Roy Bostock) And three other directors are about to leave.

In mid-February this year, we announced our intention to nominate our candidates to the Yahoo board. We will nominate four candidates, except for Dan Le Boux, the other three are former NBC Universal CEO Jeff Zacher (Jeff Zucker), Mavea Group CEO Harry Wilson (Harry Wilson), and MTV NX's former chief operating officer Michael (Michael Wolf).