Stock Update (NYSE:BABA): Alibaba Group Holding Ltd and Ant Financial Announce Local Services JV
Alibaba Group Holding Ltd (NYSE:BABA), and Ant Financial Services Group announced both parties will each invest RMB3 billion ($483.3 million) and resources to set up a joint venture aimed at capturing opportunities within China’s local services market, with an initial focus on the food and beverage segment.
The joint venture, Koubei, will integrate the convenient aspects of mobile commerce and big data to transform and upgrade China’s local services sector, offering consumers enhanced dining and shopping experiences. Alibaba’s food ordering and delivery business operating under the Taodiandian brand and Ant Financial’s offline merchant resources will become a core part of Koubei’s operations.
Alibaba and Ant Financial will each have a 50 percent equity stake in Koubei. Samuel Fan from Ant Financial’s payment business unit will become Chief Executive Officer of the new venture.
The growth of mobile Internet in China has presented enormous opportunities for transformation within China’s local services market. With Alibaba’s leadership in mobile commerce and cloud computing, as well as Ant Financial’s proven track record in mobile payment, consumer credit and micro loans, Koubei is well positioned to partner with local merchants looking to provide innovative services to consumers.
“Consolidating our resources under Koubei allows us to capture opportunities that navigate both the offline and online markets. Harnessing the power of mobile commerce and data technology, Koubei will build synergies between offline consumption and internet-based offerings that will transform China’s local services market,” said Samuel Fan, CEO of Koubei.
At the start, Koubei’s business will focus on offline consumption opportunities in the food and beverage segment and over time, Ant Financial’s merchant services in the areas of offline retail, healthcare and vending machines will be consolidated into the joint venture. Users will be able to easily access Koubei through Ant Financial’s Alipay Wallet app and Alibaba’s Mobile Taobao app.
As a platform company, Koubei will enable local merchants to access mobile payment solutions and launch local marketing and promotion campaigns to reach a wide user base. Koubei aims to build a local services ecosystem that will benefit consumers, merchants and third-party service providers. (Original Source)
Shares of Alibaba Group closed yesterday at $85.68 . BABA has a 1-year high of $120 and a 1-year low of $80.03. The stock’s 50-day moving average is $87.97 and its 200-day moving average is $90.68.
On the ratings front, Alibaba Group has been the subject of a number of recent research reports. In a report issued on June 16, J.P. Morgan analyst Alex Yao assigned a Buy rating on BABA, with a price target of $104, which implies an upside of 21.4% from current levels. Separately, on June 10, HSBC’s Chi Tsang maintained a Buy rating on the stock and has a price target of $124.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Alex Yao and Chi Tsang have a total average return of 14.7% and 20.8% respectively. Yao has a success rate of 58.3% and is ranked #656 out of 3638 analysts, while Tsang has a success rate of 61.5% and is ranked #553.
In total, 20 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $105.23 which is 22.8% above where the stock closed yesterday.