Alibaba Group Holding Ltd (NYSE:BABA) stock was little changed on Tuesday afternoon after a price target cut from one analyst and a report that the company has agreed to consider listing shares in Hong Kong. The Stock Exchange of Hong Kong is preparing to add dual-class listings for shares, and Jack Ma, founder of the China-based online retailer, said they would “seriously consider” an Alibaba stock listing in Hong Kong.
Alibaba stock listing in Hong Kong under consideration
According to Reuters, Ma commented on the possibility of an Alibaba stock listing in Hong Kong at an event there on Monday. He was responding to comments made by Hong Kong Chief Executive Carrie Lam, who said she hoped the Chinese retail giant would think about listing on the city’s stock exchange. A spokesperson for the company had no additional details on what any potential plan for an Alibaba stock listing in Hong Kong might entail.
The company’s record $25 billion IPO was held in 2014 in New York, although management would have preferred the Alibaba stock listing in Hong Kong. The problem, according to Reuters, was that the city wouldn’t accept its governance structure, which allows a “self-selecting group of senior managers” to control most of the appointments to the board.
Hong Kong is apparently upping its game against New York, which has been attracting many of the largest Chinese IPOs. Proposed new rules for the city’s stock exchange would allow for dual-class shares, which provide different levels of voting rights to each class of shares. Dual-class shares are a key part of the alternative governance structures many technology firms prefer these days.
According to Reuters, analysts believe that an Alibaba stock listing in Hong Kong could push more funds toward the city and away from the mainland. Many also believe that it could convince other major technology-related firms to list in Hong Kong. An Alibaba stock listing in Hong Kong would also provide the company itself better access to investors in China or Asia, who tend to be more familiar with its business.
Alibaba stock price target cut by Nomura
Also on Tuesday, Nomura Instinet analyst Jialong Shi and team said in a note that they have trimmed their target price for Alibaba stock to $219 per share but maintained their Buy rating. They also offered a preview of the company’s next earnings report, which is expected later this month.
They project a 51% year-over-year increase in revenue for the third quarter of the company’s fiscal 2018, which would bring the total to 80.3 billion yuan. They’re expecting 59 billion yuan in China retail revenue, a 45% increase year over year, driven by a 39% increase in customer management revenue, which would amount to 39.5 billion yuan.
They also expect a 35% increase in commission revenue on Double 11 and 3 billion yuan in “new retail” revenue, which includes Intime and Hema. The Nomura Instinet team pegs Cainiao revenues at 3 billion yuan for the quarter and believes Tmall gross merchandise volumes for physical goods maintained its previous growth rates in excess of 40%.
They also look for a 20% increase in non-GAAP earnings, bringing the total to 10.87 yuan, in line with the consensus at 10.84 yuan.
Alibaba stock hovered around its opening price of $191.13 all day on the New York Stock Exchange on Tuesday.