Lazada CEO On What It Takes And What It Means To Win Alibaba’s Backing

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Alibaba poured $1 billion to gain a controlling stake in the Singapore-based Lazada Group this year in April. On CNBC’s Managing Asia, Lazada Group CEO Maximilian Bittner shared his feelings about working with the Chinese firm.

What does it mean to get Alibaba’s investment?

When asked how it feels to have the e-commerce giant take a $1 billion shine to his company, he said, “I describe it a little bit like (being) a kid in a candy store.” But Bittner said the e-commerce giant does not write checks on a whim; rather, the company did a significant amount of work before handing over the money.

“The process is not an easy process so (by) the actual time the deal was signed, I didn’t think I had the strength to pop open a bottle of champagne. I just wanted to sleep,” he told CNBC.

On the working experience with vice chairman Joe Tsai and executive chairman and founder Jack Ma, Bittner said it allowed him to shorten his own learning curve.

“For me, the single biggest advantage is really that ability to leapfrog some of that painful trial and error,” Bittner said.

After securing Alibaba’s backing, Lazada moved on to buy a Singapore online grocery start-up Redmart for about $50 million. Bittner said that the basic objective for the deal has been very much about the logistics capabilities and management of Redmart. He added it was primarily about building their own logistics footprint.

The deal came at a time when the e-commerce industry in rising in Singapore. Amazon, the U.S.-based online retailer, is planning to expand its online retail business with a launch in Singapore in early 2017, according to TechCrunch.

Morgan Stanley: Alibaba has 40% upside

Morgan Stanley’s new analyst team initiated coverage of Alibaba with a $130 price target and Buy rating. The price target signals upside of more than 40% for the stock on top of its almost 14% rise this year. Their price target is based on a discounted cash flow analysis that assigns $7.70 per share for Ant Financial, $7.80 per share to strategic investments and $114.90 per share to Alibaba.

“Alibaba is now invigorating its e-commerce platform with robust data technology, aiming to revitalize sales amid decelerating growth in gross merchandise value (GMV),” the analyst team stated.

On Thursday, Alibaba shares closed up 1.36% at $92.31. Year to date, the stock is up almost 14%, while in the last six months, it is up almost 19%.

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