New Alibaba = Alphabet + Buffett?

This may be the earnings conference where the term "shareholder interests" was mentioned the most in Alibaba's history.

Since the announcement of its "1+6+N" organizational restructuring plan on March 28, the market has paid close attention to Alibaba's internal dynamics. According to previous statements by Zhang Yong, after this major split, the e-commerce company that has faced consumers directly in the past will transform into a "capital and asset operator."

Whenever asked about the planning and execution standards of the split plan, Zhang Yong always tells everyone that maximizing "shareholder interests" is an important criterion:

Alibaba will improve retail efficiency, split high-value businesses including Alibaba Cloud, handle assets, value the return on investment of assets, and continue to buy back stocks on a large scale - this looks more like a shareholder meeting than Alibaba at any time in the past.

New Roadmap

At the earnings conference and financial communication meeting, Alibaba announced the first phase of the group's organizational restructuring roadmap as expected. In order to smoothly implement the organizational restructuring, Alibaba has established a "Capital Management Committee" to handle a series of affairs such as split, financing, and IPO.

Compared with the information disclosed in the past, there are some adjustments in this new roadmap.

If "1+6+N" still regards the six major businesses as independent and parallel entities; then from this communication meeting, although the description of the six major businesses still exists, even the management structure of the six groups has been announced in the financial report, these businesses are actually assigned different levels in the processing and play different roles in the group.

First of all, Alibaba Cloud may bid farewell to Alibaba.

According to the financial report, the Alibaba Cloud Intelligence Group will be "completely split." The specific execution method will be "dividend to shareholders" or similar to Tencent's disposal of Meituan and JD.com assets. But before "dividend," Alibaba will introduce external strategic investors for Alibaba Cloud, reorganize related assets, debts, etc., and obtain regulatory approval. Whether it is the landing of the results or the execution of the operation, there is still a certain degree of uncertainty.

If the execution is successful, Alibaba and Alibaba Cloud will become two completely independent operating system listed companies.

Secondly, the S-level cash cow business is still Taobao Tmall.

Taotian is still China's largest e-commerce platform. Regarding Taotian's business, Alibaba stated in the earnings conference that it will continue to hold it wholly and will not be stripped from the group. According to Alibaba, Taotian can continue to generate considerable cash flow, and these cash flows can become reserves for the group's external investment in the future.

Finally, other businesses will each promote separate financing plans.

From the results, businesses with more mature financing will prioritize IPOs. According to the information disclosed in the financial report, Hema will become the earliest IPO sub-sector, which will be completed within 6-12 months; Cainiao will follow closely and is expected to complete the IPO within 12-18 months. And the overseas retail business led by Jiang Fan will officially start external financing, and the long-term goal will also be listed separately. Just yesterday, SHEIN announced a financing of 2 billion US dollars, with a valuation of only 66 billion US dollars. This will inevitably bring some dramatic challenges to Jiang Fan's financing valuation road.

However, unlike cloud services, these businesses are likely to be listed on the IPO in the form of Alibaba's partial shareholding, becoming a part of the entire Alibaba asset package. And these businesses occupy the vast majority of Alibaba Group's valuation, and the remaining larger asset package only includes some local life businesses and the big entertainment sector.

According to Zhang Yong's explanation, the asset processing methods between different businesses are different. In addition to caring about the interests of shareholders, they also mainly consider the business's independent ability and the synergistic relationship with the group's strategy.

New Alibaba

From the perspective of business structure, if all business spin-off plans are successfully implemented, Alibaba will become an investment business group that focuses on domestic core e-commerce and invests extensively in the Internet and retail industries at home and abroad.

According to the content of the financial report communication meeting, Alibaba will focus on multiple indicators including asset yield in the future, and ultimately strive to improve the overall asset efficiency. At the same time, Alibaba will also adhere to the large-scale repurchase measures in recent years. In the past year, Alibaba has repurchased billions of dollars in stocks, and there is still 19.4 billion US dollars of repurchase quota that has not been used up.

Regardless of the entire business structure and capital operation, Alibaba is becoming more and more like an investment company-Berkshire Hathaway under Buffett or SoftBank under Masayoshi Son. They both have core cash flow businesses and use the former for extensive value investment. In recent years, in a low-interest-rate environment, Buffett is also very keen on repurchasing his own company's stocks.

However, unlike widely recognized investment companies, Zhang Yong reiterated Alibaba's vision and mission as a technology company yesterday.

He emphasized that general artificial intelligence will bring new opportunities to the industry, and large models including Tongyi Qianwen will empower more industries and scenarios. In other words, Alibaba itself will continue to increase its investment in technology and will not weaken the group's technology attributes because it emphasizes asset management capabilities more.

From this perspective, Alibaba may be like a technology aggregation enterprise, similar to Alphabet. The latter also has core businesses such as Google, but it has also invested in a large number of cutting-edge technology fields and technology companies in a divergent manner, gradually owning a large number of core technology assets.

Alphabet and Berkshire are not actually contradictory, the former is structure, and the latter is direction.

However, this split did not completely answer all the questions from the outside world:

For example, the local life seems to be in a state of uncertainty. It has neither obtained the core business status of Taotian, nor has it further raised the financing agenda. There is still a lot of linkage space between local life and core e-commerce in the future. If it develops well, it may form a "more core" e-commerce with Taotian; secondly, although the entertainment sector has reduced losses on a large scale, large-scale profitability is still far away. From the perspective of asset yield, there is still no answer as to how to deal with these low-yield but highly socially concerned assets.

But one thing that may be certain is that after a large-scale spin-off and listing, there may be another group of Alibaba people who will achieve financial freedom.

Congratulations to them.