Alibaba Takes $4.63B Stake in Chinese Electronics Seller

Under the broad brushstrokes of the Internet Plus strategy – unveiled by Premier Li Keqiang during the National People’s Congress in March – the Beijing government has vocally backed China’s e-commerce industry as well as the adoption of robotics and computerized manufacturing.

Alibaba CEO Daniel Zhang assures that a slowing Chinese economy is expected to have less of an effect on companies following a business model similar to that of Alibaba. Hence, online retail will maintain its upward trend. The rating agency expects Gross Merchandise Volume (GMV) of $109.34 billion, over the strength of active buyer growth which has seen a Year-over-Year (YoY) increase of 35%.

Importantly, Alibaba’s investment strategy has attracted considerable attention.

Alibaba made its name – and its fortune – by enabling transactions online, challenging traditional bricks-and-mortar retailers.

“Both sides will raise overall efficiency by linking online and offline businesses to provide better commercial services to Chinese and overseas customers”, Alibaba said, without specifying a time scheme.

Consumers are increasingly shifting online for their offline needs.

Alibaba and Tencent are also going head-to-head in the food delivery services market.

The two companies will also work together on logistics and suggested that “in the near future” customers could receive orders as quickly as two hours after they were placed. Many analysts have commented on the company rating.

China’s e-commerce industry is leapfrogging its brick-and-mortar retail industry. Shares are up 53 per cent this year. Investors are apprehensive that limitations could hamper the company’s revenue generation capacity, given that the management does not absorb these limitations efficiently.

However, since then the stock price has dropped, generating all new lows. The 52-week high of Alibaba Group Holding Limited (NYSE:BABA) is $120 and the 52-week low is $76.21. The company has a market capitalization of $198.03 billion and a P/E ratio of 50.46.

Alibaba will buy a 19.9 percent stake in Suning, which will in turn spend 14 billion yuan for shares in the e-commerce operator, according to a Business Wire statement on Monday.

The Street is mostly Bullish on Alibaba. The 12 month consensus price target is $108.49. 16 analysts have rated the company as a strong buy.