Alibaba and Deutsche Post – adolescence and old age = success

Sergey Ruban,

analyst XCritical

Overview of Alibaba shares and Deutsche Post. Predictions last week, BNP Paribas.


I guess we all remember the classic fairy tale “Ali Baba and the forty thieves". But reading it then, we could hardly imagine that in the XXI century will be a company with a similar name, and not just a company, a giant Corporation, the largest in the world engaged in online Commerce.

As a trading platform, the company does not sell products directly, but only provides a platform for sellers and buyers, where they can safely conduct transactions. The main income of the Issuer comes from transaction fees and from advertising and other services. Alibaba is expanding annually on average by 27%. Its customer base includes more than 650 million people.

the success Story of Jack MA

The company was founded in 1999 by Chinese entrepreneur Jack MA. The path to success, Jack MA was full of uncertainty, losses, errors, but, in the end, it all ended with a Grand victory and international recognition.

So, in 1999 Jack MA creates B2B portal for trade transactions between importers and exporters. The first years of a trading platform connected buyers and sellers, but over time it has acquired a large number of business functions, such as advertising and marketing, it has the opportunity to deal with the logistics and finances. After the platform began to carry out affiliate marketing introduced product recommendations, it appeared the heroes of social networks.

In 2005, the Issuer became interested in Yahoo, which bought a 43% stake in the company. In 2007 held an IPO of securities on the Hong Kong stock exchange.

In 2012, the Corporation has made a repurchase of 20% own shares from Yahoo in 2014 year, Mr. MA has placed the company's securities on the NYSE.

Because of the volume of attracted investments IPO is one of the largest in the history of this exchange.

marketplace AliExpress

So, the company owns Alibaba's marketplace AliExpress, Taobao and others. Sales of goods at these sites exceeds $ 1 trillion dollars. For comparison –the closest competitor, the American online retail Walmart –annual turnover of 500 billion dollars

At Alibaba also has its own payment platform Alipay, which is used by most buyers to pay for their purchases. The number of clients of the payment system more than 1 billion

The company Alibaba's unique position and the fact that its core business area – the Chinese market, which is constantly growing, although it has long reached unbelievable proportions.

On trading platforms Alibaba is happening more than half of all online transactions in the PRC. This Corporation there is no need to make special efforts for the extension because it happens automatically behind the growth of market of China.

Cloud business Alibaba

A long time, the main business of the company was online Commerce. The situation changed a few years ago, when the leadership of the Internet giant drew attention to cloud technologies, which soon became one of the key segments of its business.

If the average quarterly earnings of the Issuer amounts to 23 billion U.S. dollars, of which about us $ 1.5 billion accounts to the cloud. In the latest quarter revenue in this segment grew by more than 60%.

A serious approach and huge investment has made Alibaba the largest provider of cloud technologies, not only in China but in the Asia-Pacific region.

In the next three years, the Corporation plans to invest in this business almost 30 billion dollars. The money will be spent on infrastructure, data centers, chip production and equipment.

With the support of the Chinese government, Alibaba in 2020 has launched a major project Alibaba Cloud which is a platform AI to combat coronavirus.

At Alibaba Cloud also created a special communication platform DingTalk, which aims to help health workers around the world.

Dividend policy

The company in 2014, do not deal with the payment of dividends. All the profits the management of the Corporation aims at the development of its business and the acquisition of other companies engaged in online trade and cloud-based technologies. Despite the absence of dividends, the Issuer's popularity among investors is not reduced.

What determines the dynamics of stock

Since the main activity is aimed at the domestic market, its condition affects the company's stock. Deterioration and slower growth affects the dynamics of the stock. For example, the trade confrontation between the US and China not only slowed the growth of the Issuer's assets, but even caused their decline.

The profit of the company can also influence the development of or slowing of online trading in the country and how popular is online shopping on the Internet, both in China and in the world.

Do not last role is played by the growing popularity or lack of interest in other segments of the business of Alibaba. Payment system, video hosting, music services – statements of these subsidiaries, the Chinese Corporation is also affecting the stock price.

Quarterly reporting

The financial performance of Alibaba in the third quarter exceeded expectations. Thus, the net profit of the Issuer increased by 58% and amounted to 52.2 billion yuan. Quarterly revenues increased 38% to 161.4 billion yuan, the expectations of analysts – 159.6 billion yuan.

The revenue of e-Commerce has risen to 36% and amounted to 110.45 billion yuan. Revenue cloud showed an increase of 6% and reached the level of 10.71 billion yuan. By the way, the figure for the first time exceeded 10 billion yuan.

The capitalization of the Internet giant Alibaba currently exceeds 600 billion dollars.

Technical pattern and forecast

The decline of the Issuer's shares began with the beginning of quarantine in China in January 2020. At that time the price reached the resistance of 230 $, which bounced and began its long journey down. The first months the sellers have spent in order to break the level of $ 200. They managed to do it only in March, after which they sent asset in the area of $ 170. In mid-March, the restoration of China's economy, which caused growth of quotations of Alibaba. By April, prices had returned to around 200 $, where, however, remained and retreated to the level of 190 $. Short-term and medium-term indicators are currently giving buy signal.

We are definitely suggest to add this company to your investment portfolio. Now, when the economic recovery of China is in full swing, trading volumes in the domestic market should increase. So the next couple of months, the dynamics of this emitter will be positive. Growth will continue until the autumn, in time for a possible new wave of the epidemic.

At present, we await the return of resistance with the $ 200 key level buyers. The breakdown of this obstacle will enable them to approach the region of 220$, where close to the highs of the beginning of the year.

Deutsche Post

Now to connect with person can, for example, to call him, to write to the messenger or to send an email. But this abundance was not always the case. Some 30 years ago to talk with someone or need to call him or write a letter. The younger generation is difficult to understand, but sooner only the postal service has connected people with each other in the distance.

We will now talk about one of the oldest postal services of Europe, which is in Germany. It will go from Deutsche Post. This Corporation has more than 500 thousand employees, is engaged not only delivery, but also performs courier functions. Postal service Deutsche Post sends more than 60 million emails every day in Germany, and its affiliate Express delivery DHL works with more than 200 countries.

This post and logistics company is a relatively young organization that is a successor of Deutsche Bundespost. Deutsche Post was privatized in the mid-nineties, but full independence was only in the year 2000. DHL is a subsidiary of this mail service.

structure of the company

The company operates in four areas: Post-eCommerce – Parcel, Express, Global Forwarding, Freight and Supply Chain. Division Post-eCommerce-Parcel handles both domestic and international mail and provides dialogue marketing, nationwide press distribution services and all the electronic services associated with mail delivery. The Express division offers courier services business and private clients. Division Global Forwarding and Freight includes transportation of goods by rail, road, air and sea transport. The Supply Chain division is focused on providing customized logistics solutions including warehousing, transportation, and additional services.

the history of the company

In Europe the postal service has actively worked in the middle ages. In 1497 in Europe was established mail, which replaced messengers, engaged in the carriage of public correspondence. This service had a strong influence on the development of postal services in the Old world.

However, mail as a national institution of Germany, has been legalized only in 1646 the Emperor Friedrich-Wilhelm.

Even then, between major German cities was a mail message. The service was not confined to Germany. For example, any mail came in within 24 hours to England.

Second wind Deutsche Post in the Kaiser's Empire. It was then (1871) of the German Imperial mail began to work officially.

In 1950, the Deutsche Post was renamed Deutsche Bundespost. Then she became widely known organization with related services such as postal Giro, Newspapers, insurance, and later TV.

In 1969, began its existence the company DHL. DHL has developed rapidly, extending its services worldwide. From 1971 to 1978, the organization opened its offices in Asia, Australia, Japan, middle East, Africa, etc.

In 1979 DHL launches delivery service of parcels. In 1989, the separation into three divisions: postal, banking and telecommunications.

In 1999, DHL takes control of Danzas and Air Express International.

In 2002, DHL is fully transferred under the control of the German postal service.

Quarterly reporting

the Issuer in the fourth quarter of 2020 showed a great result. In the reporting period this logistics Corporation has shown good net profit and revenue, but announced a possible deterioration in the coming quarters because of the epidemic of the coronavirus.

According to a report by logistics Corporation, its net profit rose by 5.5% and reached the level of € 858 million. In 2018 over the same period, Deutsche Post has shown a profit at 813 million euros.

The revenues of postal and logistic Corporation has improved by 0.2% and amounted to 16.955 billion euros, a year earlier the figure was in the region of 16.925 billion euros.

For 2019 Deutsche Post profit totaled 2.622 billion euros, a 26.3% more than the year before. Annual revenue also showed good results, an increase of 2.9% to 63.340 billion euros. Value EBIT increased by 30.5% and reached 4.127 billion euros.

The German postal service is ready to pay a dividend of 1.25 EUR per paper 1.15 against EUR in 2018.

The company expects this year's EBIT will exceed 5 billion euros. But Deutsche Post said that this forecast is not taken into account the risks due to the outbreak of coronavirus.

Technical pattern and forecast

The Deutsche Post recent months were under pressure. The downward trend began in January in the area of 34.50 €. Sellers controlled the market exactly two months until mid-March. At this point, the asset has reached the support zone 19.00 €. There was a rebound, followed by a steady growth in the area of 26.00–26.40 €. Here buyers began to lose momentum, and if up to this point the asset has been increasing steadily, now the trajectory is smoother. In late April, the securities of the Issuer reached the area 27.90 €, which retreated to around 26.30 €. We believe that in this area trade tool will remain before the release of the report.

Technical indicators also point to weakening purchasing power and the upcoming reversal.

If we talk about the medium term, the paper of that Issuer are required to be in the portfolio of the investor. The company has a long history, and during its existence has always shown steady growth. It combines German quality and German reliability.

In the coming years Deutsche Post will focus its investments on developing technologies that will allow us to optimize workflows, improve customer service and reduce costs. Therefore, it is possible to buy shares in this company for the long term.

A long-term clear. Do we have any other options for a short term? First, consider the negative scenario, as it most likely will happen. In this case, the permissible drop in the support area 20.00–22.00 €. I think after this pullback is quite possible to restore, the purpose of which will be the levels 25.00 and 27.00 €

If a miracle happens, and quarterly report Deutsche Post will be major, then we will talk about recovery in the region 30.00–32.00 €.


Now a few words about the results of the largest Bank of France – Paribas. The net profit of this Issuer in the first quarter of 2020 fell by 33.2% and amounted to 1.281 billion euros in the last quarter it was around 1.917 billion euros.

the Profit of the Bank decreased by 2.3% and reached the level of 10.89 billion euros. The Bank's management warned that the profit in 2020 could fall to 20% due to the epidemic COVID-19, negative influence of which has become evident in the first quarter. Against this background, the Issuer will endeavour to reduce operating costs.

The Bank left a significant sum of money to cover potential bad loans, which could arise from pandemic coronavirus.

After the release of the report, the market pattern has not changed. The asset is still in the area 26.00–30.00 € and not in a hurry to grow. However, the fact that the asset has not declined, says on its stability, and it means – the chances of recovery are.

To return to growth buyers need to overcome the resistance area 32.00–35.00 €, and only a consolidation above these levels will open the way for them to level of 43.00 €.

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