Outlook & Positioning
We do not expect much disruption to Ant’s existing business as of now. That said, Ant’s growth moving forward could very much be constrained given the new capital requirements for its lending business. Also, there is a likelihood that we have just seen the start of regulatory impact on Ant’s business.
Whilst the latest news regarding its listing suspension is certainly negative on a net basis, we don’t believe Ant’s value is zero. As of now, Ant is still a company that is expected to deliver a net profit of RMB50bn in FY2020 as a valuable technology company.
Ant has unique access to the vast user base of Alibaba as part of wider technology conglomerate in a bourgeoning market. Regulatory pressure is also not new to the group, as it has transformed and adapted through various policy changes in the past 16 years.
It is uncertain whether Ant make an immediate effort to get listed again. It is rumoured that the company may take up to 6 months for it to get everything right before applying for listing again.
Alibaba which sits as one of our portfolio top holdings saw a knee-jerk reaction following the suspension of Ant’s IPO. However, Alibaba’s value is largely derived from its core e-commerce business and will likely see its share price stabilise soon. We remain comfortable with our portfolio positioning and will continue to stick with secular growth stocks like Alibaba that have multi-year growth prospects.