Leap Motion – Second lap

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This reinvention makes more sense 

  • Following on from the mess of its first launch in 2013 (see here), Leap Motion has now shifted its focus from PCs to Virtual Reality (VR) which is a use case that makes far more sense.
  • The original idea was to use the Leap Motion controller to turn any PC into a touch enabled device but adding it into VR makes far better use of the technology that has been developed.
  • The beauty of the Leap Motion device has always been its ability to faithfully recreate a pair of fully functional hands in 3-dimensional virtual space.
  • In PCs, this is a nice to have but in VR it obviates the need to have any hand controllers which is a problem that I think has not been adequately solved to date.
  • The weakness of the Leap Motion offering is that offers no haptic at all.
  • While this was not a problem in PCs, I think in VR haptics are going to be increasingly important as the experience aims to be as close to real life as possible.
  • How Leap Motion aims to solve this problem is unclear and looking at the products that it has available today, not much seems to have changed over the last three years.
  • This brings me back to the botched launch in 2013, which I have long believed was due in no small part to management execution issues.
  • However, I also believe that management was under intense pressure from its investors to get to market which resulted in good hardware but less than perfect software which meant that the user experience was far from great.
  • The result was a device that users played with a few hours and then threw in a desk draw and forgot about.
  • However, with VR the use case is far more compelling.
  • Leap Motion can detect movement in all joints of all fingers and thumbs which in a virtual 3D environment has far more applications.
  • Furthermore, the device is small enough to mount on the front of a VR headset without meaningfully increasing its weight.
  • The obvious target for Leap Motion has to be integration as the solution would be much less cumbersome with the sensor integrated into the headset.
  • I think that the combination of Leap Motion with a solution to provide haptic feedback (a pair of gloves?) could provide a compelling offering for VR.
  • I still think that Augmented Reality (AR) is the future (see here) but it is far more difficult to implement, meaning that it won’t hit the big time for some years to come.
  • In the meantime, I think that the VR solution with the most promise is Sony, as it is one of the cheapest, already has an installed base of 100m devices that can run it as well as a thriving developer community.
  • However, Sony’s has a legendary ability to surrender dominant market positions with barely a whimper so whether it can hold onto any success it has in VR is questionable.
  • I suspect that Leap Motion will end up being acquired by one of the VR players which I think will be welcomed by its long suffering investors.

Uber – Time to print

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The time to make money has arrived. 

  • In the last few weeks Uber’s position in the transportation industry has crystallised meaningfully, meaning that the time for it to make money is here.
  • One large scale loss (China (see here)) is complimented by its dominance in almost the entirety of the developed world which is where the vast majority of the revenues are likely to be earned.
  • Data from Similar Web using Android installs as an indicator, finds that in North America, most of Europe and South America, Australasia and parts of Africa, Uber is the dominant ride hailing service.
  • In North America, Uber is installed on 21.3% of Android devices.
  • This may not be that impressive but what really matters is that it is 8x greater than its nearest rival Lyft which is on just 2.6% of Android devices.
  • Uber, just like all the digital ecosystems, is a network based business where the economics are governed by one’s size relative one’s competitors.
  • The rule of thumb that I use is that to hit critical mass a network based business has to have at least 60% share of the market in which it operates or be at least twice the size of its nearest competitor.
  • This data is showing that in most of the markets in which it operates, Uber is already there which explains why Lyft is trying to sell itself and why Uber is able to treat it with some disdain.
  • China was a big loss (see here) but now that Uber has given up trying to compete in China, the focus should now turn to justifying the $62.5bn valuation that its most recent investors have paid.
  • Out of the 171 markets that Similar Web looked at, Uber dominates 108 of them and with almost all the valuable territories now covered, the customer acquisition phase now appears complete.
  • Furthermore, Uber is now the go to place to get a taxi or to offer one’s services as a driver, meaning that the vast sums of money that have spent to get there have not been wasted.
  • For all network based businesses this is the Holy Grail because once this position has been achieved, it is possible to earn vast sums of money and it is very difficult to be disrupted.
  • The persistence of Craigslist in the US is a great example as it has proven impossible to displace even though it offers a very poor user experience.
  • Hence, I am now looking for the focus at Uber to turn to making serious money, meaning that an IPO is probably not that far off (1-2 years).
  • Consequently, I will take a dim view of further raises as with proper execution, Uber should now become a hugely cash generative enterprise meaning that further growth should be easily internally financed.
  • The big question now is: is partial world domination enough for management?
  • From the investor’s perspective, I hope that it is.

Mobile Gaming – Pokemon went.

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Tencent and Activision can breathe a sigh of relief. 

  • Pokemon Go is already showing all the hallmarks of being a craze rather than a revolution as the appeal of the game is already beginning to pall despite only being 6 weeks old.
  • Data from Apptopia shows that daily active users peaked at around 45m users three weeks after launch but have since declined by 40% in the last month to 27m users.
  • Google Trends is also showing that the spike of interest in augmented reality caused by the launch of the game has also declined precipitously as it is almost back to where it was prior to launch.
  • Furthermore, in the last two weeks Pokemon Go has fallen in the US Apple App Store to No. 16 although it remains at No. 4 on Google Play.
  • The good news is that Pokemon Go remains No. 1 on the grossing chart for both iOS and Android.
  • This indicates that the number of new users joining the game is collapsing fast although revenue generation from those that are still playing the game remains very healthy.
  • I suspect that this will translate into rapidly stalling revenue growth at Niantic and how long existing players will keep paying is the real question mark.
  • From my perspective, the real potential for Pokemon Go was to fill the vacuum that exists in developed markets when it comes to mobile gaming.
  • Both Xbox and Playstation Network have failed to gain any traction on mobile devices leaving the largest Digital Life segment unoccupied.
  • To fill this segment a thriving multiplayer gaming environment is needed that has comfortably more than 100m MaUs but to dominate it, I think 300m MaUs or more is needed.
  • With Pokemon Go having made just half of that and now showing signs of decline, those that are working quietly to fill this segment can breathe a collective sigh of relief.
  • Top of this list are Activision which has purchased King Digital (Candy Crush with 500m MaUs) and Tencent which has purchased Supercell (Clash of Clans 100m DaUs).
  • These two need to take these single game franchises and entice their players to try the other games and services that they have to offer.
  • This is how they can turn a single game community into a place where users come to play games against each other.
  • Pokemon Go seems to have fallen short of the critical mass needed to challenge the scale of King Digital or Supercell, Tencent and Activision remain the most likely winners.
  • The Gaming segment remains unoccupied and I suspect that there is room for one dominant service and a host of smaller followers.
  • Tencent has the most experience of mobile gaming with its dominant position in China but it knows very little of the market outside of China.
  • However, at the same time Activision has no experience of mobile which could prove to be an even greater challenge.
  • Tencent is the company I would look at for exposure to gaming on mobile devices but I think that Nintendo could fall further as it is still meaningfully above pre-launch levels.

Cyanogen – Call for vultures.

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Software asset worth buying from a dying Cyanogen. 

  • Although, Cyanogen appears to be on its last legs, I think that the software asset that it has developed remains the best alternative to Google Android that is available.
  • The latest twist in the sorry tale of Cyanogen is the claim that management miss-represented its user numbers to its investors when it raised $85m in March 2015.
  • At the time of the fund raising a number of 25m tracked users was used that went hand in hand with an estimate that there were around 50m active users of the software overall.
  • Cyanogen OS has some excellent privacy features that make it impossible to track a device should they be enabled which gave rise to the estimate of another 25m users that the company could not see.
  • Unfortunately, it appears that the current number of active users is closer to 2m rather than 25m with the commercial version (used by handset makers) registering around 4m (The Information).
  • I suspect that the accusation of miss-representation is without merit and that the reality is that through poor strategy and execution, the user number has fallen of a cliff in the last 12 months.
  • Cyanogen began life as the anti-Google Android offering but quickly changed direction when it realised that to get volume, it had to be compliant with Google’s standards.
  • This was when the code split into CyanogenMod (not compliant partly maintained by the community) and Cyanogen OS (compliant and managed by the company).
  • Cyanogen OS was given to handset makers to create devices and deals stuck with service providers such as Microsoft (Office 365) for a share of service revenues generated.
  • I have long believed that this business model was doomed to failure (see here) which combined with very poor execution led to no revenue generation and the need for yet another shift in strategy.
  • RFM research indicates that the current plan is to cease development of the OS entirely and instead concentrate on providing hardware makers with custom implementations of the Android code.
  • In effect, Cyanogen will become just another body shop with very little to distinguish it from the many competitors that already exist in both India and China.
  • Cyanogen’s list of departed clients is long and includes Oppo (currently 2 the Chinese market), Micromax and many others who have since returned to stock Android.
  • I think that these clients left Cyanogen not because of the product, but due to the way that they were managed by the company which is what I think prompted the precipitous decline in user numbers.
  • RFM research indicates that one of Cyanogen’s last clients, Wileyfox which is currently front and centre on Cyanogen’s website, is also moving back to standard Android.
  • This leaves Cyanogen with no way for its commercial product to make it to market ending any hope (forlorn in my opinion) that it would ever generate any revenues.
  • I do not think that Cyanogen’s last gasp strategy to become a body shop will work because it’s a commoditised business where there is brutal price competition.
  • This is a very disappointing outcome because I have long held the opinion that Cyanogen OS is an excellent implementation of Android.
  • Furthermore, in its recent iterations of the code it has enabled the kind of data sharing that I think is required for an ecosystem to take its functionality to the next level.
  • Consequently, Cyanogen OS is an excellent option for any ecosystem that needs to have control of its user experience, be able to evolve it, deploy its services and set them as default.
  • RFM research (see here) indicates that this is what the Chinese ecosystems need to do to evolve into full ecosystems with a complete set of Digital Life services.
  • Outside of Alibaba (with YunOS and Meizu) and Xiaomi, the other ecosystems are at a very early stage and I think that acquiring the Cyanogen OS would give them a rapid leg up in the race.
  • Furthermore, I think that any other player is that is thinking of trying to break free from Google in Android in emerging markets should also be interested in acquiring this asset.
  • The proceeds from the sale could give Cyanogen some more runway to get this new strategy off the ground even though I suspect that it will never take-off.
  • I see one of the BATmen as the most likely buyer.

Lenovo Q1 17A – Heavy weather.

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I see opportunity but not without risk. 

  • Lenovo is hanging on in the difficult markets that it serves, but I think there is an opportunity for it to be as creative in PCs as it has been in handsets.
  • Q1 17A revenues / EBIT were US$10.1bn / $245m nicely ahead of estimates of $10.0bn / $167m.
  • This was mostly driven by good profitability in PCs which chalked up 5.3% EBIT margins despite a 7% decline in revenues.
  • Handsets increased their losses compared to Q4 16A as sales and marketing expenses have been increased ahead of the new models from Motorola (Moto Z and Moto Mods).
  • Here, I am hopeful that these products will be reasonably successful as the Moto Z offers a lot of phone for a very reasonable price and Moto Mods is the most interesting iteration of modularity I have seen for a very long time.
  • Motorola has crammed an Android device into a very thin package leaving space for a series of backs that magnetically attach to the device offering a range of functions such as camera, projector and high quality speakers.
  • If these devices ship reasonably well, there should be a corresponding improvement in profitability that should be further augmented by steady cost reductions.
  • All of Lenovo’s end markets are having a difficult year but Lenovo is continuing to do a good job at making the best of them.
  • However, I think it could do more and I would like to see some of the creativity in Motorola spread to the other parts of Lenovo.
  • The softest target is PCs where Lenovo’s strategy is to differentiate by addressing certain segments where there is growth such as tablet PCs, Gaming PCs and Chromebooks.
  • Unfortunately, its tablet PCs are nothing more than laptops where the keyboard comes off and then instantly stops working.
  • What Lenovo needs to do is to go further than even Microsoft and Huawei have gone and make the most of the fact that the laptop form factor is now obsolete.
  • Having the keyboard and the screen physically separate allows for the vastly superior, much healthier desktop PC experience to follow the user out of the office.
  • I have long argued that this offers the potential to create a 3 to 4 year replacement cycle where laptops are replaced with something that is just as powerful but offers a vastly superior user experience.
  • The problem is that the PC industry has been selling laptops for 40 years and seems incapable of accepting the notion that there is now something much better on offer.
  • This is the opportunity for Lenovo but it is not without risk, nor will it come cheap as users are even more oblivious of how the tablet PC can improve their portable computing experience.
  • Consequently, I do not expect Lenovo to do down this road, but I believe that if it wants to see a return of growth and better than commodity margins, this is where it must go.
  • Of all the PC makers, I find Lenovo to be one of the best run and most pragmatic, even if it is a little unimaginative.
  • I would back it against almost any of the others.

Tencent Q2 16A – Stairway to heaven?

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Tencent remains a few steps away from greatness. 

  • Tencent followed Alibaba in reporting a mighty set of numbers driven not by user numbers, but by its ability to generate more revenues from the users it already has.
  • Q2 16A revenues / EPS were RMB35.7bn / RMB1.13 compared to forecasts of RMB33.3bn / RMB1.00 and RFM at RMB31.1bn / RMB1.02.
  • Weixin / WeChat reported 806m MaUs while its PC based chat system QQ recorded 899m MaUs with 667m of those engaging with Tencent’s content and gaming offerings.
  • This combined with an improving level of monetisation of the traffic that it generates and returns on investments made in premium, international content underpinned the very strong quarter.
  • Very much like Alibaba, Tencent is beginning to make the right noises that indicate that it is starting to think like an ecosystem but the proof will remain in the pudding.
  • This is because while Tencent offers single sign-on across many of its properties, the services that sit underneath this sign on remain independent and discrete.
  • For example, it makes no sense at all for QQ and Weixin / WeChat to be independent systems and I think that much more value could be derived if Tencent was to put the two together.
  • However, there is no sign of this and I think that this will ultimately limit the degree to which Tencent will be able to monetise its users.
  • Despite this, the organic growth of Weixin / WeChat into areas outside of instant messaging is impressive.
  • Weixin can be used for instant messaging, shopping, social networking, gaming, banking and payments as well as many O2O services such as ride hailing and food ordering.
  • Consequently, it is possible that Tencent may end up with a fully integrated ecosystem through the organic growth of Weixin / WeChat.
  • This would solve the integration and data sharing issues that I think are holding it back from realising its full potential.
  • Unfortinately, most of Tencent’s usage (in terms of time spent) and almost all of its monetisation lie outside of Weixin / WeChat leaving me thinking that this alone will not be enough.
  • I need to see Tencent fully embrace the ecosystem concept across all of its properties before I can start to believe that Tencent will maximise its potential.
  • This potential is significant as RFM estimates that 2018E revenues and profits could be 40-50% higher if Tencent is able to fully monetise the traffic that is being generated by its services.
  • This could allow a further substantial appreciation in the share price which is why I am watching Tencent very closely for any sign of moves in this direction.
  • In the meantime, Samsung, Microsoft and Baidu remain my top choices for 2016.

Amazon – Curse of integration

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Amazon still misses the wood for the trees. 

  • Twitch has announced that it will be acquiring Curse which further underlines how disparate and independent Amazon’s properties are and how far Amazon is from becoming a real ecosystem.
  • Twitch is a website that streams gaming videos and has created a community around that with 100m monthly active users (MaUs) of whom around 10% visit every day with an average engagement time of 2hrs.
  • Curse is a games company that sells software that allow game creators to easily add communication functions for players to their games.
  • In essence Curse has tools that can help turn a standalone game into a multiplayer community.
  • This is exactly where Twitch has gone with its website and it has been very successful at creating a thriving community around computer game video feeds.
  • Consequently, this acquisition makes sense for Twitch but it throws into sharp relief how its owner Amazon, has no real understanding of the ecosystem and the opportunity it is passing up.
  • In developed markets, the Digital Life pie is dominated by Gaming but it is the one segment that is completely unoccupied.
  • All of the other segments are dominated by at least one major player but Gaming is completely vacant.
  • This is because both of the two major developed market multiplayer gaming communities Xbox Live and PlayStation Network have completely failed to create any traction in Gaming on mobile devices.
  • I have long believed that this is why Google wanted to buy Twitch, why Activison bought King Digital and why Tencent has purchased Supercell.
  • With Twitch sitting as part of Amazon, it is being completely left to its own devices meaning that it is making no effort at all to conquer the last great wilderness of mobile or even doing anything with any of Amazon’s other gaming assets.
  • Twitch has all the elements required to begin developing a thriving multiplayer based gaming environment for mobile devices, which is exactly why I think Google wanted to buy it.
  • However, Google understands the importance of integration to create a seamless experience for users and consequently required that Twitch become fully integrated into Google.
  • Amazon clearly does not which is why it has been happy to allow Twitch to take the money but carry on doing its own thing as if nothing had happened.
  • In the meantime, a vast opportunity is being left unaddressed which gives both Activision and Tencent a shot at creating a thriving multiplayer gaming environment on mobile.
  • If I thought that Amazon had a chance of capitalising on this opportunity, I could be more forgiving of its valuation which I think still needs to come down quite some way before I can get interested.
  • I prefer Microsoft, Baidu or Samsung.

Xiaomi – Reality check pt V.

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Falling revenues reduces valuation to $3.6bn (92% below last raise). 

  • Xiaomi has slipped to number 3 in its home market which combined with stagnation overseas continues to make the outlook increasingly bleak.
  • Counterpoint Research indicates that in Q2 16A Xiaomi shipped 12.6m units (a decline of 26% YoY) in China and 14.5m globally representing a 23.6% decline YoY overall.
  • Despite a big push overseas, Q2 16A volumes have been flat YoY at 1.9m units indicating that its strategy to win users over now and monetise them later is floundering badly.
  • RFM research indicates that Xiaomi has two assets that are of value.
    • First: Its MIUI user experience.
    • MIUI is Xiaomi’s user experience which in China also carries its ecosystem but outside of China is Google compliant and carries the Google ecosystem.
    • Although the user interface is largely commoditised outside of China, I believe that things are different in China.
    • None of the big ecosystems (BATmen (see here)) have a user experience which defines their offering as most of their users are using stock Android or iOS.
    • This is a big reason why I think Xiaomi is still quite popular in China where 22m users have downloaded MIUI and used it to replace the user experience on their Android smartphones.
    • This is how Xiaomi can claim that it has 200m users despite RFM’s estimate that there are only 114m active Xiaomi handsets in use today.
    • Second: Its Chinese app store.
    • RFM calculates that Xiaomi’s app store has 15% market share measured by usage among smartphone users in China.
    • This indicates that almost all users who are using MIUI also use its app store to download the Digital Life services that they want.
    • This is a strong endorsement of its app store as the two leading app stores in China, Tencent and Qihoo, are not present on the device when it ships meaning that users are accustomed to picking and choosing the app store they want.
  • Unfortunately, its other ecosystem assets such as its media consumption offering, its instant messaging service and its shopping service are dwarfed by the services offered by the BATmen.
  • This means that although Xiaomi has a 44% score against the China Digital Life pie, none of its services are dominant and there are strong indications that engagement with these services is slipping (see here).
  • This is critical because it is engagement with its ecosystem that will allow Xiaomi to begin to earn better than commodity margins should users begin to demand its devices.
  • This is clearly not happening and the rise of Huawei and Oppo in the home market is a sign that Chinese users are increasingly indifferent to Xiaomi’s products.
  • This is devastating for both its revenue outlook and its valuation as it looks like revenues could drop by 10-20% this year.
  • Xiaomi raised money in December 2014 at $45bn and I find myself struggling to value the company anywhere near $5bn.
  • At the time of its raise, I could get to a valuation of $21bn by comparing it to Apple (like everyone else) but instead of using sales (fundamentally flawed (see here)), I used EBIT and gave Xiaomi a 300% premium given its 100% growth at the time.
  • However, with revenues now looking like they will decline by anything up to 20% this year, I can no longer justify a premium and arguably, I should apply a discount.
  • RFM forecasts that Xiaomi will ship 59.7m units in 2016E which gives revenues of $14.9bn assuming ASPs of $250.
  • 4% EBIT margin gives 2016E EBIT of $597m which if I apply a 6.0x EV/EBIT (17% discount to Apple) gives an EV for Xiaomi of $3.6bn.
  • Investors being offered a valuation of more than $10bn to exit will be doing well in my opinion.

Google – From Russia with Love pt. II

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Russian ruling could have global implications. 

  • Although the Russian complaint against Google is a sideshow compared to the EU, it could materially weaken Google’s global agreements that allow it to ensure its ecosystem is on almost all Android devices in developed markets.
  • The Russian regulator (FAS) has already fined Google $6.75m for requiring handset makers to install its services on their phones to be able to use its App Store: Google Play.
  • FAS also came down on Google for refusing to allow other third party services such as Yandex Search to be pre-installed.
  • However, Google appears to have already dropped this requirement and Yandex has seen a corresponding increase in search share in the Russian market.
  • The Google agreements that really matter are the MADA and the AFA.
    • Mobile Application Distribution Agreement (MADA).
    • This agreement requires anyone wanting to use Google Play to also include the key Google services such as search, mail and maps and to display them prominently in a folder on the home screen.
    • RFM research indicates that it also requires these services to be set as default on the device such that a request from an app to open a map always defaults to Google Maps.
    • This ensures that it is Google’s Digital Life services that are predominantly used and it is this bundling that both the FAS and the EU object to.
    • The Anti-Fragmentation Agreement (AFA).
    • This agreement is required for a handset maker to deploy Google Play and prevents the manufacturer from producing other devices that use non-Google versions of Android.
    • This prevents any handset maker from providing any alternative to Google on any Android device anywhere in the world.
    • I suspect that this has been a factor in Google’s ability to dominate the Indian market where it is now almost impossible to sell a device without Google Play on it.
    • Google has effectively seeded the Indian market with its services and the game may already be over for the home grown alternatives.
  • In addition to the fine, the FAS has also demanded that Google change these agreements with device makers.
  • Google has appealed this decision and a hearing is scheduled for August 16th.
  • While the MADA is signed on a device by device basis, the AFA is a global agreement and should the FAS force Google to relax the AFA, then it could have global implications.
  • This is because handset makers would then be free to user other versions of Android without Google services being installed potentially weakening Google’s grip on Android in markets outside of Russia.
  • Furthermore, the FAS’s decision will provide precedent which, in legal conflicts such as this, can be highly influential in determining the outcome.
  • I continue to be concerned that Google’s grip on its ecosystem on Android devices may be slipping bringing into question RFM’s medium term revenue forecasts.
  • Most of Alphabet’s revenue growth from here is being driven by advertising revenues derived from Android devices, raising the possibility that RFM’s numbers are too high.
  • Even assuming that nothing goes wrong, the shares of Alphabet look fairly valued at best, leading me to believe that there is better value to be had elsewhere.
  • Samsung, Microsoft and Baidu continue to be the places where I would be looking.

Alibaba FYQ1 16A – Monetisation magic

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Improving monetisation underpins mighty numbers. 

  • Alibaba reported very strong FYQ1 16A results as a very good performance in e-commerce was enhanced even further by Alicloud and the investments Alibaba has made in the ecosystem.
  • FYQ1 16A revenues / EBIT were RMB32.15bn / RMB8.8bn compared to consensus at RMB29.8bn / RMB8.5bn and RFM at RMB24.7bn / RMB7.4bn.
  • The real key to the beat was the monetisation rate which jumped to 2.8% and where, for the first time, the rate earned from mobile users was the same as it was for fixed.
  • RFM had been forecasting monetisation of 2.6% for fixed and 2.2% for mobile.
  • This has been driven by improving the usage of user data to provide a more engaging and relevant shopping experience for users particularly on Taobao (C2C).
  • This makes Alibaba increasingly the go to place to buy and sell products meaning that it can charge both buyers and sellers a little bit more for the service that it is providing.
  • This combined with GMV of RMB837bn (up 24% YoY), 156% YoY growth in Alicloud and the inclusion of newly acquired Youku Tudou (video streaming) is what drove the excellent results.
  • Alibaba maintained its outlook for 48% YoY revenue growth for the full year which now looks more achievable given how well it has progressed when it comes to monetisation.
  • For example even if monetisation stays where it is now at 2.8% that will be enough to provide an extra 12-15% points of revenue growth for the full year 2016E.
  • Furthermore, within Taobao Alibaba is beginning to show signs of doing more with the data that its users generate giving me greater confidence that it is beginning to think like an ecosystem.
  • If this mindset spreads out across all of its properties and not just Taobao then Alibaba will be in a strong position to monetise its growing ecosystem much more effectively than it has to date.
  • RFM research indicates that if this is fully implemented by 2018, then revenues, profits and cash flow could be around 45% higher than is currently forecast.
  • Alibaba has a long way to go but there are some signs that the way it thinks about its business and its strategy is catching up with Baidu’s.
  • That being said, the valuation of Alibaba still looks stretched.
  • Corporate governance by the Alibaba Partnership remains far from ideal and as a result I am still deducting 20% from the fair value of Alibaba to compensate for the added risk assumed by minority shareholders.
  • This combined with the recent rally in the share price still leaves me unenthused with the outlook for capital growth going forward.
  • I continue to prefer Baidu, Microsoft and Samsung.