Biz / Tech

Alibaba restructuring bodes well at the start

Ding Yining
Alibaba shares continue to rise, showing strong investor confidence, amid a new restructuring initiative. The group aims to integrate new service models in various digital sectors.
Ding Yining

Alibaba will still keep business continuity across the range of different businesses despite the restructuring initiative, said Alibaba's Chairman and Chief Executive Daniel Zhang on Thursday.

"Our mission will remain unchanged, that is, making it easy to do business anywhere," Zhang told a conference call.

"That will continue to be a shared vision across all of the companies at the Alibaba group level," he added.

On Tuesday, the e-commerce giant announced that it will be split into six business groups, including Alibaba Cloud, Taobao T-Mall, Local Life, Cainiao, the International Digital Business and Big Entertainment, with their own board of directors and independent operations.

It was followed by share hikes, and on Thursday, Alibaba shares rose 2.49 percent on the Hong Kong Exchange after climbing as much as 14 percent on Wednesday as investors remain upbeat over the new restructuring initiative.

Strong investor confidence

Instead of carrying out internal business assessment, it's much more efficient and meaningful for investors to decide which stocks should have higher market valuation with better growth prospects, Alibaba's Zhang added.

This transformation will ensure management teams and employees are passionate and motivated about the future which can fully unleash their vitality.

But he didn't reveal specific plans and timing for the separate financing plans for each unit.

Investors expect the move could usher in new service models in various digital sectors.

Barclay's said the overall market valuation could end up far exceeding the company's current valuation when the split takes effect.

China Merchants Securities' commercial sector analyst Ding Zhechuan expects stable growth in the core e-commerce business and in the long term, cloud business, local lifestyle services would contribute significant growth.

Jonathan Webers, an investment community commentator, said that Alibaba is active across different industries with some very profitable but slow-growing, while others are fast-growing but not profitable yet.

The restructuring would be easier for investors to choose which types of business units they prefer the most, market watchers pointed out.

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