21 August 2019

Alibaba and Tencent worth more than all top developers combined

Jack Ma, the e-commerce giant’s outspoken founder, reportedly reckons his firm is worth more than the market value of Hong Kong’s four largest local property developers put together.

Its estimated value of US$100 billion was close to Tencent’s (00700.HK) level last year when Alibaba unveiled its initial public offering plan.

Ma still has not decided where to list Alibaba, but the delay has brought no harm to technology shares which are enjoying ever greater investor preference.

Tencent’s price tag is HK$1.16 trillion (US$149.5 billion) based on its latest share price. If Alibaba should be worth a similar bid, that is certainly enough to buy Cheung Kong (Holdings) Ltd. (00001.HK), Sun Hung Kai Properties Ltd. (00016.HK), Henderson Land Development (00012.HK) and New World Development (00017.HK).

In fact, Ma is being modest. The big four are worth a combined HK$720 billion, so the balance of HK$440 billion is enough to pay for the top five listed Chinese developers too, with all of them trading at single-digit price earnings ratio.

The biggest, China Overseas Land & Investment’s (00688.HK), is only worth HK$163 billion, China Vanke (000002.CN) HK$108 billion, Country Garden (02007.HK) HK$76 billion, Poly Real Estate (600048.CN) HK$62 billion and Evergrande Real Estate (03333.HK) HK$47 billion.

Now, if Alibaba and Tencent join forces, their combined worth would probably be enough to buy all the listed property plays in Hong Kong and the mainland.

Click can be more valuable than brick, but the difference between them forms a big, yawning gap that looks empty and treacherous.

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EJ Insight writer

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