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Alibaba runs the risk of deepening the defeat of $ 100 billion as the grass war is heated

A prolonged battle in the China food delivery market has cut $ 100 billion in Alibaba Group Holding Ltd. market, without an end in view of damage to the profits and confidence of investors.

His shares quoted in Hong Kong fell 28% from a maximum of March to Thursday, almost twice the loss in a Chinese technology fellow meter. The rivals JD.com Inc. and Meituan have fallen through similar measures in the middle of the daily headlines on the government’s efforts to contain the destructive hypercomperation called “involution.”

At least four runners, including Goldman Sachs Group Inc. and HSBC Holdings PLC, have reduced their price objectives by an average of 8% since the end of June as the last phase of the TURF war of the years continues to increase.

“It could last more than expected,” said Luo Jing, Investment Director of Value Partners Group Ltd. in Hong Kong. “The players are financially stronger than in the previous round, with more effective and better cash flow positions.”

Alibaba’s food delivery strategy has distracted investors away from the rise of the Deepseek who led to its actions more than 80% in just two months earlier this year. The company has merged its delivery unit in its main business and has increased subsidies from the JD.com formal entrance to space in February.

It is a expensive fight. Nomura Holdings Inc. estimates that around $ 4 billion have been burned with discounts in June only by Alibaba, Meituan and JD.com. Go to Alibaba dictating the intensity and scale of the coupon war in the future.

The leader of the sector, Meituan, said on Saturday that he was going to the mode of “attack” against Alibaba, while JD.com announced a new incentive scheme this week. The extreme movements of the companies have caused many government criticisms for the possible disastrous impact for the industry, as well as the warnings on the health of the driver and food security.

Alibaba could maintain a loss of 41 billion yuan ($ 5.7 billion) in its food delivery business during the 12 months until next June, according to Goldman Sachs, equal to approximately one third of its net income for the fiscal year that ended March.

“The aggressive investment in food delivery, the purchase of INSTA will significantly moisten its short -term profits perspective,” wrote HSBC analysts, including Charlene Liu, in a note this week, reducing its target price for Alibaba by 15%.

The estimate of consensus for 12 -month progress profits from Alibaba per share has dropped approximately 6% since the beginning of May. Analysts are still overwhelmingly optimistic, with 44 purchase ratings in Hong Kong shares and without retention or sale. The action also remains historically cheap to a price / profits relationship of less than 11 times.

In terms of risks of Uspide, UOB Kay Hian Holdings Ltd. Analyst Julia Pan points out that the government can enter To stop the price competition if the market receives a hard blow and the margins are further tightened. Alibaba’s current assessment is low enough to activate some sauce purchases, he added.

The action rose up to 3.5% on Friday in the middle of a wide rally in Hong Kong.

But investors can remain cautious to a definitive end of pronounced discounts, especially if they trigger more profit sales and limit the most important business investment.

“We need to observe the price competition that evolves to a situation in which certain companies decide to gain market share at the expense of profitability,” said Nicholas Chui, a portfolio manager of Franklin Templeton. “As a collector of shares, we would avoid those actions.”

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