Skip to main content

I missed this last week: Alibaba!

I didn't so much as miss the whole September figures because by now any Chinese financial disclosure I take to be complete bunk.  This morning Zero hedge had a very interesting article about the "one day" performance of Alibaba on which they sold a total of US$ 25 billion in goods -- to give a sense of the scope of this it's equal to the ANUAL sales of Sears & Kmart -- granted not companies that are in the best of health.  That Alibaba shipped more than 800 million packages...yeah, that's not a typo 800,000,000 packages where shipped in one day -- oh and by the way, Alibaba doesn't use a logistical courier service.

Now, all that is just big numbers but here are two interesting statements:

1)  Alibaba announced that it's been one of its most profitable quarter (no numbers)
2)  Alibaba's delivery system is one of the best in the world...although it seems to be bicycles

More interesting is that Alibaba is coming back to the US bond market, for another US$ 5/8 billion -- because despite the profitability of Alibaba it needs more cash.   Now that's not the end of the world, cash and cash flow for capex are different things.  However, 90% of Alibaba's revenues are in China.  Dear reader, how much exposure do Chinese banks have to Alibaba?  Yeah, you guessed right, zero! 

The hottest tech company in China has zero Chinese banks backing up its operations, it's all foreign money.  Unfortunately, Alibaba is starting to look like Sinoforest (another Chinese company that used the foreign -- in that case, Canadian investors).  When the whole thing unraveled Canadian investors were left holding the bag, the CEO and CFO (both Chinese nationals) are still running free in China.  Their Canadian representative -- well he's in jail...In the case of Sinoforest it seems it was a scam from the very beginning.  The image of their 8 years old headquarters was a different company, their offices didn't seem to exist, nor did their wood plants or forest. 

In the past, the SEC asked some hard questions about Alibaba's results, but its US  legal representative certified that everything was above board...since he's now chairman of the SEC he should be safe since he's the principal enforcer of the US government.  Nice job if you can get it!

Comments

Post a Comment

Popular posts from this blog

Ok so I lied...a little (revised)

When we began looking at farming in 2013/14 as something we both wanted to do as a "second career" we invested time and money to understand what sector of farming was profitable.  A few things emerged, First, high-quality, source-proven, organic farm products consistently have much higher profit margins.  Secondly, transformation accounted for nearly 80% of total profits, and production and distribution accounted for 20% of profits: Farmers and retailers have low profit margins and the middle bits make all the money. A profitable farm operation needs to be involved in the transformation of its produce.  The low-hanging fruits: cheese and butter.  Milk, generates a profit margin of 5% to 8%, depending on milk quality.  Transformed into cheese and butter, and the profit margin rises to 40% (Taking into account all costs).  Second:  20% of a steer carcass is ground beef quality.  The price is low, because (a) a high percentage of the carcass, and (b) ground beef requires process
Post a Comment
Read more

21st century milk parlour

When we first looked at building our farm in 2018, we made a few money-saving decisions, the most important is that we purchased our milk herd from a retiring farmer and we also purchased his milking parlour equipment.  It was the right decision at the time.  The equipment dates from around 2004/05 and was perfectly serviceable, our installers replaced some tubing but otherwise, the milking parlour was in good shape.  It is a mature technology. Now, we are building a brand new milk parlour because our milking cows are moving from the old farm to the new farm.  So we are looking at brand new equipment this time because, after 20 years of daily service, the old cattle parlour's systems need to be replaced.  Fear not it will not be destroyed instead good chunks will end up on Facebook's marketplace and be sold to other farmers for spare parts or expansion of their current systems. All our cattle are chipped, nothing unusual there, we have sensors throughout the farm, and our milki
Post a Comment
Read more

So we sold surplus electricity one time last summer...(Update)

I guess that we will be buying an additional tank for our methane after all.   Over the past few months, we've had several electricity utilities/distributors which operate in our region come to the farm to "inspect our power plant facilities, to ensure they conform to their requirements".  This is entirely my fault.  Last summer we were accumulating too much methane for our tankage capacity, and so instead of selling the excess gas, that would have cost us some money, we (and I mean me) decided to produce excess electricity and sell it to the grid.  Because of all the rules and regulations, we had to specify our overall capacity and timing for the sale of electricity (our capacity is almost 200 Kw) which is a lot but more importantly, it's available 24/7, because it's gas powered.  It should be noted that the two generators are large because we burn methane and smaller generators are difficult to adapt to burn unconventional gas, plus they are advanced and can &qu
Post a Comment
Read more