We have written extensively in the past on the Chinese ecommerce business The share has sold off on growth concerns due to increased competition and a lacklustre consumer spending environment within China. In response, has renewed its focus on offering low prices every day to compete more effectively. The business also focuses on expanding its product assortment by growing third-party merchants selling on its platform. We think will successfully execute these strategies with the growth slowdown proving cyclical instead of structural. In our view, remains a highly compelling investment. Even with slower top-line growth, they are continuing to achieve margin improvements in the retail business, leading to increasing free cash flow generation. When you consider the business has ~50% of its market capitalisation in net cash and an investment portfolio largely concentrated in listed assets, which represent another ~50% of its market capitalisation, the core retail business (using a sum of the parts approach) is being ascribed a negative value. This core retail business generated $132bn in revenue, $5bn in EBIT and $4.8bn in free cash flow in 2023. This is an incredibly attractive investment, notwithstanding the short-term headwinds facing the business.

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