Ali publicly lowered Ant’s valuation for the first time, and charged back 12.6 billion yuan in equity incentive fees; Wenzhou added leverage and did not charge principal for the first three years of mortgage loans

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Ali publicly lowered Ant’s valuation for the first time, reversing 12.6 billion yuan in equity incentive fees

Ali’s financial statements from January to March 2022 included a “revenue” of 12.683 billion yuan.

This is not real revenue, but the net reversal of expenses related to Ant Group’s equity incentives in the quarter. Ali wrote in the quarterly report that they continued to evaluate Ant Group, and regularly accounted for the Ant Group equity incentives granted to employees based on market value.

The adjustment is due to “we recognized a decrease in the value of these equity incentives during the quarter, taking into account the current circumstances.” The equity incentive fee will continue to be affected by changes in the fair value of the relevant incentives and the number of incentives granted by Alibaba in the future.


Source: Alibaba’s March 2022 quarterly results. Click to see larger picture

The cost of stocks given to employees by the company is often lower than the price in the stock market. For example, the cost for employees to obtain stocks is 10 yuan/share, but the market price is 100 yuan/share. The company will account for -90 yuan per share of equity incentive incentive value expenses, although the company did not spend 90 yuan.

This is also why Internet companies that give employees more options are mostly accompanied by a surge in expenses when they go public. The options that a large number of old employees got at a low price will be converted into stocks and become a financial expense.

Before Ant’s unsuccessful IPO, Ali had already recorded the cost of Ant’s equity incentives held by employees according to the new valuation at that time, so there was an incentive fee of 16.056 billion yuan in the September 2020 quarterly report.

This is what almost all large companies do before going public. The “return” of 12.683 billion yuan now also reflects Ali’s new adjustment to the value of Ant Group’s stock. However, whether the incentive fee is increased or refunded in the scale of 10 billion yuan, it does not completely correspond to the adjustment of the valuation.

A lawyer in the technology field who has helped Alibaba employees deal with options matters many times explained to us that this move means that Alibaba has adjusted its assessment of the value of Ant Group based on the current market environment, but it cannot directly conclude that the value of Ant’s stock has shrunk.

This is like Ant Group’s valuation of 2 trillion yuan, but Ali felt that it should only be worth 500 billion yuan, and made corresponding financial treatment. However, changes in Ant’s valuation can only be reflected when the stock is listed and sold.

“As long as the employee does not exercise the right and sell it, there will be no actual income, and the impact is actually difficult to say. Strictly speaking, the employee will see the market value at that moment when realizing it in the future.” The lawyer said. The impact on Ant Group’s employees has been largely dashed expectations, which already happened when the 2020 IPO was aborted.

The CFO of a US-listed company also expressed a similar view to us, that is, according to the explanation of Alibaba’s charge back to Ant’s equity incentive fee, it can be considered that Alibaba has lowered Ant’s valuation, but it cannot reflect the specific reduction in Ant Group’s valuation. It is impossible to quantify the extent to which the wealth of Ant Group employees has shrunk.

Ant Group officially announced its preparations for listing in August 2020. The IPO was suspended on the eve of the bell in November , and then rectified according to the requirements of the regulatory authorities, increased capital , controlled the scale of credit, returned to the source of payment , and established a consumer finance company to undertake installment and small loan business. In March this year, Ant Group announced dividends for the first time. According to the dividend of 3.94 billion yuan receivable by Ali, the total dividend of Ant is about 10 billion yuan.

An employee who left Ant but still has options confirmed to us that he received a bonus as an employee for the first time this year. (Gong Fangyi)

Wenzhou adds leverage, and does not charge principal for the first three years of the mortgage

Wenzhou, which is often linked to “real estate speculation”, has now made a bolder attempt to buy a house with a loan.

Wenzhou Housing and Urban-rural Development Bureau has reached a cooperation with Huaxia Bank Wenzhou Branch, and the latter will provide repayment methods such as “interest first and then principal” or “a small amount of principal plus interest” to first-time home buyers with a loan term of ten years or longer. If the leverage is increased to the maximum, only interest can be paid for the first three years, and the principal will be paid from the fourth year.

  • There are no restrictions on housing, both new and second-hand. On June 15, the second day after the New Deal took effect, about 159 new homes were sold in the local area. The supply of new houses is limited, and the second-hand housing market responds faster. “Times Weekly” said that within 24 hours (June 14th to 15th) of the New Deal coming into effect, the local “Zhuge Looking for a Room” website alone added 1,367 new houses.
  • According to Wind data, on June 13, the transaction area of ​​commercial housing in Wenzhou was about 5,923 square meters, on the 14th, 13,418 square meters, and on the 15th, 15,156 square meters.
  • Since August 2021, the property market in Wenzhou has started to decline following the national trend. The cumulative sales area of ​​local commercial housing has turned negative year-on-year, and the sales area in the first four months of this year has decreased by 34.2% year-on-year. During the same period, the cumulative year-on-year growth rate of residential investment completion in Wenzhou has been positive.
  • In recent years, the proportion of personal housing mortgage loan business in the total loans of Hua Xia Bank, which is responsible for lending, has increased year by year, from 10.4% at the end of 2015 to 13.73% at the end of 2021, or about 303.9 billion yuan. (Gong Fangyi)

Fed hikes, how rates affect the economy

  • The Federal Reserve announced on the 15th that it would raise interest rates by 75 basis points (0.75%), raising the federal funds rate range by 1.5%-1.75%. A week ago, the market generally expected to raise interest rates by 50 basis points, but since last Friday’s CPI was as high as 8.6%, indicating that inflation exceeded expectations, the rate hike of 75 basis points has become a new consensus.
  • Raising interest rates can be understood as raising interest rates. In general, raising interest rates is to put the brakes on the economy, thereby curbing inflation. A rate cut is a step on the accelerator for the economy and could lead to inflation.
  • The interest rate is approximately equal to the time cost of a sum of money, saving money to receive interest, borrowing money to pay interest.
  • Raising interest rates increases interest rates. In theory, more people are willing to save money, and fewer people are willing to borrow money for consumption or investment. Commodities ranging from houses and cars to mobile phones, watches, firewood, rice, oil, salt, sauce, vinegar, and tea. One side consumes less and the other side earns less and invests more prudently. After several cycles, economic activity slows down and the price level falls.
  • Rate cuts are basically the opposite.
  • The central bank generally adjusts short-term interest rates, such as the one-year benchmark interest rate adjusted by the People’s Bank of China. The Fed adjusts the overnight rate between banks (1 day). The long-term interest rate is determined by the market supply and demand relationship, and the central bank can influence it, but cannot control it absolutely.
  • Because in addition to financial needs, geography, epidemics, supply chains, the mismatch between talents and jobs in the job market, and the unwillingness of energy companies to increase oil production will affect the market demand for funds. These are not directly controlled by the central bank. If the economy is too hot or too cold, the central bank will intervene further by withdrawing or launching quantitative easing (QE).
  • Several analysts mentioned that the only thing the Fed can do now is to actively manage market expectations, which may be more important than raising interest rates. “Plans have impact when they are announced, not when they are actually implemented.”
  • After the Fed raised interest rates, the fastest-reacting stock market fell, the 10-year U.S. Treasury yield rose, and the U.S. dollar index rose. Then Powell spoke, saying that raising interest rates by 75 basis points should not become the norm, emphasizing confidence in a “soft landing”, and stocks, U.S. bonds, and the U.S. dollar index began to reverse again. (Lin Guangying)

Top Chinese law firm Han Kun to expand in Singapore

According to media reports, Han Kun Law Offices plans to expand in Singapore and is looking for an office of at least 400 square meters to recruit staff with the aim of finding new transactions and supporting existing clients seeking expansion and growth in Singapore and surrounding areas. Han Kun said plans to expand into Singapore are still in the early stages.

Han Kun Law Firm specializes in private equity and venture capital, mergers and acquisitions, domestic and overseas securities issuance and listings. Clients include most Chinese Internet companies such as Alibaba, Tencent, Baidu, and Meituan. It has participated in most Chinese Internet listings in Hong Kong and U.S. stocks and mergers and acquisitions of most Internet companies, such as the merger of Meituan and Dianping, the merger of Tongcheng-Elong, and the merger of with Baidu Waimai, etc.

There are currently 700 employees. Singapore is Han Kun’s first overseas stop.

Amid geopolitical conflicts, relatively neutral Singapore is becoming an influx of capital and new companies. Li Ka-shing’s Victoria Harbour Investments announced the establishment of an office in Singapore to seek new transactions, after Dyson’s founders James Dyson, Ray Dalio and others set up family fund offices in Singapore. It is understood that many Chinese venture capital investment institutions including Shunwei have also set up new bases in Singapore in recent years to expand their business. (He Qianming)

Forever 21 entered China for the third time, and the industry is generally not optimistic

  • American fast fashion brand Forever 21 recently announced that its first store after returning to the Chinese market will open in June, located in Taizhou, Jiangsu. It officially announced its return last year. It was first sold on Vipshop and Pinduoduo, and later opened a flagship store on Tmall.
  • Forever 21 has withdrawn from the Chinese market twice before. The first time was in 2008 when the first store was opened in Changshu, Jiangsu, but it was soon discovered that the location was wrong, and the store was closed a year later. It returned in 2011 and opened 20 stores in first- and second-tier cities such as Beijing, Shanghai and Shenzhen. However, due to serious losses and heavy debts, it withdrew from many overseas markets in 2019, including mainland China.
  • Forever 21 filed for bankruptcy and reorganization in August 2019, was acquired in February 2020, and the former president of H&M North America was appointed as the new CEO. People speculate that Forever 21 will re-look for overseas expansion opportunities, and China, Europe, and Southeast Asia are all key markets.
  • But the industry is generally not optimistic about this return. Different from 10 years ago, with the rise of Chinese national culture and consumption upgrades, the popularity of cheap fast fashion abroad is rapidly fading. Monki and New Look with similar positioning have withdrawn from China, Bershka, P&B, etc. have closed all stores. H&M and Inditex have begun to develop mid-to-high-end brands such as COS, & Other Stories, and Oysho.
  • Forever 21 must be aware of these changes. This return is still positioned as an international fast fashion brand, but the price is more accessible to the people and it is more active on social media; in terms of channels, Vipshop and Pinduoduo will be selected first, and it will take nearly a year to test the water. Opening the first store and re-selecting in third-tier cities may be to see new opportunities in the context of consumption upgrades. (Lin Guangying)


Moutai expects revenue to grow 15% this year.

Kweichow Moutai held a shareholders’ meeting on the 16th and announced a target revenue of 125.9 billion yuan in 2022, an increase of 15% over the previous year, the highest growth target since 2020. Last year, Moutai’s revenue grew by 11.7% year-on-year, with a total profit of 74.5 billion yuan. The management also mentioned that i Moutai, which was launched at the end of March, has 17 million registered users and has achieved revenue of 3 billion to 4 billion yuan.

National passenger vehicle sales rose 25% year-on-year last week.

According to the Passenger Car Association, from June 6 to 12, the nationwide retail sales of passenger vehicles was 349,000, a year-on-year increase of 25% and a 54% increase from the previous month; the cumulative retail sales from June 1 to 12 were 519,000, a year-on-year increase of 14%. The analysis believes that the effect of the policy of halving the purchase tax of fuel vehicles, which was implemented this month, has begun to show, and the tax reduction may drive the sales of 2 million vehicles. However, it may also be that some of the suppressed car buying demand has been released. Like Shanghai, the sales of new cars in April were 0.

The National Bureau of Statistics reiterated that it will rectify the falsification of local statistical data.

Fu Linghui, a spokesman for the National Bureau of Statistics, mentioned the issue of statistical fraud on the 15th, saying that the statistical fraud in some localities still does not converge, and the National Bureau of Statistics attaches great importance to it and resolutely fights against it. He also mentioned that the statistical fraud cases in Hebei, Henan and Guizhou provinces exposed by the National Bureau of Statistics on the 27th of last month were all discovered during law enforcement inspections. In the future, rectification and accountability will be intensified.

The three major airlines’ passenger and cargo volumes declined year-on-year in May.

China Eastern Airlines, headquartered in Shanghai, showed the most significant improvement in May, with 1.51 million passengers, +74% month-on-month and -84% year-on-year; cargo and mail volumes +97% month-on-month and -58% year-on-year. China Southern Airlines carried 3.36 million passengers in May, +53% MoM and -71% YoY; cargo and mail volume +26% MoM, -36% YoY; Air China carried 1.81 million passengers, +36% MoM, -78% YoY; The volume of cargo and mail was +8.3% month-on-month and -27% year-on-year.

Jiangxi Internet anchor was fined 108 million yuan for tax evasion.

According to the announcement of the Fuzhou Municipal Taxation Bureau of Jiangxi Province, from 2019 to 2020, network anchor Xu Guohao underpaid personal income tax by 17.5557 million yuan, falsely declared and evaded personal income tax by 17.5557 million yuan, and underpaid other taxes and fees by 2.1896 million yuan. ; According to relevant laws, the underpayment part will be fined 1 time, the escape part will be fined 2 times, and a total fine of 108 million yuan will be imposed.

Vietnamese officials announced that the domestic aviation market is recovering the fastest in the world.

According to the Vietnamese government announcement, data shows that Vietnam’s domestic aviation market has recovered the fastest in the world, surpassing the level before the epidemic. Up to now, the number of passengers received by airports nationwide is 40.7 million, a year-on-year increase of 57%, of which 1.8 million are international passengers, an increase of 905%.

GM wants to hand-build a Cadillac electric car for more than $200,000.

General Motors recently said it would invest $81 million in equipment to hand-build (and also rely on machines) its upcoming Celestiq, Cadillac’s new flagship electric car, in a limited production run of several hundred units a year, priced at $200,000 or more. Celestiq is expected to use hundreds of 3D printed parts and is expected to go on sale in 2025.

Kroger beat earnings estimates and expects to save $1 billion this year from automation.

Kroger, the second largest retailer in the United States, achieved sales of $44.6 billion in the fiscal quarter ended May 21, a year-on-year increase of 3.8%, and a net profit of $664 million, both better than expected. Although also affected by inflation, profit margins fell by 1 percentage point year-on-year, but automation technology is expected to save about $1 billion in costs this year. Consumers are also starting to buy more affordable supermarket private labels, which are more profitable for Kroger.

Bill Gates: NFTs are 100% based on Bo silly theory.

Bill Gates talked about his views on NFTs when he attended an event a few days ago, “It’s incredible that expensive digital images of monkeys will greatly improve the world”; NFTs are “100% based on Bo stupid theory” people who buy it believe , someone will pay more for it; I prefer “a productive farm or a company producing a product”. Bill Gates currently has 242,000 acres of farmland worth $690 million and is the largest private farmer in the United States.

The number of monthly active users of YouTube short videos has caught up with TikTok, but the user time is still far behind.

Google announced Wednesday that its short-video product YouTube Shorts has more than 1.5 billion monthly active users, the same size as TikTok (1.6 billion). But that doesn’t mean victory. According to a report by LatePost in April this year, the former has about 300 million daily active users, and TikTok has more than 700 million, and the user usage time is several times that of its competitors. In addition, YouTube is also facing an innovation dilemma – the more embedded short videos account for user time, the more monetization of its core long video creators will be affected.

Private investment in artificial intelligence doubled last year, and fewer companies are getting paid.

In 2021, total private investment in artificial intelligence will be about $93.5 billion, more than double the previous year, but the number of newly funded companies has dropped by 14, according to Stanford University’s 2022 Artificial Intelligence Index report. This means that AI investment has reached an advanced stage. The report shows that in 2021, there will be 15 funding rounds worth more than $500 million, up from four in the previous year.

The title picture comes from the movie “The Theory of Everything”

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