Alibaba Stock In Focus After Sun Art Retail Divestment: Retail’s Neutral

Chinese private-equity firm DCP Capital Partners is buying the stake

ADR shares of Alibaba Group Holding ($BABA) rose 0.78% Tuesday after the Chinese retail giant said it was selling its 78.7% stake in Chinese hypermarket operator Sun Art Retail for $1.7 billion.

The move is part of the company’s strategy to reduce its physical retail footprint and focus on e-commerce business, according to media reports. It had bought the controlling stake for $3.6 billion five years ago.

Alibaba said Chinese private-equity firm DCP Capital Partners is buying the stake. Based on the estimated fair value, Alibaba could book a divestment loss of nearly $1.8 billion.

The sale of Sun Art represents a “good opportunity” for Alibaba to “monetize its noncore assets and to utilize such proceeds to better focus on the development of its core businesses”, the company said in its filing.

Sun Art, in a regulatory filing, said it would delist and undertake a strategic review of its operations.
Retail sentiment on Stocktwits remained ‘neutral’ compared to a week ago.

Separately, Alibaba’s cloud computing unit also said recently it may slash prices on its AI products, which helped lift its shares on Wednesday.

Last week, a consortium consisting of Youngor Fashion and members of Alibaba’s Intime Stores management team announced a deal to buy Intime Stores for 7.4 billion yuan. The company said it expects to record a loss of about $1 billion from the Intime sale.

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