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SoftBank Group Corp 9984

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Morningstar’s Analysis

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SoftBank Group’s Fair Value Cut on Alibaba Downgrade; FVE Now JPY 7,500

Dan Baker Senior Equity Analyst

Analyst Note

| Dan Baker |

We reduce our SoftBank fair value estimate to JPY7,500 from JPY 9,000, due to a 33% downgrade in our fundamental valuation of Alibaba to USD 188 per share following a weak third-quarter result from the Chinese e-commerce giant. Our no-moat rating is retained for SoftBank as we rate it as an investment holding company rather than an operating company. The stock price is still below our fair value estimate but with a high uncertainty rating on SoftBank we would prefer to wait for a better entry price. We expect the buyback announced in October to help support the share price.

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Company Profile

Business Description

SoftBank is a Japan-based telecom and e-commerce conglomerate that has expanded mainly through acquisitions, and its key assets include a 28% stake in Chinese e-commerce giant Alibaba and a 40% owned mobile and fixed broadband telecom operator business in Japan. It also owns 75% of semiconductor chip designer ARM Holdings although has agreed to sell this and is waiting on regulatory approvals, and has a vast portfolio of mainly Internet- and e-commerce-focused early stage investments. It is also general partner of the $100 billion SoftBank Vision Fund 1 and sole investor in Softbank Vision Fund 2, both of which primarily invest in pre-IPO Internet companies.

1-9-1 Higashi-shimbashi, Minato-ku
Tokyo, 105-7303, Japan
T +81 368892000
Sector Communication Services
Industry Telecom Services
Most Recent Earnings Sep 30, 2021
Fiscal Year End Mar 31, 2022
Stock Type
Employees 78,825