Alibaba (9988 HK / BABA US) – WSJ reported Ali Cloud’s Shanghai police database was hacked, negative to stock sentiment
- WSJ reported that Ali cloud is in connection with the theft of Shanghai police database
- The leaked data might include an estimated one billion Chinese citizens’ information
- Financial impact should be limited, as Cloud business only contributed c.9%/1% of Alibaba’s total revenue /earnings
- Negative to market sentiment in near term
What’s New
– WSJ reported that Ali Cloud is in connection with the theft of Shanghai police database, and Alibaba’s executives have been called in by Shanghai authorities for investigation.
– The cloud platform that hosted Shanghai’s police database was reportedly hacked due to the use of outdated systems. News links: https://www.wsj.com/articles/alibaba-executives-called-in-by-china-authorities-as-it-investigates-historic-data-heist-11657812800
– The leaked data might include an estimated one billion Chinese citizens’ information.
– Alibaba and Shanghai authorities have not yet commented on the WSJ news so far.
Our View:
– The news is negative to Alibaba’s stock sentiment in near term.
– If the news is confirmed, Ali Cloud would need to address the issue properly, or investors may concern about its business outlook.
– Financial impact in the near term should be limited. Cloud business only contributed c.9% of Alibaba’s total revenue and less than 1% net earnings contribution in FY3/22. Besides, c.50% of Cloud revenue comes from internet sector, as public service has not been its key focus.
– We currently rate BUY on the counter.