This Analyst Loves Alibaba's 'Super App'

Alibaba Group Holding Ltd BABA continues to transform its Alipay app into a "super app" that will likely result in expanded use, higher engagement and synergies with other businesses, according to Bank of America.

The Analyst

Bank of America's Eddie Leung maintains a Buy rating on Alibaba with a $215 price target.

The Thesis

Alibaba's Ant Financial business oversees a financial services app called Alipay, which is already the world's largest mobile payment platform. Leung says the company has the potential to leverage its already large user base into new categories beyond its current use in payment, transfers, investments, financing and insurance.

Bank of America identified six new categories to better serve its clients on a day-to-basis:

1. Transportation passes;
2. Local services like delivery and dining reservations;
3. Request for information and booking for public services and utilities;
4. Loyalty credits and points;
5. Mini-programs which support a range of online services; and
6. Charity campaigns and environmental protection programs.

Leung says the multiple possibilities for expansion will bring upon benefits to other Alibaba units. For example, more merchants in the e-commerce business present the opportunity for Ant Financial to offer financing needs, insurance, or installment services.

Price Action

Shares of Alibaba were trading marginally higher at $183.65 Monday afternoon.

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