Alibaba Group Holding Ltd. said most of its companies are now back to “healthy growth” as China recovers from the COVID-19 crisis.
The Chinese e-commerce giant topped revenue and revenue expectations with its fiscal report in the first quarter beginning Thursday, although its shares were 1.6% off in midday trading.
“The dynamic has fundamentally changed our macroeconomic environment and daily life, but it has also introduced new opportunities,” said pandemic chief executive Daniel Zhong. BABA of Alibaba,
Tmall marketplace saw growth of 27% gross merchandise for online purchases of digital goods, “with all major categories growing at a similar as fast rates relative to the December 2019 quarter.”
Alibaba saw “higher purchase frequency than higher average spending per customer on all city trips,” according to Zhong, who noted progress in attracting new users in less developed parts of China. The company had 742 million annual active customers in its China retail markets since the June quarter, marking an increase of 16 million from the March quarter.
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This was one “very encouraging” sign from the report, said Hari Srinivasan, a senior research analyst at Neuberger Berman. In the past, much of the growth in e-commerce came from more developed coastal cities, he told MarketWatch, but the COVID-19 crisis has prompted more domestic users to try e-commerce or expand what they choose to do online. to buy.
Alibaba generated RMB153.75 billion ($ 21.76 billion) in revenue, up from RMB114.92 billion a year earlier and ahead of the RMB148 billion FactSet consensus. The company earned an adjusted RMB14.82 per share in the stock, up from RMB12.55 a year earlier. Analysts surveyed by FactSet had expected RMB13.82.
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The company is still investing is growth areas of the company, but Srinivasan saw signs that the investments are scaling well. “The engine of profit growth is the e-commerce business,” he said, and although investment areas such as international expansion and cloud computing are a drag on marginal growth, e-commerce is delivering good growth and the losses of new investments are going down. “
Loop Capital analyst Rob Sanderson also highlighted the limited losses from Alibaba’s investment areas and wrote that in general “bulls will mark the rapid, V-shaped recovery for China online retailers, led by Alibaba.” However, he said “bears will point to repeated comments from management in the call and follow-up sales page to expect more aggressive investment spending through the year.”
He is considering the stock a buy with a price target of $ 280.
RBC Capital Markets analyst Mark Mahaney also discussed the V-shaped recovery for Alibaba, writing that the company appears to be a structural winner coming from COVID-19 just like Amazon.com Inc. AMZN,
is in the US, although Amazon’s boost may be more pronounced as the US was behind China in terms of adopting e-commerce before the pandemic began.
He has an outperform rating on the stock and increased his price target to $ 300 from $ 235.
Alibaba shares have risen 18% over the past three months as the S&P 500 SPX,
has risen 14% and as the KraneShares CSI China Internet ETF KWEB,
added 29%.
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