Image: Reuters Berita 24 English - After announcing its slowest quarterly revenue growth since going public in 2014, Alibaba Group announce...
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| Image: Reuters |
Berita 24 English - After announcing its slowest quarterly revenue growth since going public in 2014, Alibaba Group announced on Thursday that it will not issue a prediction for the current fiscal year due to COVID-19 concerns clouding its view.
In a drastically declining economy, however, the markets concentrated on Alibaba's quarterly revenue and earnings beat, sending its shares up 15%. The findings, according to analysts, were more resilient than predicted.
"We believe Alibaba is the major beneficiary of a potential beneficial policy rollout in terms of lockdown measures and consumption stimulation," Daiwa Capital analysts wrote in a note.
After two months of COVID restrictions stifled consumer spending, Beijing unveiled measures to boost the economy this week.
Alibaba said on Thursday that the limitations hurt its company by making it difficult for merchants to ship items and forcing consumers to buy only what they need. The gross merchandise value of its China retail marketplaces' online physical items - a crucial statistic - decreased by a low-teens percentage year over year in April.
"To give you a feel of the extent of effect, cities with new COVID cases in April comprised more than half of our China Retail Marketplaces GMV," CEO Daniel Zhang said on a conference call following the earnings release.
While delivery services were restarted in May, the company indicated it would take time to fully recover due to issues such as parcel backlogs.
Before Thursday's advances, the company's shares had lost a third of its value this year.
In addition to the impact of the shutdown, investors are concerned about Alibaba's and its peers' long-term prospects due to a regulatory crackdown on the tech industry. They've been on the lookout for evidence that the worst is over.
China comforted the IT industry earlier this month by stating that the government supported the sector's expansion and public listings for technology businesses.
On Thursday, Alibaba executives said they believed the government had sent a "clear" statement that it recognized the economic importance of platform businesses like Alibaba.
ECONOMY SLOWING
For the past two months, China's megacities have been put on lockdown, halting millions of lives and causing global corporations to warn that customers have slammed the brakes on purchasing.
Premier Li Keqiang committed to get China's second-largest economy back on track, indicating China's rising concern about the consequences for development.
According to Alibaba's Zhang, the government has issued "significant policy signals" about its commitment to economic stability.
Alibaba reported a 9% increase in sales to 204.05 billion yuan ($30.35 billion) in the January-March quarter, the slowest rate of growth since its IPO, but ahead of an average analyst forecast of 199.25 billion yuan, according to Refinitiv.
Alibaba attributed increased sales to rising demand at Chinese commerce divisions such as Tmall Supermarket and Freshippo, as well as niche shopping platforms like Taobao Deals and Taocaicai.
Alibaba's cloud computing sector saw a 12 percent increase in revenue, while the company's main unit, core commerce, saw an 8 percent increase in revenues to 140.33 billion yuan.
For the fiscal year, the number of active users on its platforms was around 1.31 billion, with over 1 billion users in China for the first time.
Ant Group, Alibaba's fintech subsidiary, recorded a profit of almost 22 billion yuan for the quarter ending December, up from 21.76 billion yuan the previous year. Alibaba announced that Ant had paid it a 3.9 billion yuan dividend, the first time the fintech firm has done so.
(1 US dollar = 6.7240 Chinese yuan)
