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Alibaba Group Holding Ltd. said most of its business has now returned to “healthy growth” as China recovers from the COVID-19 crisis.
The Chinese e-commerce giant beat revenue and profit expectations with its first-quarter budget report on Thursday, despite its shares falling 1.6% in afternoon trading.
“The dynamics have fundamentally changed our macroeconomic environment and our daily lives, but they have also introduced new opportunities,” Managing Director Daniel Zhong said of the pandemic. BABA from Alibaba,
The Tmall marketplace saw a gross merchandise volume growth of 27% for online digital product purchases, “with all major categories showing similar or faster growth compared to the December 2019 quarter.”
Alibaba saw “a higher frequency of purchase as well as higher average spend per customer in all levels of the city,” according to Zhong, who cited progress in acquiring new users in less developed regions of the city. China. The company had 742 million annual active customers in its retail markets in China in the June quarter, which was an increase of 16 million from the March quarter.
Read: Beyond Meat partners with Alibaba for new push in China
It was a “very encouraging sign” from the report, said Hari Srinivasan, senior research analyst at Neuberger Berman. In the past, much of the growth in e-commerce has come from more developed coastal cities, he told MarketWatch, but the COVID-19 crisis has prompted more inland users to try out e-commerce or expand what they choose to buy online.
Alibaba generated 153.75 billion RMB ($ 21.76 billion) in revenue, up from 114.92 billion RMB a year earlier and ahead of the FactSet consensus of 148 billion RMB. The company earned adjusted RMB 14.82 per US custodian share, up from RMB 12.55 a year earlier. Analysts polled by FactSet were expecting RMB 13.82.
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The company is still investing in areas of business growth, but Srinivasan has seen signs that the investments are going well. “The engine of profit growth is e-commerce,” he said, and although areas of investment such as international expansion and cloud computing hold back the growth of margins, “e-commerce generates good growth and losses from new investments are rife. down.”
Loop Capital analyst Rob Sanderson also highlighted the reduction in losses from Alibaba’s investment areas and wrote that in general, “the bulls will highlight the rapid V-shaped recovery for retailers in Chinese line, led by Alibaba. Nonetheless, he said that “the bears will point to repeated management comments in tracking calls and sales to expect more aggressive capital spending throughout the year.
He values the stock at a buy with a target price 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 out of COVID-19, as does Amazon.com Inc. AMZN,
is in the United States, although Amazon’s push may be more pronounced since the United States was behind China in terms of e-commerce adoption before the start of the pandemic.
It has an outperformance rating on the stock and raised its price target to $ 300 from $ 235.
Alibaba shares have gained 18% in the past three months, the S&P 500 SPX,
increased by 14% and like the KraneShares CSI China Internet ETF KWEB,
added 29%.
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