Alibaba valuation approaches US$100 billion ahead of possible IPO

PUBLISHED : Thursday, 09 May, 2013, 12:00am
UPDATED : Thursday, 09 May, 2013, 4:39am

The value of Alibaba Group continues to be an object of speculation after profit at the mainland's biggest e-commerce company more than doubled in the quarter that ended December 31.

Privately held Alibaba posted a net profit of US$642.17 million in the period, up from US$236.91 million a year earlier, according to a United States regulatory filing made by Yahoo. Yahoo owns 24 per cent of Alibaba.

Revenue at Hangzhou-based Alibaba climbed to US$1.84 billion in the quarter to December, up from US$1.02 billion a year ago.

That jump was driven by Alibaba's business-to-consumer online shopping site, Tmall.com, which charges commissions, and its consumer-to-consumer platform, Taobao Marketplace, a source said. The two businesses' combined gross merchandise value exceeded 1 trillion yuan (HK$1.26 trillion) last year.

In a research note on Yahoo, Stifel Nicolaus analyst Jordan Rohan said the results showed "the value of [Yahoo's] Alibaba asset is rapidly increasing towards US$100 billion, far above our prior assumptions".

"We now expect Alibaba to approach US$18 billion in revenues by 2016 at a 50 per cent pro-forma operating margin. Applying a 25x multiple and a 20 per cent discount rate, we get an entity worth US$98 billion today," Rohan said.

The median estimate of eight investment banks in February valued the firm at US$62.5 billion. The company's value has become an object of speculation.

In February, Alibaba's chairman and co-founder, Jack Ma Yun, commented on a possible IPO. He said Alibaba "is making money", unlike other e-commerce firms.

"I think when we do [an] IPO, you'll know the numbers," he said.

Ma will relinquish his role as Alibaba's chief executive tomorrow, to Jonathan Lu Zhaoxi, who currently serves as the company's chief data officer.

Alibaba last week agreed to pay US$586 million for an 18 per cent stake in Weibo, Chinese online media firm Sina's Twitter-like service that has more than 503 million users.