Alibaba expected to forecast another year of solid revenue growth

PUBLISHED : Wednesday, 07 June, 2017, 12:04pm
UPDATED : Wednesday, 07 June, 2017, 10:39pm

Chinese e-commerce powerhouse Alibaba Group Holding is expected to forecast solid revenue growth for its current fiscal year to March at its two-day investor event, which starts Thursday in its home base of Hangzhou, capital of the eastern coastal province of Zhejiang.

“We currently model its total fiscal 2018 revenue to grow 34.7 per cent year on year to 213.26 billion yuan (US$31.33 billion), which is broadly in line with the Bloomberg consensus [from a poll of analysts’ estimates] of 213.3 billion yuan,” said Alicia Yap, Hong Kong-based head of regional internet research for Citi Research.

New York-listed Alibaba is also anticipated to provide an update on its current valuation, investment portfolio, and the progress of its digital media and entertainment operations.

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At the company’s first investor day event last year, Alibaba senior management gave guidance that said total revenue for the 12 months ended March 31 would grow 28 per cent year on year, which it later revised up to 53 per cent.

Alibaba subsequently reported in May that its annual revenue rose 56 per cent year on year to 158.3 billion yuan on the back of its strong core commerce, cloud computing, and digital media and entertainment businesses.

“Per our recent conversation with investors, many expect Alibaba to guide from 35 to 36 per cent year-on-year growth for its fiscal 2018, with some safety cushion that the company could beat or revise its guidance later on,” Yap said.

“We believe there could be an upside share price catalyst if Alibaba actually guides above 36 per cent [year-on-year growth], as it could suggest a more bullish outlook likely attributed to rising advertising demand from big brands.”

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Shares of Alibaba, which owns the South China Morning Post, slid 0.6 per cent to US$124.62 at the close of US trading on Tuesday, but advanced 0.14 per cent to US$124.80 in after-hours trading.

At its investor event last year, Alibaba disclosed a valuation of US$26.1 billion, according to Yap.

That included its stakes in Alipay operator Ant Financial Services Group, entertainment arm Alibaba Pictures Group, logistics company Cainiao Network and online-to-offline local-services platform Koubei.

“Its strategic investment portfolio in total was worth more than US$15 billion [at that time],” Yap said.

Over the past several months, Alibaba was reported to have made significant investments in Shanghai-based food delivery service Ele .me and One97 Communications, operator of Indian digital payments and online retail giant Paytm.

Yap said she also expected Alibaba, led by executive chairman Jack Ma Yun, to further explain its “New Retail” vision, which management announced last month.