Analysts predict record profit and revenue for Alibaba

Chinese e-commerce giant will announce results for fiscal year on Friday

PUBLISHED : Monday, 02 May, 2016, 8:39pm
UPDATED : Monday, 02 May, 2016, 8:39pm

Analysts expect no surprises when Alibaba Group, the world’s largest e-commerce services company, reports its earnings for the fiscal year to March 31 this Friday.

New York-listed Alibaba, which owns the South China Morning Post, said in March that its gross merchandise volume (GMV) – the total value of goods sold on its domestic e-commerce platforms – surpassed 3 trillion yuan (HK$3.59 trillion) some 10 days before the close of its fiscal year.

“That is about US$476 billion, and, if the platforms we operate were a province, we would rank as the sixth-largest provincial economy in China,” Alibaba executive vice-chairman Joseph Tsai said in a blog post at the time.

On the back of that milestone, the Hangzhou-based company is forecast to post record profit and revenue figures.

Alibaba’s aggressive acquisitions and expansion into synergistic businesses ... could provide significant longer-term monetisation potential
Ling Vey-sern, BNP Paribas

BNP Paribas analysts estimated that Alibaba’s net profit would reach 43.15 billion yuan and total revenue hit 100.19 billion yuan, while Daiwa Capital Markets analysts predicted 42.59 billion yuan in net profit and 99.52 billion yuan in revenue.

In the previous fiscal year, Alibaba’s net profit was 24.32 billion yuan and its revenue 76.20 billion yuan.

Ling Vey-sern, an analyst at BNP Paribas, described Alibaba in a report “as the top online destination for buyers and sellers in China”, which made the company “the best investment proxy to leverage the structurally growing Chinese e-commerce market”.

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Earlier this month, Alibaba further burnished its credentials in the industry by joining the International AntiCounterfeiting Coalition, the world’s largest non-profit organisation focused on combating product counterfeiting and piracy.

“Alibaba’s aggressive acquisitions and expansion into synergistic businesses, such as content, entertainment, online-to-offline [local services] and software could provide significant longer-term monetisation potential,” Ling said.

In the 12 months to March last year, Alibaba used 53.45 billion yuan in cash for investments, mergers and acquisitions.

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Those activities are not expected to slow down anytime soon in light of a US$3 billion, five-year loan deal in March that Alibaba arranged with a syndicate of banks.

Alibaba also started a major push for broader domestic and international online retail expansion last month, emboldened by hefty user growth that saw annual active buyers reach a record 407 million at the end of December.

“Global import, rural e-commerce, and top-tier cities are the three key battlefields for Alibaba in 2016,” chief executive Daniel Zhang Yong said in January.

The company says it has built more than 10,000 village-level service centres to promote e-commerce and provide delivery in more than 20 provinces.

Zhang said the firm aimed to strengthen its online channels for international brands and merchants to sell to Chinese consumers.