Alibaba, China’s e-commerce barometer, tipped for solid earnings growth

PUBLISHED : Wednesday, 17 May, 2017, 8:15pm
UPDATED : Wednesday, 17 May, 2017, 11:09pm

E-commerce powerhouse Alibaba Group Holding is expected to blow past its own estimate of 53 per cent year-on-year revenue growth in the 12 months ended March 31, driven by mainland China’s booming online retail market.

New York-listed Alibaba, which will report its fiscal year to March earnings before the US market opens on Thursday, serves as the unofficial barometer for many analysts to determine the heath of e-commerce in the world’s second-largest economy.

“We believe that Alibaba will continue to be a key beneficiary of the growing disposable income among the Chinese population,” eMarketer senior forecasting analyst Shelleen Shum said on Wednesday. “This has led to a shift in spending on low-cost and basic necessities to higher quality lifestyle products.”

Alibaba is expected to post a 55 per cent year-on-year jump in net profit to 11.8 billion yuan (US$1.7 billion) for the March quarter on revenue of 35.9 billion yuan, up 48 per cent year on year, according to consensus estimates from analysts surveyed by Bloomberg.

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China’s National Bureau of Statistics last month reported a 32 per cent increase in mainland online retail sales from January to March to 1.4 trillion yuan.

That data “suggests solid gross merchandise volume growth (GMV) for Alibaba”, said Alicia Yap, the head of regional internet research at Citi Research in Hong Kong. “We expect Alibaba to deliver another quarter of robust revenue growth, beating its fiscal year revenue guidance of 53 per cent.”

Yap estimated Alibaba’s GMV for the March quarter would climb 19 per cent to 883 billion yuan.

Maggie Wu Wei, chief financial officer at Alibaba, said in January that the company adjusted its current fiscal-year-to-March guidance to 53 per cent year-on-year growth from the previous 48 per cent, “with three quarters of the year coming in ahead of expectations”.

Citi projected Alibaba’s fiscal year to March revenue to rise 54 per cent to 156.1 billion yuan, up from 101.1 billion yuan a year ago.

Core online retail operations of Alibaba, which owns the South China Morning Post, include Tmall.com, Taobao Marketplace, flash sales platform Juhuasuan.com and overseas-focused AliExpress.