Alibaba’s first-quarter profit may rise 32 per cent as more Chinese take to shopping online

New York-listed company expected to top US$150 billion in gross merchandise volume in a quarter for the first time, during the three months ended June 30.

PUBLISHED : Monday, 14 August, 2017, 9:01pm
UPDATED : Tuesday, 15 August, 2017, 7:38pm

Alibaba Group Holding is poised to report its fifth consecutive quarter of net profit growth on Thursday, as more and more Chinese consumers prefer to shop online for everything from daily essentials to large ticket goods and services, boosting sales for the world’s biggest operator of e-commerce platforms.

Net profit was forecast to rise 32 per cent to 16 billion yuan (US$2.4 billion) in its fiscal first quarter ended June 30, up from 12.2 billion yuan in the same period last year, according to the consensus estimate in a Bloomberg poll of 13 analysts.

Total revenue was predicted to rise 49 per cent to 47.8 billion yuan from 32.1 billion yuan a year earlier.

“We expect Alibaba to report upbeat results, which would either meet or exceed expectations on revenues and margins, especially for its China e-commerce segment,” said Alicia Yap, the head regional internet research at Citi Research.

Alibaba’s gross merchandise volume (GMV) – the total sales value of merchandise sold on its Chinese e-commerce platforms – was expected to rise 22 per cent to surpass 1 trillion yuan in the quarter, compared with the same period a year ago, according to Yap’s estimate.
In its fiscal year ended March 31, the GMV for Hangzhou-based Alibaba surged to 3.8 trillion yuan.

We expect Alibaba to report upbeat results, which would either meet or exceed expectations on revenues and margins, especially for its China commerce segment
Alicia Yap, head of regional internet research at Citi Research

Founded in 1999, Alibaba’s main domestic online retail platforms are Taobao Marketplace and Tmall.com. Its international retail platforms comprise AliExpress and Lazada Group. It also owns the South China Morning Post.

Alibaba announced a US$1 billion investment in Lazada in June, which increased its stake in Southeast Asia’s biggest e-commerce services provider to 83 per cent from the previous 51 per cent.

Lazada has been an important part of Alibaba’s global expansion, providing it with access to consumers in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

Yap forecast Alibaba’s international retail revenue in its fiscal first quarter to have surged 125 per cent year on year to 2.5 billion yuan.

Revenue from cloud computing, led by subsidiary Alibaba Cloud, is expected to climb 92 per cent to 2.1 billion yuan in the same period, she said.

Cloud services enable companies to buy, lease or sell software and other digital resources online on demand, just like electricity from a power grid. These resources are managed and hosted in data centres.

Alibaba said in June it will open two new data centres in India and Indonesia, raising the total number of its facilities to 17.

The company’s shares have risen 30 per cent during its fiscal first quarter to US$140.90 on June 30, giving Alibaba a market capitalisation of US$361 billion and making it one of Asia’s most valuable companies alongside Tencent Holdings.