Alibaba sees 2019 revenue growth above 60 per cent as it pushes beyond e-commerce, wins new markets

China’s biggest e-commerce services provider is diversifying its business to drive more growth, while expanding its activities across Southeast Asia

PUBLISHED : Friday, 04 May, 2018, 7:53pm
UPDATED : Friday, 04 May, 2018, 11:33pm

Alibaba Group Holding said it expects revenue growth for 2019 to hold above 60 per cent, as it expands beyond e-commerce and pushes deeper into growth markets such as Southeast Asia.

The New York-listed company on Friday reported adjusted earnings per share of 5.73 yuan in the three months ended in March, topping analysts’ estimates. Revenue climbed 61 per cent to 61.9 billion yuan (US$9.9 billion), faster than analyst projections. 

Alibaba will continue to invest in acquiring new users and winning more share of consumer spending through expanding physical products, digital content and local services, company chief executive Daniel Zhang Yong said in a post-earnings conference call. 

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The Hangzhou-based firm set a record of US$768 billion in gross merchandise value (GMV), a measure of sales, in its financial year ended in March. 

“I remain confident that we are on track to reach our goal of US$1 trillion GMV by fiscal 2020,” Zhang said.

Alibaba is the parent company of the South China Morning Post.

The company is also “actively exploring” a CDR listing in China, according to chief financial officer Maggie Wu.  

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Alibaba will continue to expand new retail formats such as its Hema supermarkets. Its logistics unit, Cainiao, will continue to build out its infrastructure to support the growth by its new retail operations, Zhang said. 

Annual active users on its China retail platforms, led by Taobao Marketplace and Tmall, increased by 37 million to reach 552 million.

China’s biggest e-commerce services provider, led by co-founder and executive chairman Jack Ma Yun, is diversifying to combat maturing growth in its core business and to fend off rising competition from rivals such as Tencent Holdings in the retail and payments space.

Its spending on logistics, cloud computing, online video and physical retail, such as the US$2.9 billion acquisition of Chinese hypermarket operator Sun Art Retail Group, has started to hit margins. Net income for the March quarter had declined 33 per cent to 6.6 billion yuan.

Revenue from cloud computing in the March quarter doubled to 4.4 billion yuan, as the company added new partners that included China National Petroleum Corp, the Malaysian government and Cathay Pacific Airways. 

In digital media and entertainment, Alibaba’s Youku Tudou video-streaming service expanded the number of subscribers by 160 per cent, driven by the addition of high-quality new content, the company said. That helped boost revenue in the segment by 34 per cent to 5.3 billion yuan in the March quarter.

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Alibaba is buying up more physical stores to connect them with the internet, with the aim of creating massive, data-driven e-commerce ecosystems and enhancing the shopping experience for the next generation of Chinese consumers.

The company took a 10 per cent stake in supermarket operator New Huadu in October and an 18 per cent stake in Lianhua Supermarket in May.  

Its “new retail” Hema supermarket concept, which allows consumers to shop online and offline, as well as have their groceries whipped up into a hot meal by in-house chefs, added 17 new stores last year and now has 46 outlets in 13 cities across China.

Alibaba is going head-to-head in that space with rival Chinese internet company Tencent Holdings, which backs online retailer 

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It is also making inroads into overseas markets, with revenue for its international retail business growing 94 per cent. Alibaba is pushing deeper into Southeast Asia with its Lazada unit, which it acquired and put co-founder Lucy Peng as chief executive.

Indonesia, one of the largest markets in the region, remains underdeveloped in terms of e-commerce activity, according to Alibaba executive vice-chairman Joe Tsai Chung-hsin.

“We’re really just at the first pitch in the first inning of the game,” Tsai said.