The Alibaba Group logo is seen in its Beijing, China office on January 5, 2021. REUTERS / Thomas Peter
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- Adjusted Q4 profit 7.95 yuan / share vs. 7.31 yuan / share estimate
- Q4 revenue rose 9% to 204.05 billion yuan from an estimated 199.25 billion yuan
- Analysts say the fourth quarter was more resilient than expected
- Alibaba: “It is not prudent” to provide guidance on the risks of COVID
- Shares skyrocket 15% of revenue, earnings exceed
May 26 (Reuters) – Alibaba Group (9988.HK) on Thursday said it would not provide a forecast for the current fiscal year because the risks of COVID-19 clouded its outlook, after reporting of its slowest quarterly revenue growth since its IPO in 2014.
Markets, however, focused on Alibaba’s quarterly revenue and earnings in a weakening economy and boosted its shares by 15%. Analysts said the results were more resilient than expected.
“Because Alibaba’s large scale reflects the global macroeconomy, we believe it is the main beneficiary of a possible favorable policy deployment in terms of measures to block and stimulate consumption,” Daiwa Capital analysts said in a statement.
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After two months of strict closures of COVID that limited consumer spending, Beijing this week announced measures to strengthen the economy.
Alibaba said on Thursday that restrictions weighed on its business by making it difficult for traders to ship goods and making consumers concentrate on buying basic necessities. The gross value of online merchandise from its key retail markets in China, a key metric, fell by a low percentage of teenagers in April over the previous year.
“To give you an idea of the extent of the impact, according to consumer management, the cities with new COVID cases in April accounted for more than half of our GMV of China’s retail markets.” said CEO Daniel Zhang in a post-earnings call.
Although delivery services resumed in May, they were taking a long time to fully recover due to factors such as package delays, the company said.
The company’s shares had lost a third of their value this year before Thursday’s gains.
In addition to the impact of the blockade, investors are also concerned about the long-term outlook for Alibaba and its partners due to regulatory repression in the technology industry. They have been looking for clues that the worst could have happened.
Earlier this month, China calmed down the technology industry, saying the government supported the development of the sector and the public lists of technology companies. Read more
Company executives said Thursday they believed authorities had sent a “clear” message acknowledging the economic importance of platform companies like Alibaba.
SLOWING THE ECONOMY
China’s giant cities have been forced to shut down for the past two months, killing millions of lives and causing global companies to warn consumers that spending has slowed. Read more
As a sign of China’s growing concern about the consequences of growth, Premier Li Keqiang promised to put the world’s second largest economy back on track.
Zhang, from Alibaba, said the government had sent “important political signals” about its commitment to stabilize the economy.
For the January-March quarter, Alibaba saw a 9% increase in revenue to 204.05 billion yuan ($ 30.35 billion), the slowest growth rate since its listing, but ahead of an estimate. analysts average 199.25 billion yuan, according to Refinitiv.
Alibaba said growing demand for Chinese business units such as Tmall Supermarket and Freshippo, as well as niche shopping platforms such as Taobao Deals and Taocaicai helped with sales.
Alibaba’s cloud computing division revenue rose 12% and sales of the company’s largest trading unit rose 8% to 140.33 billion yuan.
Annual active consumers on its platforms reached about 1.3 billion during the fiscal year, including more than 1 billion consumers in China for the first time.
Ant Group, Alibaba’s fintech subsidiary, reported a profit of about 22 billion yuan during the quarter ended December, compared to 21.76 billion yuan a year ago. Alibaba said it received a 3.9 billion yuan dividend from Ant, the first time the fintech conglomerate has paid one.
($ 1 = 6.7240 Chinese Yuan)
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Report by Brenda Goh in Shanghai and Nivedita Balu in Bangalore; Editing by Anil D’Silva, Tomasz Janowski and Sayantani Ghosh and Shri Navaratnam
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