Alibaba, headquartered here on May 26, said its GMV of online physical goods in China, excluding unpaid orders, fell further in April, with a “low” decline. in adolescents “compared to a year ago.
Str | Afp | Getty Images
BEIJING – Chinese tech giants Alibaba, Tencent and JD.com have seen their slowest revenue growth on record as Covid and Beijing’s technology crackdown took its toll.
Since the fall of 2020, China has fined companies and examined them for alleged monopolistic practices. A resurgence of Covid since March has added pressure to growth, with travel restrictions and stay-at-home orders disrupting supply chains and logistics.
Reflecting the economic downturn, e-commerce giant Alibaba on Thursday reported a drop in online shopping for its two main platforms in China during the quarter ended March 31.
The company’s total revenue rose 9% in the last quarter from a year ago, the slowest on record, according to the financial history accessed through Wind Information.
Tencent’s revenue for the quarter changed little, while JD.com saw an increase of about 18% from a year ago, both the slowest on record, according to Wind.
Alibaba shares shot up nearly 15% in New York overnight after reporting better-than-expected results. Shares of JD.com listed in the US rose 5%, while those of Tencent rose more than 1% in Hong Kong on Friday.
Consumer demand in China
“Macrosensitive stocks,” such as Alibaba and Baidu, could temporarily benefit from low earnings expectations and anticipation that Shanghai is about to end its blockade, said Jialong Shi and Thomas Shen, analysts at Nomura, on a note Friday.
“However, we believe that the sustainability of this rally is likely to be dictated by the pace of recovery in Chinese consumer demand, which the market is likely to follow closely over the coming months,” analysts said.
China’s already slow retail sales fell even more in April, 11.1% less than a year ago.
Even online sales of physical goods fell 1%, worse than during the initial pandemic shock in 2020. This is according to CNBC’s calculations of official data that has been accessed. wind information.
Nomura analysts said many companies were deciding to cut spending on marketing as a way to overcome the difficult environment, “which could lead to a late recovery of the advertising industry, even if China is completely out of lock mode “.
Alibaba said, excluding unpaid orders, the gross value of goods (GMV) had experienced a “low one-digit decline” in the past year, according to a transcript of FactSet earnings calls. GMV is a measure of the goods sold over a period of time.
The company said its GMV of online physical goods in China, excluding unpaid orders, fell even further in April, with a “low for teenagers” decline from a year ago. The company said more than 80 cities in China, mostly national economic centers, reported confirmed Covid cases in April. This accounts for more than half of Alibaba GMV’s China retail market.
For the April-June quarter, Chinese Renaissance analysts said in a report that they expect GMV trade in Alibaba’s China to fall by 13.5% year-on-year, down 6% from global net income.
Bright spots
Other Chinese companies that reported last quarter results drew a more optimistic outlook.
Baidu: The smooth 1% increase in quarterly revenue from Chinese technology company Baidu was only the worst since 2020, a year when two-quarters of revenue fell, Wind data showed. The search engine giant has expanded in recent years to cloud services and robotaxis.
“We see solid progress in its various AI initiatives,” Daiwa Capital Markets analysts wrote in a report on Thursday. They noted that Baidu’s AI cloud revenue grew 45% year-over-year during the first quarter, faster than the company’s peers.
Dada: Grocery delivery company Dada, now majority-owned by JD, saw a 21% year-over-year increase in revenue in the last quarter, the best since the third quarter of 2021, according to Wind. Dada said it was one of the companies the local government approved to maintain operations during the blockades.
The company registered more than three times the GMV and twice as many active customers in the 12 months ending at the end of March, compared to the same period two years ago.
Read more about China on CNBC Pro
Kuaishou: The emerging e-commerce application for video, live streaming and Kuaishou saw revenue growth of 19% in the last quarter, the slowest recorded, although it only went back to the third quarter of 2020, showed Wind.
“Despite recent macro uncertainties due to VOCID, we believe that Kuaishou’s bottom-up efforts in market share gains in advertising and e-commerce and cost-effective control could continue to help Kuaishou overcome the fundamentals.” , wrote UBS analyst Felix Liu and a team. week.
It is “impressive” that Kuaishou has increased the number of active users and time spent per user, while using less marketing and sales expenses than expected, analysts said.