The Chinese internet company beat earnings estimates by $0.19 last quarter and Barclay’s recently upgraded its shares to ‘Overweight’.
Alibaba Group Holding Company (BABA)
From Internet Wealth Builder
Alibaba is the Chinese equivalent of Amazon. There are several ancillary businesses attached to this massive e-commerce company, which operates under the Alibaba Group Holdings banner. They include Taobao, Tmall, eTao, and Juhuasuan. The company has 434 million active buyers.
Financial results for the third quarter of fiscal 2017 (to Dec. 31) were encouraging. Revenue was up 54% year-over-year in renminbi (RMB) terms, to the equivalent of US$7.7 billion. Earnings per share were up 49% from RMB4.90 to RMB6.94 (about US$1 per share).
Maggie Wu, chief financial officer, said that in light of the performance in the first three quarters the company is adjusting its fiscal 2017 revenue guidance to year-over-year growth of 53%. That compares with the old forecast of 48%.
She also said the company generated $4.9 billion in free cash flow in the quarter, which is being used to invest in such key areas of growth potential as cloud computing and digital media and entertainment.
The investments in cloud computing are already paying off, big time. Paying customers for the service grew to 765,000 in the latest quarter, an increase of about 114,000. Revenue was RMB1,764 million (US$254 million) during the quarter, reflecting a 115% year-over-year growth rate.
This growth story is still intact, despite recent concerns about the Chinese economy. Buy.
Glenn Rodgers in Gordon Pape’s Internet Wealth Builder, www.buildingwealth.ca, 1-888-287-8229, April 3, 2017