Alibaba: Vast Earnings Beat And Return To Growth

seekingalpha2023-08-11

jack maAlibaba (NYSE:BABA) just released its fiscal first quarter earnings. The release widely beat expectations on revenue as well on earnings per share ("EPS"). Revenue came in at $32.29 billion, up...

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Sigit waloyo
2023-08-11
Sigit waloyo
Move on
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2023-08-11
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Revenue came in at $32.29 billion, up...</p>\n\n<a href=\"https://seekingalpha.com/article/4626592-alibaba-vast-earnings-beat-and-return-to-growth\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Alibaba: Vast Earnings Beat And Return To Growth</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAlibaba: Vast Earnings Beat And Return To Growth\n</h2>\n\n<h4 class=\"meta\">\n\n\n2023-08-11 07:44 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4626592-alibaba-vast-earnings-beat-and-return-to-growth><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>jack maAlibaba (NYSE:BABA) just released its fiscal first quarter earnings. The release widely beat expectations on revenue as well on earnings per share (\"EPS\"). Revenue came in at $32.29 billion, up...</p>\n\n<a href=\"https://seekingalpha.com/article/4626592-alibaba-vast-earnings-beat-and-return-to-growth\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4503","symbol_name":"景林资产持仓","start_time":0,"source_url":"https://seekingalpha.com/article/4626592-alibaba-vast-earnings-beat-and-return-to-growth","article_id":"2358240187","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2358240187","pubTimestamp":1691711093,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"jack ma Michael Loccisano Alibaba (NYSE:BABA) just released its fiscal first quarter earnings. The release widely beat expectations on revenue as well on earnings per share (\"EPS\"). Revenue came in at","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4503":"景林资产持仓","LU0821914370.USD":"贝莱德亚洲成长领袖A2","BK4122":"互联网与直销零售","LU1046422090.SGD":"Fidelity Pacific A-SGD","09988":"阿里巴巴-SW","LU1051768304.USD":"贝莱德新兴市场股票收益A6","BK4502":"阿里概念","LU0251143458.SGD":"Fidelity Emerging Markets A-SGD","BK4505":"高瓴资本持仓","BK4581":"高盛持仓","LU0651946864.USD":"贝莱德新兴市场股票收益A2","BK4504":"桥水持仓","BK4548":"巴美列捷福持仓","BK4565":"NFT概念","LU1048596156.SGD":"Blackrock Asian Growth Leaders A2 SGD-H","BK4554":"元宇宙及AR概念","LU1688375341.USD":"贝莱德中国灵活股票基金","BK4531":"中概回港概念","BABA":"阿里巴巴","IE00B0JY6N72.USD":"PINEBRIDGE GLOBAL EMERGING MARKETS FOCUS EQUITY \"A\" (USD) ACC","BK4585":"ETF&股票定投概念","BK4534":"瑞士信贷持仓","BK4533":"AQR资本管理(全球第二大对冲基金)","BK4575":"芯片概念","BK4558":"双十一","BK4587":"ChatGPT概念","BK4579":"人工智能","BK4535":"淡马锡持仓","LU1880383366.USD":"东方汇理中国股票基金 A2 (C)","BK4524":"宅经济概念","BK4220":"综合零售","BK4538":"云计算","BK4527":"明星科技股","BK4526":"热门中概股","BK4588":"碎股","LU1515016050.SGD":"Blackrock Emerging Markets Equity Income A6 SGD-H"},"translate_title":"阿里巴巴-SW：巨额收益击败并恢复增长","themeId":"","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"BABA":1,"09988":0.6},"content_text":"jack maAlibaba (NYSE:BABA) just released its fiscal first quarter earnings. The release widely beat expectations on revenue as well on earnings per share (\"EPS\"). Revenue came in at $32.29 billion, up 14%, marking BABA's first quarter of significant top-line growth in over a year.In addition to reporting key financial metrics, the release also shared new details on the company's planned spinoff of business units. In the previous quarterly release, we learned that BABA's management planned to spin off Alibaba Cloud, Freshippo and a few other business units. In the Q1 earnings release, we further learned that Alibaba has upped its investments in AI, having launched ModelScope, an AI community with 45 million members, and partnered with Fudan University on an AI research project.Overall, Alibaba's first quarter earnings release was quite good. In addition to posting strong growth in revenue and earnings, the release also featured some impressive segment data. For example, the international commerce segment grew revenue at 25% year-over-year and the Cloud segment grew adjusted EBITA at 106%. These were all very encouraging developments. Alibaba is preparing to spin off some of its segments, and the fact that they are doing well lends credence to the idea that they will be worth holding post-spinoff.So, there are lots of exciting things happening at Alibaba this year. Between the spinoff, the cloud segment's newfound EBITA profitability, and the company's expansion into Europe, big things are in the works. As we saw in the first quarter earnings release, some of these bets are already paying off.The question now is, what does the future hold? Alibaba's upcoming spinoffs mark the end of an era, the era of Alibaba as a diversified holding company. Once Alibaba Cloud and the other business units are spun off, the remaining entity will be a pure-play eCommerce company, with few side bets remaining. As I will show in the ensuing paragraphs, this fact is a positive for long term Alibaba shareholders, as the company's core commerce business has always been its most profitable segment, and the one that delivered the lion's share of revenue growth. Therefore, the upcoming Alibaba spinoff will be a bullish catalyst for investors.In this article, I explain why I remain bullish on Alibaba following its first quarter earnings release. I explore the financial factors that contribute to my bullishness-namely the Q1 results-and also look at the company's future trajectory, ultimately concluding that it is better than its recent past.Earnings RecapIn the first quarter, Alibaba delivered:$32.29B in revenue, up 14%.$5.86B in operating income (\"EBIT\"), up 70%.$4.74B in GAAP net income.$6.2B in adjusted net income up 48%.$5.39B in free cash flow, up 70%.$2.40 in adjusted EPS, up 48%.$1.83 in GAAP EPS.Overall, the release showed remarkable growth, and a major recovery in BABA's earnings power. Particularly impressive were the cloud segment results, which showed increased profitability and growth compared to the year-ago quarter. If Alibaba can keep up its recent momentum, then the cloud segment will make a large contribution to the company's earnings in the future. Spinoff or no, that's a bullish indicator.The SpinoffsBy far the most interesting thing happening at Alibaba right now is its spinoff program. The company plans to spin off Alibaba Cloud to its shareholders very soon, other spinoffs will be coming later. This move was announced several months ago. The Q1 earnings release did not reveal any new information about the spinoffs but we might hear something about them on the earnings call, which is underway right now.Alibaba's upcoming spinoff is an unambiguous positive for investors. Alibaba has always been a fairly 'uneven' company, with high profitability in the core commerce business but low or no profits in the Cloud and media segments. The coming spinoff will allow investors to hold Alibaba's business units separately, which is a good thing because some of them are much stronger than others. The media group, for example, is nowhere near as strong as the international commerce group. Its revenue had been declining from last year until the first quarter of this year, and its EBITA earnings are just barely positive. BABA's entertainment segment does have some interesting things going on, such as a popular streaming platform, but on the whole its performance makes it a business that some BABA shareholders would prefer to sell. After it is spun off, shareholders will have the opportunity to do that, while still holding Alibaba's profitable commerce businesses. So, the spinoff is a very welcome and shareholder friendly move.Segment ResultsSpeaking of segments, we should touch on their individual performance, since they will soon become independent publicly traded companies.In the most recent quarter, Alibaba's China commerce, international commerce, cloud and media groups delivered the following results:China commerceInternational commerceAlibaba CloudMedia & entertainmentRevenue$15.85B, up 12%$3.05B$3.46B, up 4%$742M, up 36%EBITA$6.8B, up 9%($58M), improved by 70%$53M, up 106%$9MClick to enlargeOverall, the results from most of Alibaba's segments were pretty good. Particularly impressive was the cloud segment's 106% EBITA growth; I was not expecting strong growth from that segment, and to be fair, the revenue growth was rather low. Apart from that, the results in international commerce were quite good, as were the results in Chinese commerce.ValuationHaving looked at Alibaba's most recent earnings release, we can now turn to its valuation. You can check out the multiples that Seeking Alpha Quant has on file, but I'm going to calculate the important ones by hand, as the Q1 earnings release changes them slightly.Alibaba had the following per-share fundamentals in the previous four quarters (the historical data is from Seeking Alpha Quant, the Q1 data was tabulated by the author directly from BABA's earnings release).Q1 2023Q3 2023Q4 2023Q1 2024TOTALRevenue per share$11.01$13.81$11.74$12.91$49.47Adjusted earnings per share($1.09)$2.6$1.33$2.40$5.24Book value per share$50.76$54.69$56.16$62.72$62.72Click to enlargeBased on the data above, and Yesterday's closing price of $94.85, we get the following valuation multiples:P/E: 18.1.Price to book: 1.51.Price to sales: 1.92.As you can see, Alibaba stock remains cheap at today's prices, despite the significant gains it has made since its October 2022 lows. The valuation here is much cheaper than anything you'll find in U.S. big tech, and it even compares favorably to some of BABA's Chinese peers. On the whole, BABA stock appears to be undervalued.Risks & ChallengesAs we've seen, Alibaba just put out a good earnings release, and its stock remains fairly inexpensive. It's a pretty good picture overall. However, Alibaba stock is not without its risks. Competition in Chinese e-commerce is keener than it was in the past, and the political situation between China and the U.S. remains tense. Investors will want to keep the following risks and challenges in mind before taking positions in BABA:Competition. As a result of China's 2021 tech crackdown, competition in Chinese tech is fiercer than it was in the past. Alibaba used to have policies like exclusively supporting Alipay over WeChat payments, and \"choose one of two\" (i.e. forcing vendors to commit to Alibaba or not use it at all). In the 2021 crackdown, China's government banned all of these practices. As a result, Alibaba's competitive position has weakened, and its pricing power has been reduced. So, we would expect Alibaba's domestic growth and margins to be weaker going forward. This point does not apply to the international commerce business, though, so it's reasonable to think that the results from that segment will continue to be good for some time.U.S./China relations. The relationship between the U.S. and China has been a sticking point for Alibaba and Chinese stocks in general for some time. The two countries don't see eye to eye on several issues, including chips, TikTok, and the status of Taiwan. These risks are serious ones that are worth bearing in mind. In general, Alibaba stock is quite volatile, and not suitable to extremely risk-averse investors. Nevertheless, it is a rare value opportunity in a tech industry full of richly valued names. For experienced value investors, the stock may be worth the investment at today's prices.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[{"id":207621887467656,"gmtCreate":1691717598983,"gmtModify":1691717603506,"author":{"id":"4106663006772770","authorId":"4106663006772770","name":"Sigit waloyo","avatar":"https://static.itradeup.com/news/793d6f1c1bc32e2f7cdb8ef7a8931a1c","vip":1,"crmLevel":1,"crmLevelSwitch":1},"htmlText":"Move on","listText":"Move on","text":"Move on","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/207621887467656","repostId":2358240187,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":207602162102336,"gmtCreate":1691712769187,"gmtModify":1691712773647,"author":{"id":"4115290449563752","authorId":"4115290449563752","name":"Longs","avatar":"https://community-static.tradeup.com/news/824b5073731ab909a8d4e129caa8d995","vip":1,"crmLevel":6,"crmLevelSwitch":0},"htmlText":"👌🏼🙏🏼","listText":"👌🏼🙏🏼","text":"👌🏼🙏🏼","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/207602162102336","repostId":2358240187,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":18,"commentSize":0,"repostSize":1,"favoriteSize":1,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2358240187"}