To The Moon

$Alibaba(BABA)$ released the quarterly financial report as of June 30th, which is the first quarter of fiscal year 2023 in Alibaba's fiscal year. Previously, the market thought that Ali would suffer a great headwind in June Quarter. Whether it is supply chain, industrial competition, network security and other issues, Ali may enter a negative growth rate, and the pressure comes to the profit side.

By previous standards, Ali 23Q1's performance exceeded expectations.

• The overall income was 205.6 billion yuan,-0.09% year-on-year, but exceeded the expected 204 billion yuan;
• The adjusted EBITDA was 41.1 billion yuan,-15.4% year-on-year, exceeding the expected 34.2 billion yuan;
• After adjustment, the diluted EPS was 11.73 yuan,-29.3% year-on-year, higher than the expected 10.33 yuan.

What the company wants us to know

China's business income was 141.9 billion yuan, with a year-on-year growth rate of 1.58%, exceeding the market expectation consensus of 140.6 billion yuan. In other words, of the 1.6 billion yuan in total revenue exceeding expectations, 1.3 billion yuan came from domestic business income.

The company mainly mentioned the impact of supply chain and logistics from April to May, which also caused the lowest revenue growth rate in history (all of which were double digits before), which also had a great impact on wholesale business. The recovery in June, especially the shopping season, has a very strong impact, especially the 88VIP members have reached 25 million, with an average annual consumption of 57,000 yuan per member, which has become an important purchasing power. In addition, Amoy, which directly hits the supply chain, and Amoy, which provides fresh groceries, both achieved very high growth in June. This has also become an important reason why the overall business income in China exceeded expectations.

The income of the international business sector is 15.45 billion yuan, which is expected to be 15.99 billion yuan. This cannot be said to fall short of expectations, because even the exchange rate has a great influence. The depreciation of the euro, the conflict between Russia and Ukraine, and the depreciation of Turkey's exchange rate all occurred in several major areas of Ali's international business. While Lazada is obviously an increment in Southeast Asia, orders have increased by 10%, which can wait$Sea Ltd(SE)$Shopee's financial report was released and compared. However, after the adjustment of the overall international business, EBITDA still lost 1.57 billion yuan. Although the loss was reduced a lot, the international business always delayed Ali's profits.

Also noteworthy is Ali's logistics business, Rookie, which has added the "last mile" distribution business in Europe and added 770 smart cabinets, and$Amazon.com(AMZN)$The competition may be more direct.

Two aspects of local life, hungry business, are also negatively affected by Shanghai.However, the unit economic benefit of the whole quarter returned to positive, mainly due to the increase in order amount. Consumption power is still strong.Travel businesses such as Gaode and Feizhu also achieved strong growth in June. Therefore, the overall revenue increased by 21% year-on-year to 10.6 billion yuan.

Alibaba Cloud's revenue was 17.69 billion yuan, with a year-on-year growth rate of only 10.2%, which was actually less than the expected 18.22 billion yuan. The company mentioned that the revenue from non-Internet accounted for 53%, and the revenue of Internet companies declined for several reasons:First, Tik Tok's big customers, second, the changes of Internet companies in the education industry, and third, many startups have encountered a cold winter.From this aspect, we can also see that Alibaba Cloud will focus on enterprises that rely more on people's livelihood, so it has also strengthened its investment in data centers and PAAS (Platform as a Service) this quarter.

What the company implies us?

First, pay attention to "income exceeding expectations". In fact, the market consensusGenerally, it is the average value of analysts' predictions of many securities firms, that is to say, there are always high and low. The average is 204 billion RMB, which is very interesting.Most of the performance expectations given by domestic Chinese-character brokers are lower than thisThat is to say, many foreign brokers have given higher expectations. For example, CITIC Securities' expectation is 198.8 billion, while Xiaomo's expectation is 206.5 billion.

Most of the analysts of domestic securities firms are in Beishangguangshen, which is precisely the city where Q2 was most affected by the epidemic. Analysts have personally experienced the headwind faced by "Chinese business", and it is understandable to give lower expectations. At the same time, Amoy Live also lost the head anchors such as Wei Ya and Li Jiaqi, which further deepened the pessimism of analysts.

Is it true that foreign brokers are more optimistic about Ali's business than Chinese analysts? In fact, it may not be, because many foreign brokers finally gave the expected value at the end of June and early July, and even at the end of May, that is, they did not follow up in time. However, those who give early expectations tend to have higher values, which raises the average value.

In this way, Ali's performance actually exceeded the expectations of domestic analysts. This is also an important reason why it can rise a lot before the market.

And then we need to focus onCompetition trend of domestic e-commerce business in the same industry. We have noticed that the financial report specifically stated thatGMV of clothing, consumer electronics and other categories declinedThe rising categories are health care products and outdoor activities. Clothing is almost the base camp of Amoy Department, and short video e-commerce companies such as Douyin and Kuaishou have brought the greatest impact on Department clothing. Therefore, if this downward trend continues, Taobao's ecosystem may change.

Especially, the anchor change after Q2 also makes Amoy face greater pressure in live e-commerce.

In addition, Ali's repurchase in Q2 is also very strong. The $35bn buyback program spent $35bn and bought back 309m shares, or 1.5 percent of the total share capital. At present, there is still $12 billion unused. For Q3, strong repurchase can still be called an important factor of stock price support.$Alibaba(09988)$