Great article, thanks!
An in depth analysis of Alibaba's latest earnings dated 18May2023
@KYHBKO：
I have been investing in Aliaba (BABA) for the last few years and thus, I could write with investor bias. BABA’s recent performance Alibaba's revenue, net income, free cash flow, retained earnings, assets, and liabilities have all grown significantly over the past few years. In 2022, Alibaba's revenue grew by 10% to $247.8 billion. Net income grew by 2% to $35.9 billion. Free cash flow grew by 16% to $7.5 billion. Retained earnings grew by 18% to $132.3 billion. Assets grew by 14% to $844.5 billion. Liabilities grew by 13% to $371.3 billion. This growth is due to a number of factors, including the continued expansion of Alibaba's e-commerce business, the growth of its cloud computing business, and the expansion of its international business. Alibaba's growth is expected to continue in the coming years. The company is investing heavily in new businesses, such as artificial intelligence and blockchain, and it is expanding its presence in new markets. Here is a table showing the growth or decline in Alibaba's revenue, net income, free cash flow, retained earnings, assets, and liabilities from 2021 to 2022: 2021-2022 metrics My observations for 2021-2022 metrics above: There is a good 10% growth in revenue. With a corresponding 2.8% growth in net income, the expenses are outgrowing the revenue. USD$36B is still good profits and hopefully, some of these will be re-invested into CAPEX, technologies and AI for future value creation. In terms of free cash flow (FCF), I am happy to see a 15.38% growth to $8B in 2022. Despite a 2.8% growth in net income, I am glad to note a 16.2% growth in retained earnings (profits after dividends paid out to investors). This is trending in the right direction. I am also happy to see that the growth in assets (13%) is greater than the growth in liabilities (11%). Note that the above represents a quick glance at some of my favourite financial indicators. To derive a better understanding, let us dive into the latest earnings’ financials in greater detail. Latest BABA’s earnings (dated 18May2023) Alibaba Q4 FY23 (ending March 2023): Cloud Intelligence Group spin-off approved. • Revenue +2% Y/Y to $30.3B ($410M beat). • Non-GAAP EPADS $1.56 ($0.21 beat). • Operating margin 7% (-1pp Y/Y). • Free cash flow margin 15%. Twitter user “App Economy Insights” has provided the excellent earnings summary above. amount in RMB$ millions From the income statement (comparing the years ending 31 March for 2022 & 2023), here are my observations: There is an increase in revenue by 1.83% but the net income has increased by 39.28%. This implies that there is a good effort to reduce their expenses and hopefully, we can see better costs management going forward. It is good to see the efforts to bring down sales & marketing expenses by 13.61%. However, I wish to flag my concerns in "general and admin expenses” and “amortization & impairment of intangible assets” as these have demonstrated much growth by 32.14% and 15.94% respectively. I am glad to see that BABA has reduced the “weighted number of shares (per ordinary shares)” from 21,558M to 20,980M. Amount in RMB$ millions Observations from the balance sheet (comparing 31 Mar 2022 with 31 Mar 2023 balance): Total assets have increased from $1,697B to $1,753B by 3.39% Total liabilities have increased from $613B to $630B by 2.73% It is good that the growth rate in assets is greater than that of liabilities. Thus, it is not surprising to note that total equities have grown by 3.78%. I wish to highlight that Retained Earnings have grown to $599B at a rate of 6.29%. Observations from cashflow (for the year ended 31 Mar, between 2022 & 2023): Cashflow from ops grew by 39.92% Cashflow from investing fell by 31.77% (this is good news) Cashflow from finance has increased by 1.82% My investing muse Baba has demonstrated much-improved financials (based on 1 year’s performance). Though revenue has increased by 1.83%, net income has improved by 39.28%. In the balance sheet, we have improved net assets (assets minus liability) and we can see 6.29% growth in our retained earnings. For our cash flow, there is good growth in our cash flow from ops. Overall, Baba has a much-improved financials and thus, we can draw more confidence though there is a notable drop in e-commerce revenue within China. Thus, let us monitor closely with prudence. @TigerStars $Alibaba(BABA)$ $Alibaba(09988)$
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