The shares of Alibaba and JD.com were boosted by better-than-expected quarterly trading updates last week – the former rose to a 52-week high of $98.35, while the latter also received a fillip, although at $24.6 a share, JD.com’s share price is some 40% off its one-year highs.
Chief executive Daniel Zhang said that Alibaba “had an outstanding quarter, with results showing “the scale and leverage of our ecosystem, as we strengthen our competitive positions in core commerce, cloud computing and digital media and entertainment”.
Meanwhile, Richard Liu, chief executive of JD.com, noted “With our reputation for high-quality online shopping and same-day delivery already cemented with Chinese consumers, we are taking steps to further extend that advantage through efforts like our new strategic alliance with Walmart and Chinese online supermarket Yihaodian.”
The spotlight remains on Alibaba, however, given its growth rate as well as its product mix and scale in e-commerce.
While a previous trading update failed to convince investors, first-quarter results for the three months ending June 30 saw a 59% year-on-year surge in revenues, which hit RMB32.1bn ($4.8bn) from RMB20.2bn one year earlier.
By comparison, JD.com’s growth rate was lower at group level, with second-quarter sales standing at RMB65.2bn, up 42% year-on-year, although “revenues from services and others, mainly from the company’s e-commerce platform business were RMB5.5bn ($0.8bn), an increase of 67% from the second quarter of 2015”.
Alibaba’s ‘core commerce’ business – which includes Taobao, Tmall, Rural Taobao and ‘international’ operations – was responsible for RMB27.2bn of group sales. However, its other units – cloud computing, digital media and entertainment and a few other businesses – reported losses at operating level.
That said, the cloud division deserves a particular mention: although still in the red, losses narrowed on the back of rapidly growing sales, up 156% year-on-year to RMB1.2bn.
Adjusted earnings before interest, tax and amortisation (EBITA) associated to core commerce activities came in at RMB16.6bn ($2.5bn), up 38% year-on-year, yielding an adjusted EBITA margin of 61%. Non-GAAP diluted earnings per share, meanwhile, stood at RMB4.90 ($0.74), up 33% year-on-year.
The number of monthly active users (MAUs) was another key highlight at Alibaba as “mobile MAUs in June reached 427m, an increase of 17m over March 2016, while annual active buyers on our China retail marketplaces increased to 434m, a net addition of 11m annual active buyers from the prior quarter,” it said.
Finally, the group generated RMB12.7bn ($1.9bn) of non-GAAP free cash flow (FcF) during the quarter, while it spent $2bn in share repurchases at an average price of $74.1 a share, according to estimates.
In late 2015, JD.com – whose unadjusted FcF was almost RMB8.1bn in the past quarter – announced a buyback programme under which the company would “repurchase up to $1bn worth of its ADSs [American Despositary Shares] over the following 24 month (and) as of June 30, 2016, the company had repurchased approximately 2.4m ADSs for approximately $51.5m”.
Source: Transport Intelligence, August 16, 2016
Author: Alessandro Pasetti