Knight Investment Limited – Alibaba – Continued Upward Revenue Trend for 2018

HONG KONG - Sept. 3, 2018 - PRLog -- China-based Alibaba Holdings posted better-than-expected revenues in its fiscal first quarter of 2019 but missed on earnings. It posted revenues of 80.92 billion yuan ($12.2 billion) in the quarter, which was 0.2% better than analysts' estimate. However, adjusted EPS of 8.04 yuan lagged the Wall Street estimate of 8.15 yuan.

Alibaba's revenues have increased in the double digits YoY (year-over-year) for the past eight quarters. In the fiscal first quarter, its top line grew significantly by 61% YoY, driven by its strong e-commerce business, fast-growing cloud business, and improved revenue growth from its Chinese commerce retail business. Alibaba's merger with Cainiao Network and Rajax Holding (also known as Ele.me) also drove its revenue growth.

Alibaba generated a 61% YoY increase in revenues in fiscal Q1 2019 in its core commerce division, including online shopping sites Tmall and Taobao. Revenue growth was backed by growth in monthly active users of its Taobao app. Alibaba has entered into many partnerships to boost its core commerce revenues. Earlier in August, Alibaba tied up with luxury jeweler Tiffany and retailer Kroger to sell their products on Alibaba's Tmall.

Alibaba Cloud, a cloud computing business, saw its revenue rise 93% YoY and opened new data centers worldwide. The company also rolled out new products in key markets such as Europe to boost market share and revenues. According to Gartner, Amazon continued to lead the worldwide cloud business with 51.8%, followed by Microsoft's share of 13.3% in 2017. Alibaba had a 4.6% market share in 2017, while IBM had a share of 1.9%.

Higher investments to dent margins
Alibaba's operating margin reduced to 10% in the three months that ended in June, from 15% in the previous quarter and 35% in the same period last year. The company has been making rapid investments in new areas, which is bringing down its margins. Higher share-based compensation expenses related to Alibaba affiliate Ant Financial also dented its margins. The company continues to expect margin pressure in the near term as it continues to invest in its brand.

Knight Investment has been a long proponent of Alibaba and the slight slowdown in margins is a small price to pay for the strategic alliances made over the course of 2018 as it positioned itself to compete against its American competitors.

Knight see's Alibaba Group Holding Limited as a Strong Buy, to find out more contact us today at info@knight-investment.com or visit our website www.knight-investment.com to find out more about their services and products available.