- Chinese e-commerce giant Alibaba is expected to post flat quarterly profit and modest sales growth when it reports results for its September quarter on Nov. 17.
- Analysts expect adjusted earnings of 11.23 yuan per U.S. traded share, compared with 11.20 in the prior-year quarter.
- Option traders recently turned bullish on Alibaba amid signs China's regulatory crackdown on the company is easing.
- China's slowing economic growth remains a major risk after a muted Singles Day promotion.
Chinese e-commerce and cloud computing giant Alibaba Group Holdings Ltd. (BABA) heads into its quarterly earnings report riding an uptick in investor optimism despite a sharp slowdown in China's economic growth this year.
Alibaba is expected to post adjusted earnings of 11.23 yuan ($1.58) per U.S.-traded share for the quarter through September, a two-tenths of a percent increase year-over-year after four straight quarters of profit declines, based on the average estimate of analysts tracked by Visible Alpha. Revenue is expected to be up 4% after a marginal drop in the June period, its first quarterly sales decline as a public company, following increases of less than 10% in each of the two prior periods. In the 14 preceding quarters, revenue growth ranged from a low of 29% to a high of 64%.
Option traders who have driven the stock's put-to-call ratio to near a record low may be counting on an upbeat market response if Alibaba confirms recent reports of progress with Chinese as well as U.S. regulators. China's harsh regulatory crackdown on the company and other large tech firms appears to be easing, with one investment analyst noting Alibaba recently received a positive progress report from Chinese regulators for improvements in areas including protections for merchants and users.
Meanwhile, U.S. inspectors from the Public Company Accounting Oversight Board reported they received co-operation from Hong Kong and Chinese auditors of Chinese companies regarding reviews of U.S. listings, raising hopes for a resolution to a conflict that has jeopardized Alibaba's listing on the New York Stock Exchange.
Interest in Chinese stocks has revived recently after the Chinese government took initial steps to moderate quarantine measures under its "Zero-Covid" policy, and offered a package of relief provisions addressing a real estate slump that's hurt consumer spending and provincial tax revenues. That's helped boost the value of Alibaba by 20% in the past five trading days.
Meanwhile, there are few indications of a swift recovery for China's economy and Alibaba's sales. Alibaba and rival JD.com Inc. (JD) broke with precedent this year in opting not to disclose online revenue from Singles Day, a major Chinese online shopping promotion, amid forecasts that sales will be disappointing.
Alibaba Earnings History
Alibaba's June quarter revenue and earnings topped market expectations on Aug. 4, and its U.S. traded shares rose nearly 2% that day. Alibaba gained almost 15% in New York trading on May 26 after March quarter earnings and revenue beat analysts' estimates.
Alibaba Key Stats
|Estimate for Q2 FY 2023||Q2 FY 2022||Q2 FY 2021|
Per ADS (Yuan)
|Revenue (Yuan Billion)||209.2||200.7||155.1|
Source: Visible Alpha
Visible Alpha. "Financial Estimates."
XE. "Yuan-U.S. Dollar."
Visible Alpha. "Financial Estimates."
Bloomberg. "Alibaba Stock Primed for Rebound on Sales Recovery."
Barron's. "BofA Strategists Turn Bullish on China. There Are Some Caveats."
Reuters. "U.S. Watchdog Gained 'Good Access' to Audits of Chinese Firms - Sources."
Bloomberg. "Alibaba Added to SEC List of Chinese Firms Facing Delisting."
U.S. Securities and Exchange Commission. "Holding Foreign Companies Accountable Act (HFCAA)."
Bloomberg. "China’s Looser Covid Rules Tested With Surging Outbreak."
Financial Review. "Relief for China’s Property Sector as Restrictions Ease."
Yahoo! Finance. "Alibaba Shares."
Bloomberg. "Alibaba Singles’ Day Sales Kept a Secret for the First Time."
Jing Daily. "Alibaba and JD.com Keep Double 11 Revenues Secret; the Chinese Consumer Is Clearly Changing."
CNBC. "Alibaba Shares Rise Nearly 2% After Earnings Beat—But Reports First Flat Revenue Growth in History."