Alibaba Group, China’s largest e-commerce company (with a market capitalization of more than $270 billion), founded by Jack Ma in 1999, offers a range of e-commerce services to meet online shopping needs through its online Taobao (C2C), Alibaba (B2B) and Tmall (B2C) platforms. The company has also expanded its international presence through global AliExpress and Lazada. The company is scheduled to report its third quarter 2022 results before the market opens Thursday, February 23.
The company’s largest sales were generated by domestic commercial retail. In Q3 2022 66% of revenue comes from Chinese commercial retail, while 5% came from international commercial retail.
Overall, Alibaba reported sales for the first half of 2022 stagnated (QQ1 – $205.6 billion, Q2 – $207.2 billion), pulled by a massive state embargo, pstrict regulatory policies and overall decline in the Chinese economy. In the upcoming earnings report, market participants are optimistic as the Chinese government relaxes the zero-Covid policy and expect the company to post revenue of $245.9 billion, up more than 18% year-over-year and up 1.36% quarter-over-quarter.
On the other hand, EPS was recorded at $11.73 and $12.92 in the first and second quarters, respectively. The general EPS expectation next quarter is $16.59up more than 28% over the previous quarter, but slightly -1.66% over the same quarter last year.
looking ahead China’s official approval of Ant Group’s capital expansion plan (from RMB 8 billion to RMB 18.5 billion) is interpreted by the public as a sign that the Govt withsigns of relaxation of the regulatory environment. The move could also be beneficial for other local tech stocks. Addition, launching the first blockchain node service in Q1 2023 can continue to improve AliCloud’s competitiveness in the market. In the last quarter AliCloud revenue up 4% compared to the same quarter of 2021. His Non-Internet Industry (NII) of customers grew by 20% year-over-year and accounted for 58% of its total cloud revenue. This shows that AliCloud is expected to grow steadily despite having a small market share (only 5%).
Technical analysis:
#Alibaba (BABA.s) increased in January this year after a series of positive reports and hit a yearly high of $121.15which is the highest level since July 2022. The company’s shares have since fallen into a technical correction and are currently trading 23.6% below FR at $106.25. The closest level of support is at 97 dollars (38.2% FR). A successful breakout of this level could encourage more selling pressure to the 100-day SMA, which crosses the FR 50.0% at $89.60. On the other hand, if earnings results are in line with or above market expectations, resistance will build $106.25 and then to $119.70 – $121.20 area is probable.
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Larince Zhang
Market analysis
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