Alibaba, Tencent and post lowest revenue growth on record


Alibaba, whose head office is pictured here on May 26, said its GMV of online physical goods in China, excluding unpaid orders, fell further in April, with a “low teenage” drop from to a year ago.

Str | AFP | Getty Images

BEIJING — Chinese tech giants Alibaba, Tencent and all recorded their slowest ever revenue growth as Covid and Beijing’s tech crackdown took their toll.

Since fall 2020, China has fined and scrutinized companies for alleged monopolistic practices. A resurgence of Covid since March has added pressure on growth, with travel restrictions and stay-at-home orders disrupting supply chains and logistics.

Reflecting the economic slowdown, e-commerce giant Alibaba on Thursday reported a drop in online shopping for its two main Chinese platforms in the quarter ended March 31.

The company’s total revenue rose 9% in the latest quarter from a year ago – the slowest on record, according to financial history available via Wind Information.

Tencent’s revenue for the quarter was little changed, while saw an increase of around 18% from a year ago – the two slowest on record, according to data from Wind.

Alibaba shares soared nearly 15% in New York overnight after reporting better-than-expected results. U.S.-listed shares of rose 5%, while those of Tencent climbed more than 1% in Hong Kong on Friday.

Chinese consumer demand

“Macro-sensitive stocks” such as Alibaba and Baidu could temporarily benefit from low earnings expectations and anticipation that Shanghai is about to end its lockdown, Nomura analysts Jialong Shi and Thomas Shen said on Friday.

“However, we believe the sustainability of this rally will likely be dictated by the pace of recovery in Chinese consumer demand, which the market will likely watch closely over the coming months,” the analysts said.

China’s already sluggish retail sales fell further in April, down 11.1% from a year ago.

Even online sales of physical goods fell 1% — worse than during the initial shock of the pandemic in 2020. That’s according to CNBC’s calculations of official data available via Wind Information.

Nomura analysts said many companies are deciding to cut marketing spending in order to weather the difficult environment, “which could lead to a delayed recovery in the advertising industry even though China has completely exited the mode of lockdown”.

Alibaba said that excluding unpaid orders, gross merchandise value (GMV) saw a “low single-digit decline” from a year ago, according to a transcript of the FactSet earnings call. . GMV is a measure of goods sold over a defined period of time.

The company said its online physical goods GMV in China, excluding unpaid orders, fell further in April, with a “low teenage” decline from a year ago. The company said more than 80 cities in China – mostly national economic centers – reported confirmed Covid cases in April. This accounts for more than half of Alibaba’s Chinese retail market GMV.

For the April-June quarter, analysts at China Renaissance said in a report that they expect Alibaba’s China trade GMV to fall 13.5% year-on-year, down 6% of overall net sales.

bright spots

Other Chinese companies that reported results for the last quarter painted a more optimistic picture.

Baidu: Chinese tech company Baidu’s slight 1% rise in quarterly revenue was only the worst since 2020, a year that saw two quarters of revenue declines, according to data from Wind. The search engine giant has expanded in recent years into cloud services and robotaxis.

“We are seeing solid progress in its various AI initiatives,” Daiwa Capital Markets analysts wrote in a report Thursday. They noted that Baidu’s cloud AI revenue grew 45% year-over-year in the first quarter, faster than the company’s peers.

Father : Grocery delivery company Dada, which is now majority-owned by JD, posted a 21% year-over-year increase in revenue in the last quarter, the best since the third quarter of 2021, according to Wind. Dada said it was one of the businesses approved by the local government to maintain operations during the shutdowns.

The company more than tripled GMV and doubled the number of active customers in the 12 months to the end of March, compared to the same period two years ago.

Learn more about China from CNBC Pro

Kuaishou: Emerging short-video, live-streaming and e-commerce app Kuaishou reported 19% revenue growth in the last quarter, the slowest on record, though only dating back to the third quarter of 2020, showed Wind.

“Despite recent macro-economic uncertainties due to COVID, we believe Kuaishou’s bottom-up efforts to gain market share in advertising and e-commerce and effective cost control could continue to help Kuaishou outperform on fundamentals,” he said. writes UBS analyst Felix Liu and a team. the week.

It’s “impressive” that Kuaishou saw growth in active users and time spent per user, while using lower-than-expected sales and marketing spend, analysts said.


About Author

Comments are closed.