Alibaba Group Holding Limited (NYSE:BABA) announced that US$25.3 billion (RMB168.2 billion) of gross merchandise volume (GMV) was settled through Alipay on November 11, 2017, (Single’s Day) an increase of 39% compared to 2016. Mobile GMV settled through Alipay accounted for 90% of total GMV.
US Retailers had a record $3 billion on Black Friday and then $3.45 billion on Cyber Monday last year. Both were records. Alibaba had over 5 times more than both those days combined.
Alibaba reported total quarterly revenue of RMB 55.1 billion ($8.3 billion), beating expectations of RMB 52.2 billion according to a Reuters poll with 61 percent growth. Net profit for the period increased by 146 percent to reach RMB 17.7 billion ($2.7 billion).
Alibaba raised its forecast for annual revenue growth from 49 percent to 53 percent as a result of an investment in logistics affiliate Cainiao which gave the firm a majority ownership.
Revenue from overseas also grew, up 115 percent year-on-year to RMB 2.9 billion ($433 million), thanks primarily through Lazada in Southeast Asia and the international Aliexpress service.
Alibaba now has 488 million annual active consumers.
Alibaba added 11 million active consumers three quarters ago,
12 million two quarters ago,
and 22 million last quarter.
Alibaba is also the leading cloud player in China. That growth narrative is also accelerating. Cloud computing revenues rose 96% in the first quarter of 2018. They rose 99% in the second quarter.
BABA stock trades at just 37 times fiscal 2017 earnings estimates of $5.04. Earnings are expected grow about 30% per year from that $5.04 base to $8.46 in fiscal 2019. A 37 times multiple for 30% growth is very cheap. That is a price-to-earnings/growth (PEG) ratio of just 1.2.
The S and P 500 is trading at 19.7 times 2017 earnings for roughly 10.7% annual growth expectations into 2019. That is a PEG ratio of about 1.8.
From a fiscal 2018 earnings base of about $6.50, multiyear growth potential will look more like 20% (versus 30% from fiscal 2017). If you apply a market PEG of 1.8 to that 20% growth, you get a “fair” P/E multiple of about 36. A 36-times multiple on $6.50 fiscal 2018 earnings implies a one-year price target of just under $235.
A market PEG of 1.8 to 22% growth would be a PE of a fair PE multiple of 39.6. Implied target would be 257.
A market PEG of 1.8 to 25% growth would be a PE of a fair PE multiple of 45. Implied target would be 296.
The Alibaba Economy at Scale
* Total GMV settled through Alipay was RMB168.2 billion (US$25.3 billion), an increase of 39% compared to 2016
* Total mobile GMV settled through Alipay was approximately 90% of total GMV, compared to 82% last year
* More than 140,000 participating brands and merchants
* Alipay processed 1.48 billion total payment transactions, up 41% from 2016, and processed 256,000 transactions per second at peak
* Alibaba Cloud processed 325,000 orders per second at peak
* Cainiao Network processed 812 million total delivery orders
* The first delivery arrived 12 minutes and 18 seconds after midnight
Globalization: Power of the Chinese Consumer
60,000 international brands and merchants available to Chinese consumers
225 countries and regions with completed transactions
167 merchants each generated more than RMB100 million (US$15.1 million) in sales, 17 merchants surpassed RMB500 million (US$75.4 million) in sales, and 6 merchants surpassed RMB1 billion (US$150.9 million) in sales
Top countries selling to China include: Japan, United States, Australia, Germany, South Korea
Disclosure – Brian Wang at Nextbigfuture owns Alibaba stock
SOURCES – Investor Place, Alibaba, TechCrunch, Ecommerce insights, eMarketer