Alibaba #BABA #Fundamentals Overall results for the last q | Investor's sight: Stocks, Crypto, NFT
Alibaba #BABA
#Fundamentals
Overall results for the last quarter:
Capitalization: 318.8 billion
TTM Revenue: 38.07B(+12%)
EBITDA: 8.1B(+8%)
Profit: 7B(-25%)
P/E 2021: 30, fwd p/e 2022: 13-15
P/B: 2
Revenue segments:
Trade in China: 71%
International trade: 7%
Cloud Computing: 8%
Local consumer services: 5%
Cainiao logistics services: 5%
Other: 4%
The report is rather neutral. Fiscal 3Q 2022 revenue rose 12% YoY to 38.07B. At the same time, profit decreased by 25%.
Pros and cons:
◈ The company continues to grow and there are no good reasons to stop growth yet. However, the current situation in the world is a risk for the Chinese market, since any economic aggravation of China with the US or a weakening of the dollar can cause a crisis in China. Produced goods can rise in price in $ and this will form a whole chain of problems. However, at the moment everything is fine.
◈ Cloud computing is one of the fastest growing segments of the company. It grew by 20%, bringing in 8% of the brand's total revenue to date. Alibaba predicts that the cloud market in China will grow 5 times, to 1 trillion yuan ($160B) by 2025. The segment will allow the company to diversify its business.
Moreover, this segment posted a positive EBITDA (+134 million yuan in 4Q2021 / $21 million), with a margin of 1%. If profitability increases to 20%, which is not much, the annual EBITDA of the segment will already be estimated at $160m, and if the market grows 5 times, then about $800m.
On March 22, Alibaba management announced a 60% increase in the buyback program from $15B to $25B. The program will be valid until March 2024, which will support quotes.
◈ The growth of expenses to income negatively affects the company in recent years. TTM's net margin is 15%, up from 20% a year ago and 26% 5 years ago. The operating margin is 11% versus 12% and 30% respectively. Such a drop in profitability is a negative for the company.
The drop in brand performance is largely due to the need to hold the market. Alibaba controls about 80% of the e-commerce market in China. The share is not growing, but new competitors are emerging, such as Tencent Holdings. Foreign markets still bring only 7% of revenue, as the share of foreign giants is large.
The company was fined the previous year, causing serious damage to profits.
China's unpredictable private sector policy is a major risk for Chinese companies. We all remember the TAL example.
Conclusion:
Ahead of the annual report, however, most likely, despite the growth in revenue, other indicators will not be record-breaking. The company's FWD P/E 2022 was 13-15 with a high degree of probability, but it suggests a quite fair assessment.
Not an individual investment recommendation
