Alibaba profit surges 124pc to 47b yuan

Chinese e-commerce giant Alibaba (9988) beat quarterly revenue and profit estimates yesterday as its core commerce and cloud computing businesses benefited from the coronavirus-led shift to online shopping and working from home.

Alibaba saw revenue rise 34 percent to 153.75 billion yuan (HK$172.23 billion) for the quarter ended June, while its net profit surged 124 percent to 47.59 billion yuan. Both the figures surpassed median projections - 148.1 billion yuan and 36.2 billion.

Ant Group, Alibaba's 33 percent-owned financial affiliate, saw profit increase six-fold to 9.2 billion yuan during the quarter, offering a glimpse into its books in the run-up to a mega initial public offering in Hong Kong and mainland China.

Alibaba's shares opened 1.5 percent lower in New York last night.

"Our domestic core commerce business has fully recovered to pre-Covid-19 levels across the board," chief financial officer Maggie Wu Wei said.

The company's core commerce reported a 34 percent growth in revenue to 133.32 billion yuan. Its annual active consumers in China grew 16 million to 742 million. Revenue from cloud computing surged 59 percent to 12.35 billion yuan.

Revenue from innovation initiatives and others fell 6 percent to 1.09 billion, as it reclassified revenue from self-developed online games business to the digital media and entertainment segment. The digital media and entertainment sector saw revenue climb 9 percent to 6.99 billion yuan.

At the same time, Alibaba needs to fend off growing competition from the likes of JD.com (9618), Tencent (0700) and ByteDance across businesses spanning online retail to food delivery and cloud computing.

Alibaba is one of the big businesses seen as a potential target if US President Donald Trump makes further moves against Chinese companies, following restrictions on Chinese-owned video platform TikTok and Tencent's WeChat.

"Today, we face uncertainties from not only the global pandemic but also increasing tensions between the US and China," chief executive Daniel Zhang said.

"We are closely monitoring the latest shift in US government policies toward Chinese companies, which is a very fluid situation," Zhang said.