"Alibaba continued to firmly invest into our three strategic pillars of domestic consumption, globalization, and cloud computing to establish solid foundations for our long-term goal of sustainable growth in the future"
~Alibaba chairman and CEO, Daniel Zhang~
Hello! Not much update for this month of November 2021. Last week, I added my position in ALIBABA. Reasons will be given below.
ALIBABA
$BABA (Alibaba) released its quarterly results last week and below are the earnings highlight:-
Revenue was RMB200,690 million (US$31,147 million), an increase of 29% year-over-year (excluding the consolidation of Sun Art). Aggregate revenue of its international commerce retail and international commerce wholesale was RMB15,092 million (US$2,342 million), an increase of 34% year-over-year. Cloud computing revenue was RMB20,007 million (US$3,105 million), an increase of 33% year-over-year.
Annual active consumers (“AACs”) of the Alibaba Ecosystem across the world reached approximately 1.24 billion for the twelve months ended September 30, 2021, an increase of approximately 62 million from the twelve months ended June 30, 2021.
Income from operations was RMB15,006 million (US$2,329 million), an increase of 10% year- over-year due to a RMB15,690 million decrease in share-based compensation expense related to Ant Group share-based awards granted to our employees. The year-over-year decreases were primarily due to increased investments in key strategic areas that have exhibited robust growth in operations, as well as support to merchants. These investments in key strategic areas within our commerce segment, such as Taobao Deals, Local Consumer Services, Community Marketplaces and Lazada, increased by RMB12,575 million year-over-year.
Net income attributable to ordinary shareholders was RMB5,367 million (US$833 million) and net income was RMB3,377 million (US$524 million). Non-GAAP net income was RMB28,524 million (US$4,427 million), a decrease of 39% year-over-year.
Diluted earnings per ADS was RMB1.97 (US$0.31) and diluted earnings per share was RMB0.25 (US$0.04 or HK$0.30). Non-GAAP diluted earnings per ADS was RMB11.20 (US$1.74), a decrease of 38% year-over-year and non-GAAP diluted earnings per share was RMB1.40 (US$0.22 or HK$1.68), a decrease of 38% year-over-year.
Net cash provided by operating activities was RMB35,830 million (US$5,561 million). Non- GAAP free cash flow was RMB22,239 million (US$3,451 million), a decrease compared to RMB40,540 million in the same quarter of 2020, mainly due to a decrease in profit as a result of our increased investments in key strategic areas.
Alibaba cited a "regulatory environment that affect Alibaba's business operations" and "privacy and data protection regulations and concerns" as some of the uncertainties it was facing
AFTERMATH
After ALIBABA reported disappointing quarterly earnings, Alibaba dropped 10.7%, the steepest decline since its listing in Hong Kong $9988.HK (Alibaba Group Holding Ltd (Hong Kong)) in November 2019. The fall in Hong Kong followed a similar plunge on Wall Street. According to CNN, so far this year, Alibaba's stock has dropped 40%, wiping about $234 billion from the value of the company.
WHAT I SEE / LIKE
1. Alibaba's giant cloud business continues to post impressive results. Revenue rose 33% from a year ago for that unit. Alibaba Cloud has helped the company expand beyond China to South East Asia region.
2. The disappointing earring was mainly due to slowdown in consumer spending and also the uncertainties of regulatory crackdown. In the short term, Alibaba’s regulatory headwinds maybe temporary.
3. Alibaba is still the leader in Chinese e-commerce, payments and fintech, and the cloud. Given the long term growth prospects of China and its rising middle class, coupled with the its investment in their domestic consumption, globalization and cloud computing for sustainable growth, I still think it is safe to see Alibaba to grow steadily in the years ahead.
MY UPDATE
With the negativity in Alibaba's earnings and the plunge of its share price, I wanted take this rare opportunity to add more position in ALIBABA. Last week, I have added significant position in Alibaba.
PORTFOLIO PERFORMANCE
Portfolio has been flat staying for the month of November 2021. Solely for the month of November 2021, my portfolio performance is up 0.96%. Overall, my portfolio performance currently is up at 34.17% since its inception in May 2021.
Stay safe.
MNMLH
22.11.2021
