Earnings First Take: 3QFY3/22 non-GAAP net income decreased by 25% y-o-y, in line with expectations
- Non-GAAP net income decreased by 25% to Rmb44.6bn, largely in line with market expectations
- Revenue increased by 10% y-o-y to Rmb243bn, mainly driven by international commerce and cloud segments
- China retail commerce remained sluggish due to slowing consumption and intensified competition
- Expect neutral share price reaction
What’s New
– Alibaba (9988 HK) announced its 3QFY3/22 results last night after HK market close.
– Revenue increased by 10% y-o-y to Rmb243bn.
– Segment wise, China commerce retail revenue grew by 7% to Rmb168bn, within which customer management decreased by 1% due to slowing consumption and intensified competition.
-International commerce revenue grew by 18% to Rmb16bn; Cloud segment revenue grew by 20% to Rmb20bn, worse than market expectation of 26% growth due to the slowing demand from customers in Internet sectors; Local consumer services revenue increased by 27% to Rmb12bn.
– Adjusted EBITA decreased by 27%, due to increased investments in growth initiatives, such as Taobao Deals, Taocaicai.
– Non-GAAP net income declined by 25% to Rmb45bn, largely in line with market expectations.
Our View:
– We expect neutral share price reaction.
– Management expects that the operating loss for Taobao Deals and Taocaicai will narrow in next few quarters.
– In longer term, the growth will be supported by deeper penetration into lower cities areas and Cloud business overseas expansion.
– We currently rate BUY on the counter with TP of HK$208/ US$216.