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Alibaba on the move

 

Summary (from latest annual report - 2016) - Fiscal year ends in March

  • Total stockholders' equity : 32.61 billion USD
  • Market Cap is 292.1 billion USD ( last price of the stock is 116.86 USD)
  • Alibaba Group Holding Limited is a Chinese e-commerce company that provides consumer-to-consumer, business-to-consumer and business-to-business sales services via web portals. It also provides electronic payment services, a shopping search engine and data-centric cloud computing services
  •  Total stockholders' equity has increased from 21.9 billion USD in 2015 to 32.61 billion in 2016
  • Company has 16 billion USD in cash on account (from latest annual report 2016 year)
  •  In 2016 company had 8.07 billion USD long-term debt, short – term debt was 649 million USD                                                                                                        
  • (In 2015 company had 286 million USD short-term debt , long-term debt was 7.64 billion USD)
  • Company's revenue increased in 2016 to 15.6 billion USD from 11.50 billion in 2015
  • Net income in 2016 was 10.72 billion USD, Net income in 2015 was 3.64 billion USD
  • In 2015 company paid 25 million usd dividend to its shareholders

 

Opinion about the company

Fundamentally it is a good company and in the future we can expect its growth (Total debt is 8.71 billion usd, company has 16 billion USD in cash on account, ROE is around 16%).

The price of the stock is moving in "uptrend"

Alibaba Group Holding Limited is a Chinese e-commerce company that provides consumer-to-consumer, business-to-consumer and business-to-business sales services via web portals. It also provides electronic payment services, a shopping search engine and data-centric cloud computing services. The Group's websites accounted for over 60% of the parcels delivered in China and 80% of the nation's online sales. It is the world's largest retailer as of April 2016.

  • China commerce operations represent 83% of total revenues
  • International commerce operations represent 7% of total revenues
  • Cloud computing operations represent 4% of total revenues
  • Others operations represent 6% of total revenues

Alibaba's consumer-to-consumer portal Taobao, similar to eBay.com, features nearly a billion products and is one of the 20 most-visited websites globally. Alibaba earns the right to own 37.5% of Ant Financial’s equity (Alipay’s owner) worth around 22.5 billion USD Alipay’s owner Ant Financial said it closed a $4.5-billion funding round, which sources briefed on the discussions say values the company at a figure “very close to $60 billion” - or even more. Alipay is a third-party online payment platform with no transaction fees. It also provides an escrow service, in which buyers can verify whether they are happy with goods they have bought before releasing money to the seller. According to analyst research report, Alipay has the biggest market share in China with 300 million users and control of just under half of China's online payment market (it is almost triple the size of its U.S. rival, PayPal). Alibaba Group spun off Alipay in 2010, and renamed it Ant Financial in 2014. The companies describe themselves as separate, unaffiliated entities, but their ties remain strong. Alibaba has spent more than 13 billion USD on acquisitions in last three years, the biggest of them include a controlling stake in ChinaVision Media Group for 804 million USD, Chinese mobile internet firm UCWeb for 2 billion USD, a Chinese map supplier AutoNavi for 1.5 billion USD, video service Youku Tudou for 4.8 billion USD..

On 19 September 2014, Alibaba's shares (BABA) began trading on the NYSE at an opening price of $92.70.

Alibaba achieved significant growth and strong operating results in the fiscal year 2016. Total revenue increased by 45% from RMB52,504 million in the fiscal year 2014 to RMB76,204 million in the fiscal year 2015 and further increased by 33% to RMB101,143 million (US$15,686 million) in the fiscal year 2016. Net income increased by 4% from RMB23,403 million in the fiscal year 2014 to RMB24,320 million in the fiscal year 2015 and further increased by 193% to RMB71,289 million (US$11,056 million) in the fiscal year 2016. Revenue is expected to increase 53% in fiscal 2017, Alibaba may report strong revenue growth from its mobile users, thanks to higher user engagement, international growth in new markets, and a healthy retail marketplace. In its third quarter, Alibaba reported revenue growing 55% revenue, with cloud revenue up 130% and mobile up 78%. For the fourth quarter, markets should expect mobile MAUs (monthly active users) growing again, albeit at a slower pace.

 

Based on data from Bloomberg, 41 of 45 analysts covering BABA have a buy rating while the other 4 analysts have a hold rating. The average of 38 analysts' price target for BABA is $127.09, which represents a 9% upside from the current price.

Analysts estimates for FY 2017 is revenue of $22,643 million, which represents 42.3% y/y growth. This is derived from the average of 39 analyst estimates via Bloomberg. This 2017 y/y growth rate is far below management's recently upgraded guidance of 54% (it is important to note that BABA's FY 2017 ended on March 31st, 2017). Analysts estimates for FY 2018 is revenue of $29,862 million, which represents 31.9% y/y growth. Analysts assume revenue growth to decline annually by 5% for FY 2019 to 2021.

 

Technical analysis

When we look at one year chart we can see that price of BABA is moving in "uptrend". On this chart, I marked two trend lines that represent support levels. As long the price is above mid-term trend line this stock is in the "BUY" zone and there is no indication of the trend reversal. If the price falls on the mid-term trendline and if we get "bullish" confirmation candle it would be a very good entry point for short-term traders who are trading with "stop loss" and "take profit" orders. Mid-term trend line represents strong support level, if the price breaks this trend line it would be a "SELL" signal and we have an open way to $110. If the price breaks $110 support level we have an open way to $100. If the price continues to rise we have resistance level at $118.69.

 

 

Conclusion - as long the price is above mid-term trend line this stock is in the "BUY" zone and there is no indication of the trend reversal

Alibaba achieved significant growth and strong operating results in the fiscal year 2016, revenue is expected to increase 53% in fiscal 2017. Based on data from Bloomberg, 41 of 45 analysts covering BABA have a buy rating while the other 4 analysts have a hold rating. The average of 38 analysts' price target for BABA is $127.09, which represents a 9% upside from the current price. The price of this stock has made a very big jump in the short time period and I would not recommend investing in this stock at this price levels (only as short term trader with "stop loss" and "take profit" orders). As long the price is above mid-term trend line this stock is in the "BUY" zone and there is no indication of the trend reversal. If the price continues to rise we have resistance level at $118.69. The fundamentals of the company are very good but with 292.1 billion USD market capitalization this company/stock is little expensive. Maybe if the price falls at $100 this could be a good entry point for the long-term investors. The price of this stock is correlated with the situation in China, a global economic situation also affects the price of this stock (especially stock markets in the USA..)

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