Alibaba profit almost triples

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Alibaba

Reuters.

Employees stand on a logo of Alibaba (China) Technology Co. Ltd during a media tour organised by government officials at its headquarters on the outskirts of Hangzhou, Zhejiang province in this file picture.

New York - Alibaba Group Holding’s profit almost tripled in the past year as sales at China’s largest e-commerce company jumped with shopping promotions and new acquisitions bolstering mobile services.

Alibaba’s first revision to its initial public offering prospectus showed net income rose to about 23.1 billion yuan ($3.7 billion) in the year ended March 31, compared with 8.4 billion yuan a year earlier.

Revenue rose 52 percent to 52.5 billion yuan, with much of that gain coming in the quarter that ended in December which included a promotion day that drove sales at Alibaba’s retail marketplaces.

The company’s filing today also names the 27 members of Alibaba’s partnership, key to its unique corporate governance structure.

Investors have been awaiting these additional details as they weigh whether or not to buy shares in Alibaba’s IPO -- which could be the largest ever in the US.

“The growth and margins story are the huge tailwinds for this company coming to the market,” said Max Wolff, chief economist at Citizen.vc, New York-based venture capital fund.

The amendments come after the US Securities and Exchange Commission’s 30-day window from the original filing to provide comments to the company.

Communications between the regulator and the company will continue and remain confidential until after the IPO.

 

Quarterly Slowdown

 

Alibaba’s revenue growth slowed in the fourth quarter of 2014, with sales increasing 40 percent to $1.9 billion, compared with growth of 71 percent in the same period last year, data compiled by Bloomberg show.

The three months through March generally contribute the smallest portion of Alibaba’s annual revenue, due to a lower allocation of online marketing budgets by sellers and the beginning of the Chinese New Year, according to the filing.

The company’s retail marketplaces -- Taobao Marketplace, Tmall and Juhuasuan -- accounted for 82 percent of revenue, the filing showed.

Virtual shopping centre Tmall.com’s gross merchandise volume doubled during the financial year to $81 billion while volume at Taobao Marketplace, which enables individuals and small businesses to sell products, rose 42 percent to $189 billion.

The company’s sales on “Singles Day,” a sales-promotion day on Nov. 11 last year, helped boost transactions on Taobao Marketplace and Tmall to 35 billion yuan in a 24-hour period.

 

Earnings Multiple

 

Alibaba has a value of $168 billion, according to analysts’ average estimate. While the valuation may change with the updated financials, it indicates a price of 45 times the latest year’s earnings, data compiled by Bloomberg show.

Ten Chinese Internet and technology companies listed in the US for which data is available, including Baidu and Sina, trade at a median of 39 times historic earnings, data compiled by Bloomberg show.

The new filing didn’t answer all of investors’ questions, however.

Alibaba’s choice of a listing venue -- the New York Stock Exchange or Nasdaq Stock Market -- has not yet been identified.

Alibaba’s partners will be able to nominate a majority of Alibaba’s board. Nine out of the 27 partners are female, the filing showed.

The partnership committee -- responsible for administering partner elections and allocating the bonus pool -- consists for five people: founder Jack Ma, executive vice chairman Joseph Tsai, chief executive Jonathan Lu, chief people officer Lucy Peng and vice president of strategy Ming Zeng.

 

Alipay Executives

 

Among those in the 27-member partnership are six executives of Alibaba’s financial services affiliate, Small and Micro Financial Services Company.

Ma owns 46 percent of the financial arm, the parent of Alibaba’s Alipay payment affiliate, according to the filing.

The company is in talks to regain a stake in Alipay, a person familiar with the matter said last month.

Alibaba acquired the rest of UCWeb last week and integrated it into the company as a business unit.

The company named Yahoo! co-founder Jerry Yang and Tung Chee-hwa, the former chief executive of Hong Kong, as independent directors.

The company did not add any additional underwriters in addition to Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Citigroup. - Bloomberg News


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