Morgan Stanley Highlights Expectation For Robust Revenue Growth From Alibaba
Alibaba Group Holding Ltd (NYSE: BABA) is likely to report strong revenue growth for F1Q17, driven by GMV, improving monetization and AliCloud growth, Morgan Stanley’s Robert Lin said in a report. He maintained an Overweight rating on the company, with a price target of $130.60.
Analyst Robert Lin mentioned that Alibaba is likely to have generated resilient GMV growth of 22 percent y/y in F1Q17. GMV is estimated to reach Rmb821 billion.
Improved Monetization And AliCloud
Lin expects Alibaba to have achieved a higher monetization rate in its core ecommerce business as well as faster growth in its cloud business. Total revenue is estimated at Rmb30.3 billion, representing 50 percent y/y growth.
Excluding acquisitions of Youku Tudou Inc (NYSE: YOKU) and Lazada, revenue is estimated at Rmb27 billion, representing 35 percent y/y growth. The analyst expects revenue growth to have been driven by:
- China retail marketplace revenue growth of 33 percent y/y to Rmb21.0 billion, “faster than GMV growth with blended monetization rate up 22bps yoy to 2.55%”
- Alicloud revenue growth of 176 percent y/y to Rmb1.3bn, “holding up well vs 175% yoy in F4Q16 given the growing paying customer base, new product launches and increased adoption of more value-added services”
With 500k paying customers as of March 2016, AliCloud is becoming a growth driver, Lin stated, while adding that AliCloud is expected to record revenue of Rmb7.2 billion, representing 140 percent y/y growth, and be “slightly profitable” in FY17.
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Latest Ratings for BABA
|Sep 2016||Deutsche Bank||Maintains||Buy|
|Sep 2016||Daiwa Capital||Maintains||Buy|
|Aug 2016||JP Morgan||Assumes||Overweight|
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