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Morgan Stanley Highlights Expectation For Robust Revenue Growth From Alibaba

Morgan Stanley Highlights Expectation For Robust Revenue Growth From Alibaba
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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.

GMV Growth

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.

Related Link: Walt Disney, Alibaba On Deck For Earnings Announcements

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 2016Deutsche BankMaintainsBuy
Sep 2016Daiwa CapitalMaintainsBuy
Aug 2016JP MorganAssumesOverweight

View More Analyst Ratings for BABA
View the Latest Analyst Ratings

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