An analyst at Credit Suisse came away impressed from a meeting with Alibaba Group Holding Ltd's BABA management following the release of its fiscal year 2020 third-quarter earnings.
The Alibaba Analyst
The Alibaba Thesis
The logistics capacity of major third-party logistics has recovered to over 80% of normal, and consumer demand has been steadily picking up, Long said. The analyst noted Alibaba is striving to alleviate merchants' pressure and facilitate their activities by various measures such as fee waiver and consumer demand.
Leveraging on Alibaba's Alipay and Ele.me has helped merchants by way of working capital loans, preferential interest rate or reduction in commission in certain areas, Long added.
The analyst also noted that Alibaba's DinkTalk, an enterprise communication platform, has seen its weekly active users skyrocket from 62 million in the week of the Chinese New Year to 208 million in the last week of February, thanks to working from the home and school closure in the wake of the virus outbreak.
"Cloud - in our view, we could see some near-term impact from the outbreak given the limitation to do face-to-face meeting, yet it could create bigger back log, esp as more corporates turn more conscious on going digital," Long wrote in the note.
Summarizing the key takeaways, Credit Suisse said investors fully understand the near-term negative impact from the outbreak but it believes the long-term story remains intact.
The firm also believes Alibaba is taking market shares in both local service and cloud during the outbreak: "There is still room to further enhance monetization down the road."
BABA Price Action
Alibaba shares were slipping 4.20% to $195.93.
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