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Preview: Why Alibaba Earnings May Beat Estimates By Shuli Ren
Alibaba Group (BABA) will report June quarter earnings results on Thursday before the U.S. markets open with a conference call at 7.30AM Eastern time.
Wall Street analysts largely expect Alibaba to report
22-23% gross merchandise volume growth given its management said June quarter GMV growth would be on par with the March quarter growth of 23.7% at its mid-June analyst day.
The street sees revenue at Alibaba growing by 50% to 30 billion yuan ($4.5 billion). Alibaba can grow its revenue faster than transactions conducted on its sites thanks to higher take rates.
T.H. Capital‘s Tian Hou this morning said that Alibaba can beat street estimates on the top line. According to China’s National Bureau of Statistics, online retail sales in the second-quarter re-accelerated to 28.5% from a year ago, compared to 27.8% in the first-quarter. In other words, Alibaba’s management may have been conservative and wanted to manage expectations.
Hou wrote:
Street expectation of RMB30.0B (US$4.5B) and highly likely to be better due to:
1) better commission revenue driven by accelerating Tmall GMV growth and higher commission rate in the June quarter.
Based on our data, total GMV transacted on BABA domestic retail marketplaces is likely to increase 24% Y/Y to RMB833B, of which GMV from Tmall is likely to grow 37% Y/Y to reach RMB338B and GMV from Taobao is likely to grow 16% Y/Y to reach RMB495B in F1Q17.
Commission rate for Tmall is likely to grow to 2.11% in F1Q17 from 2.04% in F1Q16.
Higher Tmall GMV and commission rate will lead to better commission revenue growth at 42% Y/Y to reach RMB7.12B in F1Q17.
Hou raised her price target for Alibaba substantially to $97, from $84 previously. Alibaba closed at $85.24 on Tuesday.
Source: Barron's Asia
http://blogs.barrons.com/asiastocks/201 ... estimates/
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