Alibaba, Tencent and have just reported their slowest revenue growth

Alibaba, Tencent and have just reported their slowest revenue growth

Alibaba, whose headquarters are pictured here on May 26, said its GMV online physical goods in China, with the exception of unpaid orders, fell further in April, with a drop in “low teens” compared to last year.

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BEIJING – Chinese technical giants Alibaba, Tencent and saw the slowest revenue growth in history as Covid and Beijing’s technology intervention took its toll.

Since autumn 2020, China has fined corporations and tested them for alleged monopoly practices. Covid’s recovery since March has increased growth pressure as travel restrictions and home orders have disrupted supply chains and logistics.

In response to the economic slowdown, e-commerce giant Alibaba on Thursday announced a decline in online shopping for its two major Chinese platforms in the quarter ending 31.

The company’s total sales increased by 9% in the last quarter compared to the previous year – the slowest in history, according to the financial history available through Wind Information.

Tencent’s quarterly sales have changed little, while has seen a roughly 18% increase over the previous year – both the slowest in history, according to Wind.

Shares of Alibaba in New York rose almost 15% overnight after showing better-than-expected results. Shares of listed in the US rose by 5%, while shares of Tencent in Hong Kong rose by more than 1% on Friday.

Chinese consumer demand

“Macro-sensitive stocks” such as Alibaba and Baidu could temporarily benefit from expectations of low profits and expectations that Shanghai is nearing the end of the blockade, Nomura analysts Jialong Shi and Thomas Shen said in a statement on Friday.

“However, we believe that the sustainability of this rally is likely to be dictated by the pace of recovery in Chinese consumer demand, which the market is likely to monitor closely in the coming months,” analysts said.

China’s already slow retail sales fell further 11.1% in April from a year earlier.

Even online sales of physical goods fell 1% – worse than during the initial pandemic shock of 2020. According to calculations by official CNBC data to which Wind Information has access.

Nomura analysts said many companies have decided to reduce marketing spending as a way to overcome a difficult environment, “which could lead to a delayed recovery in the advertising industry, even if China is completely out of blocking.”

Alibaba said that excluding unpaid orders, the gross value of goods (GMV) recorded a “low single-digit decline” a year ago, according to FactSet’s earnings transcript. GMV is a measure of goods sold during a specified period of time.

The company said GMV’s online physical goods in China, with the exception of unpaid orders, fell further in April, with a drop in “young teens” than a year ago. The company said more than 80 cities in China – mostly national economic centers – reported confirmed Covid cases in April. This represents more than half of Alibaba’s Chinese GMV retail market.

For the April-June quarter, China Renaissance analysts said they expected GMV trade in Alibaba to fall 13.5% year-over-year, a 6% drop in total net income.

Bright spots

Other Chinese companies announcing last quarter’s results have painted a more optimistic picture.

Baidu: The slight 1% quarterly increase in sales of the Chinese technology company Baidu was only the worst since 2020, the year in which sales fell by two quarters, Wind data showed. The search engine giant has expanded into cloud services and robotaxis in recent years.

“We see solid progress in its various AI initiatives,” Daiwa Capital Markets analysts wrote in a report on Thursday. They noted that Baidu’s AI cloud sales grew 45% year-over-year in the first quarter, faster than other companies.

Dada: Dada, now majority owned by JD, reported a year-over-year 21% year-over-year increase in sales, according to Wind, the best since the third quarter of 2021. Dada said it was one of the companies the local government had approved to maintain operations during blocking.

The company announced more than three times as much GMV and twice as many active customers in the 12 months to the end of March compared to the same period two years ago.

Read more about China from CNBC Pro

Kuaishou: Short videos, live broadcasts and emerging e-commerce applications Kuaishou showed 19% sales growth in the last quarter, the slowest in history, although returning only to the third quarter of 2020, Wind showed.

“Despite recent macro uncertainties caused by COVID, we believe that Kuaishou’s bottom-up efforts to gain market share in advertising and e-commerce and effective cost control could continue to help Kuaishou outperform,” wrote UBS analyst Felix Liu and his team. week.

It is “impressive” that Kuaishou has achieved an increase in the number of active users and time spent per user, while using less than expected sales and marketing costs, analysts said.


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