Three of China's largest technology companies – Alibaba (NYSE :), Baidu Inc (NASDAQ 🙂 and JD.com (NASDAQ 🙂 – have recently reported their latest quarterly results so that investors can see how they are doing amidst the continuing fear of trade war and the slowing domestic economy. Below we focus on the most important doubtful episodes of their respective income expenditures, and what might be in stock for each share in the coming months.
Alibaba: A +
The Chinese e-commerce giant Alibaba made an impression when he reported his latest business results on May 15, reporting both the best and the worst figures. Excluding non-recurring items, adjusted earnings per share increased 50% to $ 1.28, while sales increased 51% to $ 13.9 billion.
Although the company's core business remained the main driver for its growth, the diversification to cloud computing was what really made headlines and aroused enthusiasm among investors. Revenue from the company's cloud computing business increased 76% to $ 1.15 billion in the fourth quarter.
According to data from IT research firm IDC, Alibaba is now the third largest cloud service provider in the world, lagging behind only Microsoft (NASDAQ 🙂 and Amazon (NASDAQ :).
"Our cloud and data technology and huge traction in New Retail have enabled us to constantly change the way companies operate in China and other emerging markets, which will contribute to our long-term growth," Alijaba said -CEO Daniel Zheng.
Looking ahead, the company's full-year 2020 directive called for revenue to grow by 32.7% to $ 74.5 billion.
The Chinese tech giant's focus on the long term and its diversification into new revenue streams is encouraging and should make it a good bet in the future. As such, we continue to expect further income from here and we recommend accumulating shares.
The fact that management did not seem to be concerned about the escalating trade war between the US and China is another positive point for the company. Joseph Tsai, executive vice president of Alibaba, said about the company's income call that negotiations between Washington and Beijing to address trade inequality will benefit the e-commerce giant through more outside imports To encourage China.
The share of Alibaba, which ended Tuesday at $ 163.43, has so far reached around 19% in 2019.
JD.com: B-
JD.com reported better than expected when it reported earnings on May 10, as the online retailer focused in China experienced solid growth in its major e-commerce activities.
JD sales for the first quarter ending March 31 increased 21% from the same quarter a year earlier to around $ 18 billion, while earnings per share rose to $ 0.33 cents from $ 0.10 in the period of the year ago.
Despite the strong sales growth, it was still the slowest pace since the IPO in 2014.
Annual active customers on the JD.com platform increased by 15% from the quarter a year ago to 310.5 million users, but that was also a slowdown in growth rates in the same quarter compared to a year earlier.
However, looking ahead, JD.com sounded optimistic about its second-quarter outlook, telling investors that sales would increase 19% to 23% to a range between approximately $ 21.2 billion and $ 22.0 billion. That was ahead of consensus estimates with sales of $ 21.34 billion.
JD.com also said it has renewed a strategic partnership with China messaging and gaming giant Tencent Holdings (OTC 🙂 for three years because they are both fighting to prevent competition from e-commerce giant Alibaba. JD.com, the second largest e-commerce company in China, expects the alliance to improve customer satisfaction, reach a larger user base and further expand its presence on mobile commerce.
"We will continue to invest in key technologies and top talent in the industry while working on an even wider customer base through advanced innovation," said CEO Richard Liu.
We expect that JD.com – whose shares were closed yesterday at $ 29.05 and has risen nearly 39% this year so far – continues to do well under indications that its core business remains strong as it maintains its position as the After biggest name in China & # 39; s online retail space, lagging behind with Alibaba only.
Baidu: F
Baidu, the technology company that is often described as the Chinese equivalent of Google (NASDAQ :), reported to its very first that it became public almost 15 years ago and the worst could come.
The Chinese search engine company reported a net loss of approximately $ 49 million for the first three months of the year, when it posted its latest business results on May 20.
Robin Li, CEO of Baidu, said the sharp drop in profits was largely due to the broader economic slowdown in China and the government's increased focus on online content, which had damaged the company's core advertising activities
Online marketing, accounting for 73% of Baidu's quarterly revenue, rose only 3% from a year earlier to $ 3.6 billion, which means a shocking slowdown compared to previous quarters.
"Although the Chinese government has announced many economic policies to support the economy … we take a cautious view that online marketing will become a more challenging environment in the short term," Li said during the post-earnings conference of the call company.
Baidu, worried about the sharp slowdown in his core advertising business, said it expects second-quarter revenue to remain about the same as a year earlier, which in no way depends on the double-digit revenue growth it has experienced in the past two years.
Taken together, it can become more ugly for Baidu & # 39; s shares before it gets better. Shares closed at $ 120.49 yesterday have so far fallen by 24% this year and have fallen by around 50% in the last 12 months.
