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Alibaba sales surge as Chinese consumers defy economic gloom
[HONG KONG] Alibaba Group Holding posted a 39 per cent surge in revenue as China's dominant e-commerce operator shrugged off a slowing economy with promotions to woo cash-rich consumers.
Asia's largest Internet company posted better-than-expected sales of US$3.7 billion in the March quarter and said it will start providing annual forecasts. Its shares rose 5.3 per cent in pre-market trading.
Alibaba, often regarded as a proxy for Chinese consumer spending, is capitalizing on the liquidity of households and expanding into rural areas, helping limit the impact of an economy growing at the slowest pace in 25 years. The company's platforms, which link buyers and sellers, hit a US$461 billion milestone of goods sold during the period and the online emporium made more from mobile advertising and expanded overseas.
"Alibaba is still growing very nicely and sustaining very high margins in the face of the concerns about Chinese consumers and the face of competition," said Gil Luria, an analyst with Wedbush Securities Inc. "It's good results for Alibaba and it seems like their business is holding up."
Net income rose 85 per cent to 5.3 billion yuan, just shy of the US$814.5 million average of estimates. Affiliate Zhejiang Ant Small & Micro Financial Services Group, which owns Alipay, incurred a net loss after spending to drive user growth. Adjusted earnings-per-share were 3.02 yuan, trailing analysts' projections for 3.52 yuan.
The marketing push helped spur a 21 per cent jump in active users to 423 million. That in turn underpinned a 41 per cent jump in revenue on Alibaba's Chinese retail e-commerce platforms. Mobile shopping on local retail sites almost tripled and now accounts for 63 per cent of sales.