Alibaba, Tencent and post slowest revenue growth on record

Alibaba, Tencent and post slowest revenue growth on record

BEIJING — Chinese language tech giants Alibaba, Tencent and have all posted their slowest revenue growth on record as Covid and Beijing’s tech crackdown took their toll.

For the reason that fall of 2020, China has fined firms and scrutinized them for alleged monopolistic practices. A Covid resurgence since March has added strain to growth, with journey restrictions and stay-home orders disrupting provide chains and logistics.

Reflecting the financial slowdown, e-commerce big Alibaba reported on Thursday a drop in on-line looking for its two important China platforms within the quarter ended March 31.

The corporate’s complete revenue rose by 9% within the newest quarter from a 12 months in the past — the slowest on record, based on monetary historical past accessed by Wind Data.

Tencent’s revenue for the quarter was little modified, whereas noticed a roughly 18% improve from a 12 months in the past — each the slowest on record, based on Wind information.

Alibaba shares soared by almost 15% in New York buying and selling in a single day after reporting better-than-expected outcomes.’s U.S.-listed shares rose by 5%, whereas Tencent’s climbed greater than 1% in Hong Kong buying and selling Friday.

China’s client demand

“Macro-sensitive stocks” resembling Alibaba and Baidu might temporarily benefit from low earnings expectations, and anticipation that Shanghai is close to ending its lockdown, Jialong Shi and Thomas Shen, analysts at Nomura, said in a note Friday.

“However, we believe the sustainability of this rally will likely be dictated by the pace of recovery for China consumer demand, which the market will likely closely follow over the coming months,” the analysts said.

China’s already sluggish retail sales fell further in April, down 11.1% from a year ago.

Even online sales of physical goods fell, down by 1% — worse than during the initial shock of the pandemic in 2020. That’s according to CNBC calculations of official data accessed through Wind Information.

The Nomura analysts said many businesses were deciding to cut marketing spending as a way to ride out the difficult environment, “which might lead to a belated recovery in the ads industry even if China is completely out of the lockdown mode.”

Alibaba said excluding unpaid orders, gross merchandise value (GMV) saw a “low single-digit decline” from a year ago, according to an earnings call transcript from FactSet. GMV is a measure of goods sold over a set period of time.

The company said its online physical goods GMV in China, excluding unpaid orders, fell further in April, with a “low teens” decline from a year ago. The company said more than 80 cities in China — mostly national economic centers — reported confirmed Covid cases in April. That represents more than half of Alibaba’s China retail marketplace GMV.

For the April to June quarter, China Renaissance analysts said in a report they expect Alibaba’s China commerce GMV to drop by 13.5% year-on-year, for a 6% decline in overall net revenue.

Bright spots

Other Chinese companies reporting results for the latest quarter painted a more upbeat picture.

Baidu: Chinese tech company Baidu’s mild 1% quarterly revenue increase was only the worst since 2020, a year that saw two quarters of revenue decline, Wind data showed. The search engine giant has expanded in recent years into cloud services and robotaxis.

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

Dada: Grocery delivery company Dada, which is now majority-owned by JD, reported a 21% year-on-year revenue increase in the latest quarter, the best since the third quarter of 2021, according to Wind. Dada said it was one of the businesses local government approved to maintain operations during lockdowns.

The company reported more than triple the GMV and double the number of active customers in the 12 months ended late March, versus the same period two years ago.

Read more about China from CNBC Pro

Kuaishou: Short-video, livestreaming and emerging e-commerce app Kuaishou reported 19% revenue growth in the latest quarter, the slowest on record, although only going back to the third quarter of 2020, Wind showed.

“Despite the recent macro uncertainties due to COVID, we think Kuaishou’s bottom-up efforts in market share gains in ad and e-commerce and effective cost control could continue to help Kuaishou outperform on fundamentals,” UBS analyst Felix Liu and a team wrote this week.

It’s “impressive” that Kuaishou delivered growth in the number of active users and time spent per user, while using less-than-expected sales and marketing expenses, the analysts said.

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