The golden age of China Concept Stock: The reign of Alibaba

Recently, the China Concept Stock has been rather successful. Following the second spring of social networking, Alibaba and the e-commerce industry in China ushered in a new peak.

Jack Ma, Alibaba's founder

On the evening of May 18th, Alibaba released its fourth quarter in 2017 fiscal year financial report. It shows that, the group's quarterly revenue has reached 38.579 billion yuan, increasing by 60% compared to last year, which is the highest single-quarter increase since the IPO. At the same time, the amount of profit reached 10.44 billion yuan, increasing by 38% compared to last year.

The e-commerce companies have a different way of conducting statistics than other listed companies which is based on the natural year. Since the peak season in the e-commerce business is from December to January of the next year, the fourth quarter of Ali’s 2017 fiscal year in fact corresponds to the first quarter of 2017's natural year, that is to say, the first quarter of each natural year is identical to the last quarter of each fiscal year.

Another special feature of Ali's financial report is that, this listed company began to define itself as ‘the world's largest mobile economic entity.’

At the first technical meeting Alibaba Group held in March 2017, Jack Ma mentioned the concept of "economic entity" for the first time : “Alibaba's vision for the next 20 years is to build the world's fifth largest economic entity, serve 2 billion consumers and create 100 million jobs opportunity all around the world.”

The ‘Ma whirlwind’ and the ‘Chinese American Dream’

Four months ago, Jack Ma set off a Chinese whirlwind in the United States .

Donald Trump, who has an aggressive attitude toward China since the beginning of his presidential period, highly praised the founder of China's largest e-commerce company after he learned that Ma is willing to help him to promote American products in Chinese market. “He loves this country (referring to USA).” Of course, the new president of the United States also emphasized that, “he certainly loves China.”

In the United States, Ma also went to Detroit to meet local merchants to talk about how the latest version of the American dream can come true in China. He took the example of a third-generation farmer in Washington who sold thousands of tons of cherries through Alibaba, and a lucky drug dealer in Philadelphia who successfully sold vitamin tablets.

Almost all Americans who have listened to Ma's speech have believed that, although China's economy is slowing down, it is still very strong. Ma said to a group of elites in the Silicon Valley: “We have changed China in the past fifteen years, and we will change the world in the next fifteen years.” In 1999, Ma told his partner that, Ali's rivals were not in China, but in the Silicon Valley.

And how is Western media responding ?

Ma was on the cover of Newsweek which was published on May 12. The report mentioned that “Alibaba is no longer satisfied with becoming an e-commerce platform, but an economic entity or an ecosystem. It takes the global view. In the cloud computing, the electronic payments, and Hollywood, Ma strikes everywhere.”

Forbes recently selected the top 10 companies with most investment values, the Midas List, and Alibaba is on the top of the list. Facebook is on the second and Uber is on the third. The Barron’s said that Alibaba “allows global investors to participate in the wave of China's consumer upgrades,” and “the company is changing China and the global business structure.”

The first half for ne business and the second half for e-commerce

It is believed that in 2018, the total amount of e-commerce business in China will exceed the sum of all other countries. With such a huge volume, the gross merchandise volume (GMV) of Ali China's retail platform in the 2017 fiscal year still increased by 22%, reaching 3.767 trillion yuan, and exceeding all expectations.

So how is that possible?

Firstly, Tmall is becoming the leading platform for new products and consumers’ first choice, especially in the introduction of overseas brands such as luxury goods, which conforms to the current trend of consumer upgrades.

Alibaba disclosed that, before March 2017, Tmal Global introduced 14,500 overseas brands covering 3700 categories from Europe, United States, Japan, South Korea, Southeast Asia and other 63 countries and regions. For more than 80% of these brands, it's the first time they enter Chinese market. Up to March 2017, among the top 100 most valuable brands listed by Forbes, nearly 80% were listed in Tmall.

Luxury is another bursting point. In the first quarter of 2017, LVMH Group's TAG Heuer, Swatch Group's Tissot, Armani's Armani Jeans and other brands have been introduced in Tmall. Not long ago, Tmall has welcomed Burberry, Calvin Klein, LA MER and other famous luxury brands. On March 21, 350 units of limited edition Alfa Romeo cars were sold out within 33 seconds.

Secondly, Ali continues to connect online and offline. Previously, Ali invested in Intime, Suning, and Sanjiang shopping mall This year, Ali converted Suning into a partner and they jointly implemented a strategic cooperation. Suning’s online shop on Tmall had amazing results in the fourth quarter. Its GMV was tripled on the basis of the same period of last year, which shows the powerful stream guidance effect of e-commerce.

In addition, Alibaba is also working with overseas retailers. The list of cooperators can be called ‘the billion club’: Chemist Warehouse, Costco, Macy's, Supature, Sainsbury's, Metro, emart and so on.

The support point of 300 billion market

On the eve of the annual report of the 2017 fiscal year, Alibaba’s share price closed at $ 120. This is the first time for Ali to reach $ 300 billion market value. Previously, in 2014, on ‘double eleven’ day ( November 11. Chinese e-commerce companies usually conduct a sales promotion on this day), Alibaba's market value briefly reached that peak.

The e-commerce business, cloud computing, and ‘great entertainment’ constitute the main support points of Alibaba’s $ 300 billion market value.

No need to emphasize on the e-commerce business. The 3.7 trillion GMV is their biggest advantage. Although the GMV represents the sales of the e-commerce platform, which is not equivalent to Ali's revenue, Wall Street analysts still take it as an important measurement of the development speed and competitiveness of a company.

The cloud computing business is also astonishing. In the fourth quarter of 2017 fiscal year, Ali Cloud earned 2.163 billion yuan, with a 103% growth compared to last year. And it is an eighth consecutive record with three-digit growth rate since the first quarter of 2016 fiscal year. The revenue of Ali Cloud in 2017 fiscal year has reached 6.663 billion yuan, raising up by 121% compared to last year, achieving a three-digit growth for two consecutive years.

The strategic layout of ‘great entertainment’, which is the ‘digital media and entertainment business’ mentioned by the report, is also noteworthy. In the fourth quarter of 2017 fiscal year, ‘great entertainment’ has reached 3.927 billion yuan, increasing by 234% compared to the same period of last year. The annual revenue increased by 271%, reaching 14.733 billion yuan. Ali specifically suggested that ‘the synergistic effect between the core businesses has brought great opportunities.’

If the e-commerce business represents Ali's past, then the new businesses, cloud computing and great entertainment undoubtedly represent Ma's efforts to draw the future.

Original article here

#Alibaba #JackMa #China