Alibaba ADR

Alibaba managed to deliver an all-around beat despite experiencing significant challenges because of the rapid change in the Covid situation. The company delivered double-digit growth in its free cash flow and adjusted EBITA through operating efficiency and cost optimization. Its direct sales logistics and business services continued to grow. The strong net cash position of Alibaba is supported by its healthy cash flow generation. The cost-to-revenue ratio is stable mainly through improving operation efficiency, traffic acquisition, and optimizing content cost. AliExpress and Lazada saw revenue growth this quarter. With the entire manufacturing and supply chains becoming active, logistics has resumed normal operations. Tmall and Taobao GMV tipped mid-single digits and the consumption demand was suppressed greatly. Wellness and healthcare-related goods grew strongly, whereas apparel and discretionary goods were weak. Due to increased home-based consumption, restaurant order volume growth rate rose. Ele. me demonstrates positive unit economics per order by reducing delivery costs and increasing average order value. Business and consumer confidence are rising and digital transformation across several sectors and industries has significantly accelerated which is a favorable trend. We give Alibaba Group a ‘Hold’ rating with a revised target price.