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Alibaba Group Holding Ltd ADR BABA Stock Quote

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Morningstar‘s Stock Analysis BABA

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Is it the right time to buy or sell?
Is it the right time to buy or sell?

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Economic Moat


Capital Allocation


Alibaba Is the Best Play on China Reopening Among Traditional E-Commerce Companies

Chelsey Tam Senior Equity Analyst

Analyst Note

| Chelsey Tam |

We are very pleased with the cost-cutting efforts by wide-moat Alibaba, leading to 29% year-on-year higher adjusted EBITA in the quarter. We have revised our fiscal 2023 adjusted EBITA margin up from 12.7% to 16.2% and we expect adjusted EBITA margin to reach 16.7% at the end of this decade versus 12.0% previously to account for the strategy of prioritizing profitability over top-line growth. Alibaba’s near-term revenue outlook is weaker than our expectations, leading to our 7% cut in fiscal 2023 revenue. We lowered our 10-year revenue growth from 9.7% to 8.7% to factor in stronger competition in the China consumption sector, and expect to see slower-than-previously-expected China retail gross merchandise volume growth and monetization rate rises. Our fair value estimate remains USD 179 or HKD 173. Given the catalysts of easing coronavirus restrictions in China and more positive government rhetoric regarding the tech sector, we think it is time to add Alibaba to investors’ shopping carts.

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Key Statistics BABA

Company Profile BABA

Business Description

Alibaba is the world’s largest online and mobile commerce company as measured by gross merchandise volume (CNY 8.3 trillion for the fiscal year ended March 2022). It operates China’s online marketplaces, including Taobao (consumer-to-consumer) and Tmall (business-to-consumer). Alibaba's China commerce retail division accounted for 67% of revenue in the year ended March 2022. Additional revenue sources include China commerce wholesale (2%), international commerce retail/wholesale (5%/2%), local consumer services (5%), cloud computing (9%), digital media and entertainment platforms (4%), Cainiao logistics services (5%), and innovation initiatives/other (1%).

1 Matheson Street, Causeway Bay, 26th Floor, Tower One, Times Square
Hong Kong, Hong Kong
T +852 22155100
Industry Internet Retail
Most Recent Earnings Sep 30, 2022
Fiscal Year End Mar 31, 2023
Employees 243,903

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