Caixin
Jun 09, 2017 05:23 PM
BUSINESS & TECH

Alibaba Elbows Past Tencent Again to Become China’s Most Valuable Company

Alibaba Group Holding Ltd. regained bragging rights as the most valuable company in China on Friday, as rosy growth forecasts gave its stock price its biggest boost in over a year. Above, a customer pays by scanning QR codes in Shanghai on May 15. Photo: IC
Alibaba Group Holding Ltd. regained bragging rights as the most valuable company in China on Friday, as rosy growth forecasts gave its stock price its biggest boost in over a year. Above, a customer pays by scanning QR codes in Shanghai on May 15. Photo: IC

(Beijing) — Alibaba regained the crown as the most valuable company in China on Friday, as rosy growth forecasts gave its stock price its biggest boost in over a year.

The management of Alibaba Group Holding Ltd. projected at the e-commerce company’s annual Investor Day event in Hangzhou on Thursday that revenues will expand by 45% to 49% this year, a target that beats analyst expectations by 10%.

Company management is confident that the goal is within grasp as users spend more time and money on its gamut of services.

Alibaba now has an equity value of over $355 billion, after the bullish expectations boosted the company stock by 13% on Thursday. Alibaba now narrowly leads Tencent Holdings Ltd., its Shenzhen-based rival in several business areas, which has a value of $343 billion.

Revenues grew 56% in 2016, including those of Lazada, the Southeast Asian e-commerce platform whose earnings have been consolidated into Alibaba’s financials as of April 2016. Income from Lazada apart, the revenue increase would be closer to 45% for 2016, higher than the 36% growth projected a year ago.

Alibaba’s share price has been making a steady ascent since the November Singles’ Day shopping festival, a nationwide online spending event Alibaba created to help merchants clear inventory and which has become a gauge of the growing heft of e-commerce in national consumption.

The company’s value has climbed by nearly 75% since late 2016, with Thursday’s hike accounting for a significant portion of the increase.

With an additional $10 billion in free cash flow generated last year, Alibaba plans to move ahead in gaining market share in business to consumer e-commerce (B2C), said company’s Chief Financial Officer Maggie Wu at the group’s headquarters in Hangzhou. “This is a company that always invests for the longer term, for the future,” she said.

Alibaba is hoping to broaden its edge over JD.com, a fierce rival in B2C online retail that had 26% of the market in 2016 while Alibaba’s Tmall controlled 57%, according to a report by Beijing-based consultancy Analysys in May. Tencent, which has competing payment, cloud computing and entertainment units, is the largest stakeholder in JD.com.

Contact reporter April Ma (fangjingma@caixin.com)

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