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Alibaba Is In The Lead To Consider Further Acquisition Plans.

2008/3/26 14:09:00 7

The Alibaba has breathed a sigh of relief, but in the long run, the company will still face the test of sustained profitability.

Alibaba (688.HK) released its first earnings report after its listing 18 days, and the handsome figures made the Alibaba shares troubled by the big environment breathed a sigh of relief.

But in the long run, Alibaba B2B will still face the test of sustained profitability.

Alibaba reported that in 2007, in the two important indicators, namely paid members and average customer payment, Alibaba B2B grew, making the company's revenue increased by 58.6% compared to 2006, reaching 2 billion 162 million 800 thousand yuan and net profit 967 million yuan.

Alibaba's revenue and profits surpassed that of international investment banks.

Morgan Stanley has predicted that Alibaba's revenue will exceed 2 billion yuan this year, with a net profit of 622 million yuan.

Ma Yun, founder of Alibaba, was also the first global best executive director in 2008 in March 24th.

Alibaba's chief executive, B2B, announced that the number of registered users in the online trading market increased from 19 million 800 thousand at the end of 2006 to 27 million 600 thousand at the end of 2007.

Meanwhile, the total number of online shops in Alibaba's online trading market increased from 2 million 100 thousand at the end of 2006 to 3 million at the end of 2007.

Wei Zhe indicated that in 2007, Alibaba B2B launched more value-added services.

It includes providing unlimited product supply and demand information for all paying customers from the fourth quarter, increasing the number of free users' products, creating more sales opportunities for Chinese suppliers to buy keywords, and further fine-tuning the prices of key words and ranking, word segmentation and pricing. Besides, the distribution of foreign trade solutions designed by Ali software company through its direct selling team also brings extra commission income to the company.

After the announcement, Alibaba's share price rebounded to HK $13.6 from HK $12.2 the previous day, and returned to HK $13.5.

According to the analysis of Qiao Feng securities, Alibaba is the largest B2B e-commerce website in China, and the number of overseas and domestic users continues to rise. The new value-added service (VAS) is expected to stimulate the overall revenue.

Recently, the company launched the Japanese B2B website to test the market. The market has a positive initial response, and its growth prospects are optimistic.

But it is worth noting that some of the data in Alibaba's earnings still attracted the attention of market participants. They think Alibaba will bear some pressure in the future earnings.

According to Alibaba's prospectus, the growth rate of paid users in Alibaba in 2006 was 55%. In 2007, the growth rate of paid users had dropped to 39%. In addition, in the net profit of 967 million yuan, 406 million came from interest income, and the net profit brought by business was 561 million actually.

In addition, Alibaba's operating expenses of up to 1 billion 98 million yuan, and 150 million of equity incentive expenses also make the market participants have reason to believe that Alibaba should reduce the expenditure figures as soon as possible.

The relevant analysis released by Morgan Stanley by reporters found that the total number of paid users accounted for only 1.1% of the registered users and 2% lower than expected due to the slow growth of Alibaba's "integrity" members. At the same time, Alibaba was also faced with some macroeconomic risks, such as the US recession, the appreciation of the renminbi, and the credit crunch against SMEs.

Morgan Stanley gave Alibaba a rating of HK $18.7 / share in accordance with the "market performance" rating.

Analysts say Alibaba's deposit based income model can mitigate the impact of long-term sales instability, because deferred income often accounts for about 60% of the total revenue in the next year. The more favorable factor for Alibaba is that the number of Chinese Internet users is growing at an annual rate of 50%, and more and more SMEs are starting to use Internet services.

Wang Fang, a senior analyst at Ai consulting, believes that Alibaba needs to further segment e-commerce users with different levels and degrees, and gradually improve user conversion and renewal rates.

For primary users, we should reduce the corresponding entry service charges from a long-term perspective, increase the trust and dependence of primary users on B2B e-commerce, and increase the number of users, especially the number of paid users.

The analysis also points out that in considering the entry of costs and benefits, Alibaba should make greater use of capital advantages in the future to acquire leading enterprises in a certain field to cut into the market at a faster time and a higher starting point and reduce the risk of entry.

Wei Zhe revealed that Alibaba will continue to work with Group subsidiary companies such as Ali software, Alipay and Taobao to provide more services for SMEs and provide more opportunities for collaborative sales.

It will also open platforms to other service providers, make more effective use of the company's trading market, and provide other SME applications.

At present, Alibaba group has made strategic plans for the rise of small and medium-sized enterprises. The international trade, domestic trade, retail trade, service trade, payment financing, network marketing and management software of small and medium-sized enterprises are all embodied in the strategy of the group.

"This year, Alibaba will further enhance its penetration in developed countries (such as the European Union, Japan) and emerging markets (such as India), and ensure the diversification of SMEs in different countries and create new benefits."

Wei Zhe said.

Alibaba stakeholders confirmed to reporters that Alibaba has officially obtained the "international domain name registration service" qualification, aiming to promote the e-commerce infrastructure of small and medium-sized enterprises.

The reporter learned that Wei Zhe has further promoted Alibaba brand in overseas markets such as Britain and the United States.

In addition, Alibaba will add 2000 sales teams this year.

Wei said that in 2007, Alibaba received a total of 1 billion 316 million yuan of regular free cash flow, and the company is considering further acquisition plans.