A Quick Review of Alibaba Group Holding’s 8-Year Historical Performance (between FY2014/15 and FY2021/22)

A Quick Review of Alibaba Group Holding’s 8-Year Historical Performance (between FY2014/15 and FY2021/22)

Following my posting about SEA Limited’s results a couple of days back (in case you’ve missed it, you can check out the post here – https://www.investingnote.com/posts/2502787…), there are a number of discussions comparing the online shopping platform of the company (Shopee) and Lazada (owned by Alibaba.) 

This post was originally posted here. The writer, Lim Jun Yuan is a veteran community member and blogger on InvestingNote, with a username known as @ljunyuan and has close to 2,000 followers.

I understand that many community members here are vested in Alibaba Group Holding Limited (and it is one where I’ve been actively monitoring its performance over the years, along with news relating to it) – as such, I thought of doing up a post on the NYSE ($BABA) and HK-listed ($BABA-SW(9988.HK)) company. 

But first up, an introduction about the company – their business segments comprises (i) Core Commerce – in retail (Taobao and Tmall) and wholesale commerce ( 1688.com… and Lingshoutong零售通) in China, along with retail commerce in several countries around the world (in Singapore, it owns Lazada); (ii) Cloud Computing – through Alibaba Cloud; (iii) Digital Media & Entertainment – through Youku, and Alibaba Pictures; (iv) Innovation Initiatives – where they innovate & develop new service & product offerings to meet the needs and improve daily lives of their customers, including Amap (mobile digital map, navigation, and real-time traffic info in China) & DingTalk (digital collaboration workplace that offers new ways of working, sharing, and collaborating for modern enterprises and organisations.)

In the rest of today’s post, you’ll find the company’s historical performance over the last 8 financial years – between FY2014/15 and FY2021/22: 

Total Revenue & Net Profit:

  •  While total revenue increased every year, and recorded a compound annual growth rate (CAGR) of an impressive 34.9% over the past 8 years, its net profit fell in FY16/17 & FY21/22 (due to net losses from decrease in prices of their equity investments in publicly-listed companies), and recording a CAGR of 12.1%. 

Gross & Net Profit Margin:

  • Gross profit margin have been on a downward decline – down from a high of 68.7% in FY14/15 to a low of 36.8% in FY21/22; Net profit have largely hoovered around 20+% in most years, except in FY21/22, where it fell to a low of 7.3% (due to a 57.4% decline in its net profit for the year.)

Return on Equity (ROE):

  • While ROE have ranged at 10+% for most years (which is pretty OK in my opinion), it has been trending down since FY19/20.

Net Cash/Debt Position:

  • Alibaba is in a strong net cash position throughout the 8 years I have looked at.

Free Cash Flow Per Share:

  • Except for FY21/22, its free cash flow per share have been on an upward rise (from $2.17 in FY14/15 to $10.71 in FY20/21.)

Closing Thoughts:

  • Positives: Strong revenue & net profit growth, stable ROE, healthy net cash position, and steady free cash flow/share growth
  • Negatives: Declining gross profit margin
  • While the company have shown some brilliant results over the years, I’m staying out of it due to the current situation surrounding it (crackdown of tech companies by the Chinese government, along with the company being embroiled in a data leak case and in my opinion, they could be faced with a hefty fine – and depending on the amount, their cash could be impacted.)

Once again, this article is a guest post and was originally posted on ljunyuan‘s profile on InvestingNote. 


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