Wednesday 15 May 2024

Alibaba Full Year Results- Don't Miss the Forest For the Trees.

Not sure why many analysts were extremely disappointed with Alibaba for missing earnings expectations which brought about a sell down in the US market. On the contrary, I thought that Alibaba did fairly well for its last March Quarter 2024 and full year. Revenue continued to grow by 7% on a year to year basis for Q4. So clearly, Alibaba seems to be returning to growth mode. I will ignore the "Net Income" due to the "fair value" mark to market for its non-core business activities (public listed investments) and focus instead on the non-GAAP net income.  Also interestingly, Alibaba is going to pay out dividends again!

1. Not too bad results- investment for topline revenue growth
Q4 March 24 Results

The non-GAAP net income for Q4 ended 31 March 2024 decreased 11% from  RMB 27,375Mil to RMB 24,418Mil. Nevertheless non-GAAP diluted earnings per share decrease only 5% year on year due mainly to share buy-back (please see below).

2. Share Repurchases
Share buy-back
US$4.8 billion was spent buying back ADs and shares in US and Hong Kong markets respectively. This help mitigate the earnings per share decline due to latest strategies to re-ignite growth in Alibaba's business. 

3. Fantastic upcoming pay out of regular cash dividends and special dividends to rewards shareholders.
Wow, Alibaba really seems to be becoming a dividend stock. Total year end approved payouts will be a total of US$0.2075. I am currently holding on to about 2,300 shares. So this translates to a dividend of US$477.25. Less off withholding tax of 10% and the quantum we are looking at is thus US$429.53 (S$580) on 3 July 2024 (Wednesday). This is a respectable sustainable dividend yield of almost 2%. Ex-dividend date is on 3 June 2024.

Parting thoughts
Today (15th May) is Buddha's Day in Hong Kong and a public holiday. Once the HKSE open on 16th May 2024, the price will probably drop by 5%-6% to mirror the US market. If there is another strong pull-back on the 9988 counter, I may look into accumulating more Alibaba shares.  

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