Category: Stock Market

(Bloomberg) — Alibaba Group Holding Ltd. slid after projecting revenue growth will slow this year, reflecting post-Covid 19 economic uncertainty at home as well as the potential for U.S.-Chinese tensions to disrupt its business.Its stock slid as much as 4% in Hong Kong Monday, after a drop of almost 6% in New York before the weekend. The e-commerce giant forecast sales growth this year of at least 27.5% to more than 650 billion yuan ($91 billion), down from 35% previously and slightly below analysts’ estimates. While it posted a better-than-expected 22% rise in March quarter revenue of 114.3 billion yuan, that marked its slowest pace of expansion on record.Online shopping began to bounce back from March, executives said Friday. But the tepid outlook demonstrates the world’s second-largest economy has yet to fully shake off Covid-19, with consumers still hesitant about spending on big-ticket items. Asia’s most valuable corporation is tackling also the rise of rivals such as ByteDance Ltd. and Pinduoduo Inc. And the Tmall operator is going head-to-head with Tencent Holdings Ltd. for internet leadership in everything from online media to payments and cloud computing. JD.com Inc., the No. 2 Chinese online retailer, forecast better-than-expected revenue this quarter.“The market is a bit disappointed despite the strength given 2Q guidance of 20-30% YoY growth for JD and 99% GMV growth in 1Q20 for PDD,” CICC analyst Natalie Wu wrote. “We regard Alibaba’s advantage as a market leader as intact and unchanged in the longer run, though it may take several quarters for market sentiment to swing back.”Read more: Alibaba Sales Growth Plumbs New Lows While Uncertainty EscalatesAlibaba has lost more than $70 billion of market value since the coronavirus first erupted in January, and now has to grapple with not just an uncertain global economic environment but also any potential fallout from U.S.-Chinese financial tensions. On Friday, executives sought to assuage concerns about a U.S. bill that mandates much closer accounting scrutiny of U.S.-listed Chinese companies and may bar them from American bourses.Chief Financial Officer Maggie Wu said Friday Alibaba’s financial statements have been consistently prepared in accordance with U.S. GAAP accounting measures and were beyond reproach. “The integrity of Alibaba’s financial statements speak for itself, we have been an SEC filer since 2014 and hold ourselves to the highest standard,” she told analysts on a conference call. “We will endeavor to comply with any legislation whose aim is to protect and bring transparency to investors who buy securities on U.S. stock exchanges.”The bigger short-term challenge is in reviving growth: Alibaba’s bread-and-butter customer management or marketing business grew just 3% in the March quarter. Much of that stems from weaker consumer sentiment during the coronavirus-stricken quarter, when total Chinese e-commerce rose just 5.9% or at less than a third of 2019’s pace, according to government data. Jefferies analysts led by Thomas Chong wrote that Alibaba’s guidance was in fact a positive when viewed against an array of uncertainties gripping the post-Covid 19 global economic environment.What Bloomberg Intelligence SaysUser engagement and transaction volume have rebounded in April and May to precrisis levels, which bodes well for normalized sales growth ahead, especially as merchant-support measures are gradually rolled back.\- Vey-Sern Ling and Tiffany Tam, analystsClick here for the research.Rival PDD posted a revenue rise of 44% on Friday, down sharply from 91% in the previous quarter but ahead of expectations. Its sales and marketing expenses jumped 49%. PDD’s shares climbed 15% Friday.Alibaba’s March-quarter net income was 3.2 billion yuan, down 88% from a year ago when it booked an 18.7 billion yuan one-time gain on investments. In February, Alibaba declared a waiver of some service fees for merchants struggling financially during the outbreak on its main direct-to-consumer Tmall platform. In April, the company rolled out a new 10-billion-yuan subsidy program for Tmall users to buy electronics, encroaching on JD.com’s traditional turf. These initiatives may further compress margins for the June quarter.“The challenging part is for them to achieve the same amount of growth this year,” said Steven Zhu, a Shanghai-based analyst with Pacific Epoch. “Just because they are too big, for the same amount of growth, they need to spend much more effort.”But executives were confident in a gradual e-commerce recovery over the year. Beyond its main business, younger divisions such as its cloud computing arm should buoy the bottom line. That division’s revenue jumped 58% in the quarter.“Despite a challenging quarter due to reduced economic activities in light of the COVID-19 pandemic in China, we achieved our annual revenue guidance,” Wu said in a statement. “Although the pandemic negatively impacted most of our domestic core commerce businesses starting in late January, we have seen a steady recovery since March.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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May.24 — Hong Kong protesters battled with riot police in busy downtown areas on Sunday, showing their opposition toward China’s dramatic move to crack down on dissent in the biggest demonstration since the coronavirus swept through the city in January. Stephen Engle reports on “Bloomberg Daybreak: Australia.”

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Apple Inc.’s (AAPL) China sales continued to recover in April, driven partly by the launch of a cheaper iPhone, CNBC reported.The tech giant sold 3.9 million iPhones in China in April, reflecting a 160% surge from March figures, when it sold 1.5 million smartphones, the Shanghai-based market research firm CINNO Research told CNBC.The signs of a recovery path since February comes as the world’s second largest economy slowly reopens again after the coronavirus pandemic forced store closures earlier this year that led to sales declines. China iPhone sales slumped 60% in February year-on-year. Since mid-March, all stores in China have reopened.Apple, which launched its second-generation iPhone SE in mid-April, started to sell the device in China later that month. It starts at 3,299 yuan ($464) in the mainland. iPhone SE accounted for 24% of all of Apple’s 3.9 million iPhone sales in April, according to CINNO Research.In April, overall smartphone shipments in China rose over 94% to 40.8 million compared with the previous month, according to state-backed think tank, China Academy of Information and Communications Technology.Five-star analyst Daniel Ives at Wedbush, who has a Buy rating on the stock with a $350 price target, sees a seminal moment for Apple in China with pressure on both ends of the spectrum from a supply and demand perspective amid renewed tensions between the U.S. and China.The recent Department of Commerce ban on Huawei, preventing it from purchasing semiconductors from U.S. companies, has ignited fears of retaliatory moves against companies such as Apple.“On the demand story, a relative bright spot during this COVID-19 Category 5 storm remains China which represents a growth linchpin region for the company representing roughly 20% of all iPhone upgrades over the next 12 to 18 months with our estimation that 60 million to 70 million iPhones in China are currently in the window of opportunity,” Ives wrote in a note to investors. “From a supply chain perspective we believe Apple would only be able to move 5%-7% of iPhone production to India/ Vietnam over the 18 to 24 months if the China situation/tensions spirals down a more negative and nasty path over the coming months.”Ives believes though that “while uncertainty will add to an already worrisome near-term situation around the global demand picture for Apple, the fundamental impact on iPhone production and the potential backlash in the region thus far is more bark than bite”.Turning now to the rest of Wall Street, analysts have a bullish outlook on Apple’s stock. The Strong Buy consensus is backed up by 27 Buys with the rest split between 4 Holds and 1 Sell. The $318.93 average price target indicates shares are fully priced (See Apple stock analysis on TipRanks).Related News: Apple To Reopen More Than 25 U.S. Stores This Week Google, Apple Roll Out Coronavirus Contact Tracing Technology Apple is Said to Snap Up Startup NextVR For Virtual Reality Content; Top Analyst Sees Buying Opportunity More recent articles from Smarter Analyst: * Vermilion Energy CEO Steps Down With Immediate Effect * American Airlines and Others Given Go-Ahead to Reduce Route Coverage * Facebook Workplace Hits 5 Million Paid Users As Remote Work Demand Rises * NYSE to Reopen Its Trading Floor on Tuesday

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May.25 — Ben Powell, chief APAC investment strategist, at BlackRock Investment Institute, shares his views on the region’s markets and global policies. He speaks with Haslinda Amin and Tom Mackenzie on “Bloomberg Markets: Asia.”

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Bayer said on Monday it had made progress seeking a settlement over claims its glyphosate-based Roundup weedkiller causes cancer, after Bloomberg reported the company reached a verbal agreement on about 50,000 to 85,000 cases. In April, Bayer’s management regained shareholder support for its handling of the litigation process. Bloomberg cited people familiar with the negotiations as saying that the deals have yet to be signed and Bayer is likely to announce the settlements in June.

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Shares of Coty (COTY) rose by 15% on Friday to $3.85, after the company announced that its Kylie Skin products are now available at Douglas, a beauty retailer with around 2,400 locations across Europe. The announcement boosted Coty's valuation by a full $300 million. Douglas will offer six different products from the Kylie Skin line, including the Foaming Face Wash, Walnut Face Scrub, Face Moisturizer, Eye Cream, Vanilla Milk Toner and Vitamin C Serum.“We have started to build a strong foundation to support our strategic partnership with Kylie Jenner. The launch of Kylie Skin in Europe is a next step as we accelerate the integration and build Kylie Jenner’s beauty businesses into a global powerhouse brand,” said Simona Cattaneo, President of Luxury Brands at Coty.Coty acquired a controlling stake in Kylie Jenner's cosmetics startup, Kylie Cosmetics, last November for $600 million. The deal increased the company's debt load, but at the time management indicated that it expected its return on invested capital to exceed the associated cost by 2023.The stock fell significantly two weeks ago when Coty reported subpar quarterly results, revealing stalling revenue growth and falling net income. The stock has suffered through a very difficult year on Wall Street; even with Friday's jump, shares are down over 70% in the last year.TipRanks data reveals a Hold consensus for Coty.  Yet with the dramatic decline COTY shares has experienced of late, the analyst price target for COTY still represents 57% upside at $5.89 per share over the coming 12 months. (See COTY stock analysis on TipRanks)."Difficult operating environment for COTY and unfortunately things will likely get worse before they get better" summed up RBC Capital's Nik Modi. However, the stock's lone bull added that he believes "management is making the right structural decisions (i.e. cost cutting, shifting decision making to be more local, partnership with KKR) to position the Company well for a post-COVID environment."As a result Modi lowered his FY'20 sales/EBIT estimates, but left his price target unchanged at $8 (113% upside potential).Related News: Beleaguered Hertz Sinks 36% In After-Market On Bankruptcy Protection Filing Facebook Invests An Eye-Watering $5.7B in India’s Jio Platforms Tesla Asks China to Build Model 3 Cars with LFP Batteries – Report More recent articles from Smarter Analyst: * Facebook Workplace Hits 5 Million Paid Users As Remote Work Demand Rises * NYSE to Reopen Its Trading Floor on Tuesday * Agilent Up 5% On Solid Revenue Beat, But Top Analysts Stay Cautious * Facebook-Backed Reliance Launches Powerful Online Grocery Service In India

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The coronavirus lockdown has fuelled the market for teleconferencing technology apps.

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