Alibaba raises forecast, agrees to buy 33% of Ant Financial
Hong Kong: Alibaba Group Holding Ltd. raised its annual sales forecast and agreed to buy a 33% stake in its financial services affiliate.
Revenue in the 12 months ending March will rise 55% to 56%, the company said on Thursday. That’s up from a range of 49% to 53% previously. Alibaba will buy new shares in Ant Financial in exchange for certain intellectual property rights with the companies to terminate a current profit-sharing arrangement.
The e-commerce giant’s revenue growth has been underpinned by Chinese consumer strength and investments to link its business to traditional retailers. Billionaire founder Jack Ma’s splurged $13 billion since 2015 in brick and mortar companies—shaking up supermarkets and department stores, equipping them with management systems, and investing billions into artificial intelligence and cloud computing.
“Reacceleration in overall e-commerce growth shows the early benefits of Alibaba’s new retail strategy,” Karen Chan, an analyst at Jefferies Group LLC wrote in her research report. Alibaba will “extend its last-mile reach to the 60% offline consumer population.”
The company also posted third quarter results, with revenue and adjusted earnings topping estimates.
Shares of Alibaba climbed 2.3% in New York on Wednesday. The stock has gained 18.5% this year compared with a 4.4% gain for the NYSE Composite Index.
Ant Financial, known formally as Zhejiang Ant Small & Micro Financial Services Group Co., operates the Alipay payments system. Bloomberg