Chinese tech giant Alibaba posts surge in sales in advance of IPO

Alibaba has posted a surge in mobile revenue as the Chinese ecommerce giant prepares to seek a $140 billion (€106 billion) valuation at one of the most eagerly anticipated flotations in years.

A tenfold jump in revenue from mobile devices helped drive revenue 46 per cent higher to Rmb15.8 billion (€1.94 billion) in the second quarter, while net income almost tripled to Rmb12.3 billion. Analysts have focused on Alibaba’s ability to draw mobile users to its marketplace amid fierce fighting among China’s tech groups for customers glued to their smartphones

The group said a third of overall sales by value took place via mobile last quarter, up from 12 per cent last year, as the number of smartphone shoppers hit 188 million in June, from 136 million last December.

The jump in sales prompted Alibaba to increase its internal valuation to $140 billion, from $133 billion earlier this month and $119 billion in June, according to a regulatory filing ahead of its roadshow in Asia, which could start as early as next week. It is expected to raise about $20 billion when it lists in New York, putting it in contention for the title of the biggest initial public offering, currently held by Agricultural Bank of China, which raised $22.1 billion in 2010.

It is already the world’s largest online retailer by merchandise volume, and many investors see huge growth opportunities for Alibaba as China’s population grows wealthier and goes online in increasing numbers.

The number of smartphone users in China is growing faster than the number of PC users – many of them first-time internet users who are only able to afford internet access thanks to cheap handsets – but rival Tencent is generally perceived to have the edge on mobile.

Tencent operates the popular chat app WeChat, or Weixin, and has rapidly been adding ways to use the app to shop.

Until recently, Alibaba and Tencent had been locking horns in a months-long race to get Chinese consumers to log into their respective apps to hail and pay for taxis in an attempt to win over users new to making mobile purchases.

The roadshow for the Alibaba deal could begin as early as next week with pricing in the week of September 15th, although the schedule remains highly uncertain and depends on the US Securities and Exchange Commission vetting process. The regulator will provide feedback and ask for clarifications from companies seeking to list.

Chinese and Silicon Valley tech entrepreneurs will watch closely what Alibaba does with the proceeds of its listing. Alibaba has been on a string of acquisitions recently, snapping up start-ups in whole or in part to fuel its ambitions both at home and abroad. – (Copyright The Financial Times Limited 2014)