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Alibaba Reaping the Rewards

Alibaba Reaping the RewardsAlibaba Reaping the Rewards

E-commerce is skyrocketing in China, the country’s National Bureau of Statistics said Thursday, and Alibaba is reaping the rewards, Business Insider reported. Online retail sales in the country grew 37% in the first two months of 2018, NBS reported, up from 32% growth the prior month. Meanwhile, traditional retail sales grew just 9.7%—falling just short of the expected 9.8%. “Taking into consideration normal seasonality pattern, this gives us a higher level of comfort in our Alibaba’s FY18 gross merchandise volume growth estimate of 30% with potential upside,” Jefferies analyst Karen Chan said in a note to clients Thursday. Jefferies is one of the Alibaba’s biggest bulls, with a price target 41% above the Wall Street consensus of $230 per share. “We believe the strong online retail sales in spite of weak seasonality could be attributed to: 1) a longer-than-usual shopping window prior to Chinese New Year holiday; 2) increased rural consumption spending over CNY from post-80s with smart home electronics and imported fresh goods showing fast growth; 3) step-up in online-offline promotional efforts, e.g. red packets, Taobao-RTmart (SunArt) promotion; 4) enhanced logistics service for fresh goods, e.g. Hema,” Chan said.

 

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