Chinese e-commerce giant Alibaba Group BABA reported strong fourth-quarter fiscal 2020 results before the opening bell on May 22, wherein it beat earnings and revenue expectations.
Earnings of $1.30 per ADS beat the Zacks Consensus Estimate of 59 cents and increased 7% year over year. Revenues climbed 22% to $16.14 billion and topped the consensus mark of $15.28 billion. Strong performance was driven by solid domestic retail businesses and robust cloud computing revenue growth.
As people stayed indoors and brick-and-mortar stores remained closed during the lockdown led by coronavirus crisis, online orders surged with the company's core commerce business rising 19% in the quarter. Cloud computing revenues soared 58%, and digital media and entertainment revenues increased 5% (read: Tech Sector Outperforming This Year: Best ETFs, Stocks).
Annual active consumers increased 15 million from the last quarter to reach 726 million in March. Mobile monthly active users in its China retail marketplaces increased 22 million quarter over quarter to 846 million.
Alibaba expects revenue growth to slow this year, reflecting post-COVID 19 economic uncertainty at home as well as business disruption from potential U.S.-China tensions. It expects to generate more than 650 billion yuan ($91 billion) in revenues in fiscal 2021, which represents at least 27.5% growth annually. The Zacks Consensus Estimate for revenues is pegged at $95.3 billion.
Alibaba currently has a Zacks Rank #3 (Hold) and a VGM Score of B. It belongs to a top-ranked Zacks industry (placed at top 16% of the total 250+ industries in the Zacks universe).
ETFs in Focus
ETFs having the highest allocation to the Chinese e-commerce giant will be in focus in the days ahead. Below, we have highlighted six ETFs in detail (see: all the Technology ETFs here):
Invesco BLDRS Emerging Markets 50 ADR Index Fund ADRE
The product offers exposure to 50 emerging market-based depositary receipts by tracking the S&P/BNY Mellon Emerging Markets 50 ADR Index. About 48.1% of the portfolio is allotted to Chinese firms, with Alibaba occupying the top position at 19.5%. Taiwan, Brazil and India round off the next three spots in terms of country exposure. Consumer discretionary, information technology, communication services and financials are the top four sectors. ADRE has amassed $104.2 million in its asset base while trading in light volume of about 14,000 shares. It charges 30 bps in fees per year and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
iShares MSCI China ETF MCHI
This ETF targets the Chinese stock market and follows the MSCI China Index. Holding 604 securities in its basket, Alibaba takes the top spot with 17.3% share. From a sector look, about 28% of the portfolio is allotted to consumer discretionary while communication (22.5%) and financials (18%) round off the next two spots. The fund has amassed $5.2 billion in its asset base while charging 59 bps in annual fees. Volume is also solid as it exchanges nearly 4.8 million shares daily on average. The ETF has a Zacks ETF Rank #3 with a Medium risk outlook (read: Are China ETFs at Risk as Economy Shrinks on Coronavirus Blows?).
Franklin FTSE China ETF FLCH
This product follows the FTSE China Capped Index, charging investors 19 bps in annual points. It holds 781 stocks in its basket with Alibaba taking the top spot at 18.1%. Consumer discretionary, communication services and financials are the top three sectors. The ETF has amassed $50.6 million in its asset base and sees average daily volume of 17,000 shares. It has a Zacks ETF Rank #4 (Sell).
SPDR S&P China ETF GXC
This product follows the S&P China BMI Index, charging investors 59 bps in annual points. It holds 1656 stocks in its basket with Alibaba taking the top spot at 14.1%. From a sector look, consumer discretionary takes the largest share at 27.3%, while communication services and financials round off the next two spots. The ETF has amassed $1.2 billion in its asset base and sees average daily volume of 118,000 shares. It has a Zacks ETF Rank #4 with a Medium risk outlook.
WisdomTree China ex-State-Owned Enterprises Fund CXSE
This fund offers exposure to Chinese stocks that are not state-owned enterprises. It tracks the WisdomTree China ex-State-Owned Enterprises Index, charging 32 bps in annual fees. Holding 149 securities in its basket, Alibaba is the second firm accounting for 12.5% share. Consumer discretionary and communication services take the top two spots at 35.6% and 21.3%, respectively, from a sector look. The product has been able to manage $213 million in its asset base and trades in volume of 37,000 shares a day on average. It has a Zacks ETF Rank #4 with a Medium risk outlook.
ProShares Online Retail ETF ONLN
This ETF focuses on global retailers that derive significant revenues from online sales. It follows the ProShares Online Retail Index, holding 24 stocks in its basket. While U.S. firms dominate the portfolio with three-fourth share, Chinese firms account for 23.8% with Alibaba taking the second spot and accounting for about 13.6% share. The product has amassed $122.1 million in its asset base while trading in a lower volume of around 39,000 shares a day on average. It charges 58 bps in annual fees from investors (read: 4 ETFs to Profit From E-Commerce Sales Boom).
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iShares MSCI China ETF (MCHI): ETF Research Reports
Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report
SPDR SP China ETF (GXC): ETF Research Reports
Invesco BLDRS Emerging Markets 50 ADR ETF (ADRE): ETF Research Reports
WisdomTree China exStateOwned Enterprises ETF (CXSE): ETF Research Reports
Franklin FTSE China ETF (FLCH): ETF Research Reports
ProShares Online Retail ETF (ONLN): ETF Research Reports
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