Alibaba earned $2.3 billion in profits, excluding any one-time gains, in the first half of 2014. Analysts a t the banks working on the deal recently forecast that the companys profit will grow to nearly $7 billion for the full year in 2015, people familiar with the figures said. At that level, a share price at the middle of the range proposed for Alibabas IPO values the Chinese e-commerce giant at about 24 times its 2015 earnings—about 20% lower than the 30 times earnings at which bankers say rival Tencent typically trades. At the midpoint of the IPO price, Alibaba would have a market value of $162 billion, including options grants and other restricted shares, compared with $147 billion for Hong Kong-listed Tencent. Like Alibaba, Tencent is a big player in the Chinese mobile Internet, though it is primarily a chat app provider, not an e-commerce company. The analysts also forecast that Alibabas revenue will continue to grow at a rapid rate, more than 30% a year, meaning that Alibaba could reach $20 billion in revenue by 2016, the people familiar with the estimates said. While big investors typically do their own research on companies and produce their own estimates, during IPOs they rely more heavily on banks analysts. That is because the banks analysts get to discuss future earnings with the company. Companies rarely make public forecasts before IPOs, for fear of running afoul of U.S. securities rules that limit what they can say before the offering. The banks estimates range, with some of the people saying that analysts have given forecasts closer to $6 billion, not including one-time gains, for 2015 adjusted net income. Analysts outside the bank have come up with similar estimates. For example, analysts at Bank of America Merrill Lynch and Sanford C. Bernstein, which arent underwriting the deal, forecast profit of $6.5 billion for Alibaba next year, and forecast a potential market value for the company of more than $200 billion.
Posted on: Sat, 20 Sep 2014 03:39:12 +0000
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