Alibaba's performance better than expected

Alibaba reported a better-than-expected performance in the second quarter with revenue increasing after promotional activities boosted spending. 

Revenue in the June quarter climbed 34 percent to US$21.76 billion while profit was 47.6 billion yuan (US$6.8 billion), jumping more than 120 percent due to gains from equity investments. 

"We were well positioned to capture growth from the ongoing digital transformation, which has been accelerated by the pandemic, in both consumption and enterprise operations,” said Daniel Zhang, chairman and CEO of Alibaba Group. 

Income from core commerce businesses jumped 34 percent to 133.32 billion yuan. 

Transactions made through Taobao Live increased more than 100 percent from last year as virtual promotion formats gained momentum. 

The company will further leverage livestreaming as an event marketing tool and as part of the customer management and promotion solution for merchants to differentiate from rivals including Douyin and Kuaishou, Zhang said during the earnings conference call. 

"We've seen recovery of local consumption stay strong and promising in all city tiers although there's still uncertainty as low-income groups remain cautious about employment and spending which need more time to fully recover," he added.

Transaction volume of online physical goods at its flagship business to consumer site Tmall grew 27 percent, with all major categories almost returning to the growth pace in the December quarter last year, thanks to higher purchase frequency and increased new consumer acquisitions. 

BOCOM International wrote in a research note ahead of the earnings call that Alibaba is expected to enhance efficiency in the advertising system to monetize livestreaming and personalized recommendation services. 

JD, China’s second largest e-commerce site, also topped estimates on Monday after it reported strong quarterly gains with a 33.8 percent jump in revenue to US$28.5 billion.

Supermarket,s including consumable items and fresh goods, became the largest category in the first half for JD after wet market access was limited. 

BOCOM International expects stronger seasonality in the third quarter for JD as consumption for home appliances was delayed in previous months, while growth in consumer goods won't be as high as in the second quarter due to promotional activities. 

It also estimates the momentum for general merchandise to persist, as the demand for consumer goods remained strong in July even without promotions.