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Last week on Asia earnings: Alibaba, Tencent, Megabanks of Japan


(Bloomberg) – Key Asia earnings could deliver mixed business results this week, with Chinese retail giant Alibaba expected to widen profit margins while the three banks Japan’s largest customer will likely incur larger losses due to holding foreign bonds.

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Japan’s major banks will detail their earnings performance on Monday, and analysts expect the subdued results to be influenced by sluggish loan growth. The Nikkei reported on Sunday that between them, the three banks’ total unrealized losses from foreign bonds will likely hit their biggest since March 2015. This week ends much of the earnings season of the three banks. Japan, so far has shown a stark difference between companies beating expectations in an increasingly challenging global environment, and those expectations are dwindling.

Tencent and the online retail giants will release earnings over the weekend after China announced that it would change its Covid Zero policy that has cast a shadow over the country’s long-term outlook. Alibaba, which reports second-quarter earnings on Thursday, probably saw its first Ebita profit margin expansion in three years after losses at local consumer services and in Southeast Asia, according to a report. Bloomberg Intelligence. Retailers’ earnings came after the Singles Day shopping event, which Citi analysts described as disappointing for Alibaba and surprisingly positive for JD.com.

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Highlights to look for this week:

Monday: Japan’s three megabanks will report earnings on Monday after markets close in Tokyo. No specific fireworks are expected in the second quarter reports. Market participants will keep an eye on how lenders are moving towards their full-year goals. Mitsubishi UFJ Financial Group (8306 JP) is targeting a net income of 1 trillion yen this fiscal year, with smaller rivals Sumitomo Mitsui Financial Group (8316 JP) and Mizuho Financial Group (8411 JP) forecast is 730 billion yen and 540 billion yen, respectively. With interest rates in the US skyrocketing while the Bank of Japan is firmly pinning yields to near zero, all eyes will be on paper losses on foreign bond holdings by foreign investors. lenders. Meanwhile, analysts expect MUFG to embark on another share buyback program this quarter.

Third: No big earnings are expected.

Wednesday: Tencent (HK700) will report third-quarter earnings after the market closes. It recorded its first decline in revenue last quarter and investors are keen to see if the downtrend continues. Third-quarter revenue is expected to fall 0.4 percent from a year earlier, according to Bloomberg Consensus estimates. Wall Street analysts cut their price targets by the most for the month, and the stock fell to a five-year low last month. According to CICC, domestic and foreign game businesses face pressure and weak growth during the traditional peak season, which is summer, according to CICC. Further comments on the divestment from the portfolio are also in the spotlight as the Chinese giant has long been expected to reduce investment to meet Beijing’s antitrust regulations.

Thursday: Alibaba (BABA US) will launch in Asia evening. China’s e-commerce giant may report first year-over-year expansion in adjusted Ebita margins since 2019, thanks to narrower-than-expected losses at online food delivery platform Ele.me and Southeast Asia branch Lazada, BI wrote. Analysts expect sales to grow 4.3% in the fiscal second quarter – down from a 29.4% gain in the same period last year – reflecting JPMorgan’s revenue concerns about cutting price target reduction in September.

Friday: JD.com (JD US) reports after the market close in Hong Kong. China’s second-largest online retailer’s third-quarter results followed Singles’ Day and were on par with Alibaba’s earnings, with Bloomberg Consensus predicting the highest gross margin in two years. However, potentially weaker business sentiment in the country could drag down the current quarter’s services revenue contribution, BI added.

– With support from Crystal Chui and Sophie Jackman.

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