Fitch Ratings affirmed Long-Term Foreign-Currency Issuer Default Rating (IDR) and senior unsecured rating “A+,” affirming the Chinese-based e-commerce giant stable outlook, according to FitchRatings. Rating underscore’s Alibaba’s strong business profile on key drivers and outlook.
- Strong recovery and improved monetization
- Alibaba had strong product offerings and customer engagement that drove recovery from pandemic impacts.
- Alibaba improved monetization and strengthened market leadership
- Accelerated digitalization
- Pandemic to accelerate online shopping and adoption of cloud services
- Low geopolitical impact
- A potential US ban will have low impact on the company as it derives limited revenue from America
- Alibaba’s secondary listing in Hong Kong does not rely heavily on external financing to fund growth and expansion
- Alibaba to continue having healthy relationships with Chinese government and authorities
- Cash generation and robust profitability
- Alibaba’s profitability to remain high with strong free cash flow generation
- Alibaba to turn cloud business profitable under Cainiao Network to generate positive operating cash flow in 2020/21
- IPO and capital structure
- Alibaba’s anti-dilution right subscribing for additional shares in Ant’s IPO to boost capital structure
- Conservative capital structure to preserve free cash flows for capital investment expenditures
- Alibaba’s credit profile compares favorably to other internet peers such as Baidu Inc., eBay Inc., and Expedia Group, but similar to Tencent Holdings.
Alibaba stock is gaining on strong ratings. BABA: NYSE is up 0.38%
