BEIJING, Feb 4 (Reuters) - JPMorgan said on Wednesday it began coverage of Alibaba <1688.hk> with a "neutral" rating because the top Chinese e-commerce firm was expected to emerge even stronger when the economy bottoms out.
The U.S bank expects Alibaba to grab more market share thanks to returns and margin leverage from current marketing activities, as well as a more diversified revenue base.
"With 6.1 billion yuan ($893 million) and no debt, Alibaba has a strong defence to survive a recession, and we believe its business could rebound sharply in an economic recovery," JPMorgan said in a research note.
However, short-term risk still exists as Chinese exporters will remain cautious about marketing costs in a challenging global business environment, despite measures taken by the Chinese government to bolster the economy, JPMorgan noted. It set a price target for Alibaba of HK$5.30, implying a 10 percent downside from Tuesday' closing price.
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