Written by 
Article content
(Bloomberg) — Alibaba Group Holding Ltd., Tencent Holdings Ltd. and JD.com Inc. will post earnings soon after China is expected to sign off on what could be its biggest fiscal package to spur growth since the pandemic.
They stand to be beneficiaries of any potential measures unveiled by the Standing Committee of the National People’s Congress meeting in Beijing this week to support the economy.
Article content
All three continued to sustain quarterly revenue growth, consensus shows, with investors becoming increasingly optimistic about their outlook with a favorable regulatory backdrop, UOB Kay Hian said. The tech giants are also benefiting from easing competition and increasingly embracing collaboration efforts, including integrating payment and delivery services on rival platforms.
Alibaba and JD.com, operating in a soft retail landscape, may introduce steeper discounts to stimulate consumption during Singles’ Day, the country’s largest annual shopping festival, said Bloomberg Intelligence. China’s trade-in program to boost demand for appliances and consumer goods may also bode well for sales during the shopping event taking place Nov. 11.
Hon Hai Precision Industry Co. could see high AI demand offset weak smartphone sales this quarter. It also plans to boost server capacity to meet stronger-than-anticipated demand for Nvidia Corp. chips used to develop AI.
Highlights to look out for:
Tuesday: SoftBank Group (9984 JP) will likely miss consensus calling for net income of more than ¥300 billion ($2 billion) in the second quarter amid the recent AI stock volatility. A slowdown in OpenAI’s active users could be pivotal to its valuation and SoftBank’s net asset value, given its $500 million investment, BI said.
Article content
- Tokyo Electron’s (8035 JP) quarterly operating profit may have risen, as solid demand from AI chip customers spurred sales, BI said. The maker of industrial electronics products may also slightly raise its full-year operating profit target, given progress in the first half, it added.
Wednesday: Tencent (700 HK) continued to see sustained revenue growth, with consensus calling for a 8.6% increase. Video games continued to see faster growth in the second half of the year, supported by popular game titles including Brawl Stars and Valorant, HSBC said. The company still faces a deteriorating outlook for its fintech and advertising segments amid a sluggish economy, said BI.
- Rakuten’s (4755 JP) recent mobile segment profitability improvement might have stalled in the third quarter, BI said. Strong earnings growth from the company’s internet and fintech units might be offset by continued mobile operating losses.
Thursday: JD.com’s (JD US) earnings should benefit from China’s consumption-boosting stimulus measures, with the trade-in program for household appliances expected to boost electronics sales. Watch for commentary on Singles’ Day sales. Analysts at Citi said lower sales and marketing spending during July and August could further bolster profit.
Article content
- Hon Hai’s (2317 TT) record third-quarter sales, fueled by demand for AI servers, should drive profit growth. Consensus is for slimmer gross margins, which BI analysts attribute to the buy-and-sell business model in some of its higher-end AI servers. Revenue from the smart consumer electronics segments, which has seen declines in recent quarters, may see some stability as iPhone shipments improve.
- Net income at Sumitomo Mitsui Financial Group (8316 JP), Mitsubishi UFJ (8306 JP) and Mizuho Financial Group (8411 JP) probably grew 13%, 69% and 9.8%, respectively. MUFG and Mizuho are expected to raise profit guidance, SMBC Nikko said. MUFG will likely announce buybacks of around ¥200 billion yen, they added.
- Geely Automobile (175 HK) was another beneficiary of China’s appliances trade-in program, which likely helped lift sales in the quarter. The automaker should also gain from the Chinese government’s purchase of new energy vehicles. Sales growth may be hampered by new EU tariffs on Chinese electric vehicles.
Friday: Alibaba (BABA US) likely only saw 1.4% revenue growth in its Taobao & Tmall Group segment in the fiscal second quarter, as business and consumer sentiment in China remained weak. Adjusted Ebitda likely fell for a third straight quarter as the firm spent more to gain e-commerce market share, BI said.
Share this article in your social network