10 of the best performing Chinese tech companies in Q1

Major listed Chinese tech firms have released their latest quarterly results, and most of them delivered strong performances. Here’s a roundup of some of the top performers, including BAT, JD, Weibo, and Momo.

Chinese tech companies listed in Hong Kong

Tencent (腾讯)

Market cap: US$329.84 billion

Tencent Holdings Limited (00700.hk) is China’s largest tech company by market cap as of August 22, and the 16th largest tech company in the world, according to Forbes.

Tencent reported May 17 better-than expected results for the first quarter of this year ended on March 31, 2017. The company’s revenue structure is composed of value-added services (revenue generated from online games and social networks), online advertising (revenue mainly comes from WeChat Moments, WeChat official accounts and the company’s mobile media advertising) and others (this revenue mainly includes payment-related services and cloud services).

Financial Highlights:

  • The tech giant reports a 58% profit surge in Q1 driven by its popular messaging app WeChat and gaming business.
  • The company’s revenue surged 55% year-on-year (YOY) to RMB 49.55 billion (around US$ 7.18 billion).
  • The profit for the period was RMB 14.54 billion (US$ 2.10 billion), a 57 % increase YoY.
  • Profit attributable to equity holders for the period was RMB14,476 million (USD2,098 million), an increase of 58% YoY.
  • Basic earnings per share were RMB1.540. Diluted earnings per share were RMB1.522.

China Mobile (中国移动)

Market cap: US$228.45 billion

China Mobile Limited (00941.HK), the world’s biggest telecom carrier by subscribers, released April 20 its unaudited financial data for the first quarter of 2017. As of March 31, the total number of mobile customers was around 856 million.

Financial Highlights:

  • Operating revenue was RMB184.0 billion (US$27 billion), up by 3.7% over the same period last year; of which, revenue from telecommunications services was RMB160.9 billion, up by 6.1% over the same period last year.
  • Profit attributable to equity shareholders was RMB24.8 billion (US$3.6 billion), up by 3.7% over the same period last year.
  • EBITDA was RMB67.1 billion, up by 3.0% over the same period last year.

Chinese tech companies listed in the U.S.

Alibaba (阿里巴巴)

Market cap: US$302.76 billion

Alibaba Group Holding Limited (NYSE: BABA) announced on March 18 its financial results for the quarter ended March 31, 2017. The company is the world’s largest retail platform (as of April 2016), and it is more than an e-commerce giant with businesses composed of core commerce, cloud computing, digital media and entertainment, innovation initiatives and others.

Financial Highlights:

  • Revenue was RMB38,579 million (US$5,605 million) during the quarter, an increase of 60% year-over-year.
  • Net income was RMB9,852 million (US$1,431 million), an increase of 85% year-over-year.
  • Diluted EPS was RMB4.12 (US$0.60) and non-GAAP diluted EPS was RMB4.35 (US$0.63)
  • Non-GAAP net income was RMB 10,440 million (US$1,517 million), an increase of 38% year-over-year.
  • Mobile MAUs on its China retail marketplaces reached 507 million in March.

Baidu (百度)

Market cap: US$64.45 billion

Baidu, Inc. (NASDAQ: BIDU), the leading Chinese language Internet search provider, announced April 28 its unaudited financial results for the first quarter ended March 31, 2017. The search giant reported the second consecutive decline in quarterly net profit, after being hit hard by a advertising scandal last year. The biggest chunk of revenue still comes from online marketing, which made up 87.25% of the company’s total revenue in Q1. The company is now betting big on artificial intelligence to spur its future development.

Financial Highlights:

  • Total revenues in the first quarter of 2017 were RMB16.891 billion (US$2.454 billion), a 6.8% increase from the corresponding period in 2016.
  • Operating profit in the first quarter of 2017 was RMB2.006 billion (US$291.4 million), a 9.3% decrease from the corresponding period in 2016.
  • Net income attributable to Baidu in the first quarter of 2017 was RMB1.777 billion (US$258.1 million), a 10.6% decrease from the corresponding period in 2016.
  • Diluted earnings attributable to Baidu per ADS for the first quarter of 2017 were RMB4.63 (US$0.67); Non-GAAP net income attributable to Baidu in the first quarter of 2017 was RMB2.390 billion (US$347.2 million), a 1.3% increase from the corresponding period in 2016;
  • Non-GAAP diluted earnings per ADS for the first quarter of 2017 were RMB6.85 (US$1.00).

The reduction in net profit can be attributed to the company’s soaring costs on bandwidth, content, research and development and equity incentives. The increased costs are largely related to AI, an area that Baidu is betting big on and hoping will improve their future growth.

JD.com (京东)

Market cap: US$56.90 billion

JD.com, Inc. (NASDAQ:JD), China’s second largest online retailer, announced May 8 its unaudited financial results for the quarter ended March 31, 2017.

It booked its first quarterly profit as a public company, and the profit increase is due in large part to declining logistics costs and expanded product line-up.

Financial Highlights:

  • Net revenues for the first quarter of 2017 were RMB76.2 billion (US$1 11.1 billion), an increase of 41.2% from the first quarter of 2016.
  • Net income reached RMB 239 million (US$35 million) for the three-months period, turning a profit for the first time since it was listed in 2014.
  • Net income per ADS for the first quarter of 2017 was RMB0.17 (US$0.02), compared to net loss per ADS of RMB0.66 for the first quarter of 2016.
  • Non-GAAP net income per ADS for the first quarter of 2017 was RMB1.03 (US$0.15), as compared to non-GAAP net loss per ADS of RMB0.15 in the first quarter of 2016.
  • GMV for the first quarter of 2017 increased by 42% to RMB184.1 billion (US$26.7 billion) from RMB129.3 billion in the first quarter of 2016.

NetEase (网易)

Market cap: US$36.88 billion

NetEase, Inc. (NASDAQ: NTES), China’s leading internet and online game services providers, announced May 10 its unaudited financial results for the first quarter ended March 31, 2017. It is worth noting that the company derived 79% of its total net revenues from its online game services.

Financial Highlights:

  • Net revenues were RMB13.6 billion (US$2.0 billion), an increase of 72.3% compared with the first quarter of 2016. Online game services net revenues were RMB10.7 billion (US$1.6 billion), an increase of 78.5%compared with the first quarter of 2016.
  • Gross profit was RMB7.5 billion (US$1.1 billion), an increase of 63.2% compared with the first quarter of 2016.
  • Total operating expenses were RMB2.7 billion (US$394.0 million), an increase of 57.8% compared with the first quarter of 2016.
  • Net income attributable to the Company’s shareholders was RMB3.9 billion (US$569.9 million), an increase of 59.4% compared with the first quarter of 2016. Non-GAAP net income attributable to the Company’s shareholders was RMB4.3 billion (US$630.0 million), an increase of 62.6% compared with the first quarter of 2016.[1]
  • Diluted earnings per ADS were US$4.29; non-GAAP diluted earnings per ADS were US$4.75.

Ctrip (携程)

Market cap: US$ 27.97 billion

Ctrip.com International, Ltd. (Nasdaq: CTRP), a leading online leisure travel companies in China, announced May 10 its unaudited financial results for the first quarter ended March 31, 2017.

Ctrip.com International, Ltd. is the top performer among Chinese online leisure travel companies listed in the US, including Tuniu.com (NASDAQ:TOUR) and Qunar.com (NASDAQ:QUNR). It was established in 1999 and has become China’s largest travel company. The company mainly derives its revenue from its accommodation reservation, transportation ticketing, packaged-tours and corporate travel management.

Financial highlights:

First Quarter of 2017 Financial Results and Business Updates

  • For the first quarter of 2017, Ctrip reported net revenues of RMB6.1 billion (US$884 million), representing a 46% increase from the same period in 2016. Net revenues for the first quarter of 2017 increased 20% from the previous quarter.
  • Net income attributable to Ctrip’s shareholders for the first quarter of 2017 was RMB82 million (US$12 million), compared to net loss of RMB1.6 billion in the same period in 2016 and net income of RMB645 million in the previous quarter.
  • Gross margin was 80% for the first quarter of 2017, compared to 73% in the same period in 2016, and 78% in the previous period.
  • Diluted earnings per ADS were RMB0.15 (US$0.02) for the first quarter of 2017. Excluding share-based compensation charges, Non-GAAP diluted earnings per ADS were RMB1.09 (US$0.16) for the first quarter of 2017.

Weibo (微博)

Market cap: US$15.40 billion

Weibo Corporation (NASDAQ: WB), a Twitter-like social media platform, announced May 16 its unaudited financial results for the first quarter ended March 31, 2017. Weibo span off from online media company Sina in 2014, which still has a 49.8% stake in the company. Alibaba took a 31% stake in Weibo, remaining the second largest shareholder.

Financial Highlights:

  • Net revenues totaled $199.2 million, an increase of 67% year-over-year, exceeding the Company’s guidance between $185 million and US$190 million.
  • Advertising and marketing revenues were US$169.3 million, an increase of 71% year-over-year.
  • Net income attributable to Weibo was US$46.9 million, an increase of 561% year-over-year.
  • Non-GAAP net income attributable to Weibo was US$57.8 million, an increase of 254% year-over-year.
  • Monthly active users in March 2017 reached 340 million, an increase of 30% year-over-year, 91% of which were mobile users.

ZTO (中通快递)

Market cap: US$10.3 billion

ZTO Express (Cayman) Inc. (NYSE: ZTO), a leading express delivery company in China, announced May 18 its unaudited financial results for the first quarter ended March 31, 20171. Its major Chinese rivals include S.F. Express, STO Express and Shanghai YTO Express, which have all managed to go public since 2016.

Financial Highlights

  • Revenues were RMB2,614.6 million (US$379.9 million), an increase of 33.5% from the same period of 2016.
  • Gross profit was RMB730.6 million (US$106.2 million), an increase of 21.5% from RMB601.4 million in the same period of 2016.
  • Net income was RMB502.9 million (US$73.1 million), an increase of 48.4% from RMB338.8 million in the same period of 2016.
  • EBITDA was RMB804.8 million (US$116.9 million), an increase of 54.7% from RMB520.2 million in the same period of 2016.
  • Basic and diluted earnings per American depositary share (“ADS”4) were RMB0.70 (US$0.10), compared to RMB0.47 in the same period of 2016.

Momo (陌陌)

Market cap: US$7.03 billion

Momo Inc. (NASDAQ: MOMO), a leading location-based social networking platform, announced May 23 its unaudited financial results for the first quarter 2017. Thanks to its strong performance in live streaming business, the company continued its outstanding performance.

Financial Highlights:

  • Net revenues increased 421% year over year to US$265.2 million.
  • Net income attributable to Momo Inc. increased to US$81.2 million in the first quarter of 2017 from $7.1 million in the same period last year.
  • Non-GAAP net income attributable to Momo Inc. increased 615% to US$90.7 million in first quarter of 2017 from US$12.7 million in the same period last year.
  • Monthly Active Users (“MAU”) were 85.2 million in March 2017, compared to 72.3 million in March 2016.