Alibaba is optimistic about its cloud computing business in the current fiscal year, according to finance chief Maggie Wu.
Alibaba’s current fiscal year started in April and ends on March 31, 2021.
In a 2018 interview, current chairman and CEO Daniel Zhang told CNBC that Alibaba cloud computing business could become its “main business” someday.
On Wednesday, Zhang said in a speech that the technology is a “growth engine” but noted that the world is in a “nascent stage of the global cloud era.”
According to the Alibaba CEO, cloud computing is “the kind of opportunity that comes only once in a generation.”
Meanwhile, Alibaba’s CFO Wu said its Cainiao logistics arm aims to turn operating cash flow positive in the current fiscal year.
Cloud computing is considered one of Alibaba’s fastest-growing businesses in recent years as has expanded to Europe and Asia. In the June quarter, revenue from cloud computing increased by 58.5% to 12.35 billion yuan ($1.75 billion). However, it remains to account for 8% of Alibaba’s total revenue.
Data from Synergy Research showed that Alibaba is the second-largest cloud computing player by revenue in the Asia-Pacific region, behind Amazon, but it is number one in China.
In April, Alibaba announced it would invest 200 billion yuan in its cloud computing section over the next three years.
Alibaba shares
Last year, Alibaba announced its plan to raise up to $13.4 billion through the issuance of shares in Hong Kong.
The plan of Alibaba for a secondary listing in Hong Kong to raise $13.4 billion for its continued expansion into online travel, delivery and media represents the company’s vote of confidence in the territory which has been affected by months of civil unrest.
In 2014, the company founded by billionaire Jack Ma raised $25 billion in its initial public offering (IPO) on the New York Stock Exchange (NYSE), setting the record for the largest IPO in history.
For the Hong Kong listing, Alibaba will price the 500 million new shares on or around November 20 and will start trading about four business days after. Using the current NYSE price of Alibaba’s shares, this will amount to as much as $13.4 billion if the company’s bankers exercise an option to purchase some additional shares.
According to the company’s filing with US Securities and Exchange Commission, it will use the funds raised from the IPO to further expand its online travel platform Fliggy and the digital video platform Youku. Alibaba will also use it to invest in new cloud computing and machine learning technology.
If successful, the listing will surpass AB InBev’s approximately $5 billion IPO of its Asia business in Hong Kong earlier this year as well as Uber’s $8.1 billion IPO in New York, becoming the largest offering of 2019 so far. The IPO will also establish Hong Kong as this year’s largest exchange for public offerings.
The offering reflects confidence from investors and companies in Hong Kong despite the territory’s first recession in 10 years and months of unrest and protests.
However, Alibaba’s Hong Kong IPO could potentially be outdone by Saudi Arabia’s state oil giant Saudi Aramco, which plans to go public later this year on the Riyadh stock exchange and is expected to be the biggest IPO in history.
