E-commerce giant overtakes Tencent to be most profitable Internet firm

Alibaba Group Holding Ltd, China's biggest e-commerce company, has overtaken Tencent Holdings Ltd to become the country's most profitable Internet company after its net profit nearly tripled in the fourth quarter from a year earlier.

Analysts said the rapidly growing profit may help privately run Alibaba secure an initial public offering, although the company said it has no timetable yet.

Alibaba posted a 171.1 percent jump in net profit in the fourth quarter as its revenue rose 84 percent, according to a regulatory filing by major shareholder Yahoo Inc.

For the quarter ending December 2012, net profit attributable to Alibaba Group was $642.2 million from $236.9 million a year earlier, while its revenue for the period jumped 84 percent to $1.84 billion, the filing said.

Yahoo, which owns about 24 percent of Alibaba, reported the online shopping giant's results as part of a document filed to the US Securities and Exchange Commission.

Tencent, in comparison, has reported net profit of $552.2 million in the fourth quarter, up 36 percent from a year earlier, according to its financial report.

Its total revenue increased 53.4 percent to $1.9 billion over the same period.

Investors are closely watching Alibaba's performance amid expectations it is preparing for an initial public offering.

Jack Ma, who steps down this week as CEO of Alibaba (he remains executive chairman), said in a speech in Stanford University over the weekend that he does not care where and when an IPO will be made for his e-commerce empire, which saw total transactions of more than 1 trillion yuan ($161 billion) last year.

He said what he cares most about is whether it will help the company sustain growth and benefit stakeholders.

"If an IPO is a wedding, Alibaba is more concerned about the marriage after. The result that we don't expect to see is the marriage becoming the grave of love," Ma said.

Hong Bo, a Beijing-based IT analyst and founder of consultancy company IT5G, said: "In the past, Jack Ma didn't want Alibaba to make money too quickly, but starting from last year, they have sped up, partly to prepare for a public listing."

Last year, Alibaba regained boardroom control from its former biggest shareholder Yahoo, buying back as much as half of its stake from Yahoo.

Incentives included in the deal to encourage the company to go public are scheduled to expire by December 2015.

The company's valuation could hit $62.5 billion once it goes public, according to the median of eight estimates from investment banks and research companies since February, based on data compiled by Bloomberg.

"Apart from surging revenue and profit, we can expect a lot from Alibaba in the future, whose focus will be on providing financial services and using transaction data from its huge e-commerce platforms," said Qiu Lin, a stock analyst with Guosen Securities Co in Hong Kong. "All this will benefit its IPO."

The net profit of China's Internet companies was roughly 100 billion yuan last year, while that of major listed Chinese banks was about 1 trillion yuan, Qiu added.

Alibaba may have even bigger scope for growth after entering the financial services industry, he said.

However, Qiu doubted the company will have any urgent need for an IPO, at least for one or two years, after the Wall Street Journal reported last week that it had obtained an $8 billion loan from nine banks.

According to Morgan Stanley estimates, Alibaba's revenue for the 12 months through December of this year could rise 59 percent from last year to $7.48 billion, delivering net profit of $2.18 billion, compared with last year's $746.3 million.

Ma also told the Stanford University audience that the company will continue to invest in mobile Internet services.

Last month, it paid $586 million for an 18 percent stake in Sina Corp's Sina Weibo, China's largest micro-blogging service, in an effort to win an upper hand in the mobile sector.