Ant Group’s profit dropped 10 per cent in the March quarter, following a structural shakeup and ramped up efforts to grow overseas.
The Hangzhou-based fintech company contributed 3.9 billion yuan (S$717.7 million) of profit to Alibaba Group Holding. Based on Alibaba’s one-third stake in Ant, that translates to an estimated 11.7 billion yuan in profit for the three months ending in March, according to Bloomberg calculations based on the listed company’s disclosures.
The results compared with a 19 per cent plunge in earnings for the previous three months, when Ant was hit by an investment loss. Its earnings lag a quarter behind Alibaba’s.
Ant declined to comment in an emailed statement.
The company made broad overhauls to its business in March, setting up independent boards for international, database and digital technologies units to pave the way for future spinoffs. The company has been expanding its overseas operations to offset slowing growth at home, tying up with at least 25 e-wallet platforms for cross-border payments in regions including South-east Asia and Europe.
The moves come after billionaire Jack Ma gave up control of Ant last year. China wrapped up its crackdown on the once high-flying internet sector by slapping more than US$1 billion in fines on Ant and Tencent Holdings in July last year.
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Ant’s international business has also been building its treasury management platform known as Whale, underpinned by blockchain technology. Separately, it worked with DBS Group Holdings to start a treasury token pilot project to improve the efficiency of fund movements between bank accounts.
Domestically, Ant is considering selling its stake in Baihang Credit, a personal credit reporting firm, as it awaits a licence approval for another similar entity known as Qiantang, a person familiar said in June.
Ant proposed buying back as much as 7.6 per cent of its shares last year, giving investors such as Fidelity Investments and T Rowe Price Group an opportunity to sell some stock. Under the repurchase plan, the company’s valuation was trimmed to about US$79 billion – well off its peak of US$280 billion before regulators scrapped an initial public offering three years ago. The fintech company is awaiting a financial holding company licence, which would help revive the IPO.
Initially catering to Chinese tourists travelling outside the country, the company has expanded its services into a backbone for cross-border payments known as Alipay+ that can be used by different wallets. The network connected more than 88 million merchants in 57 countries and regions as of early March.
Ant’s affiliate Alibaba saw revenue rise by only 4 per cent, after aggressive promotions and new shopping features failed to drive spending in China. BLOOMBERG
