UOB Kay Hian analyst Julia Pan has maintained her “buy” call on e-commerce giant Alibaba with a maintained target price of US$311 ($423.89).

“Our target price implies 31 times FY21F forward price-to-earnings ratio (P/E ratio), or 0.8 standard deviation (SD) above its 5-year historical mean, on the back of a 25% earnings per share (EPS) compound annual growth rate (CAGR) in FY21-24,” says Pan in a report dated Sept 30.

In 2020, China’s retail platforms – including Alibaba – saw sustained improved user engagement despite the Covid-19 outbreak.

China’s retail mobile monthly active users (MAU) grew 15.8% y-o-y to 874 million in 2Q20. New users' average revenue per user (ARPU) exceeded RMB3,000 ($602.0) in FY20 with more than 70% of new users coming from tier 4-6 cities.

Physical goods’ gross merchandise value (GMV) for fast-moving consumer goods (FMCG), apparel and consumer electronics under Alibaba offshoot Tmall grew 40%, 17% and 27% y-o-y respectively.

The growth supersedes China’s retail growth of 6%, -8% and 6% in the same categories in 2Q2020.

In August 2020, Taobao GMV grew 20% y-o-y, surpassing pre-Covid-19 levels. The platform saw over seven million merchants joining the platform as at 1HFY20.

The online store also saw improved recommendation feeds and impressions of Taobao Live and short form videos on its app.

Moving forward, Alibaba says it will focus on upgrading its recommendation feeds for Taobao mobile app as well as to enrich its live ecosystem and interactive entertainment products to drive new-user growth.

Alibaba’s cloud business also saw heightened growth. Alicloud achieved 9.1% and 28.2% of global and Asia Pacific Infrastructure as a Service (IaaS) market share in 2019, and 42.4% market share in China’s IaaS and Platform as a service in March 2020 alone.

It had served more than 60% of A-share companies as at June 2020 with ARPU CAGR of 40% from 2018 to June 2020.

Alicloud CEO Jeff Zhang says the company is looking to expand its presence in the Southeast Asian market due to its fast growth opportunity.

As at March 2020, internet data centre revenue from Southeast Asia grew 200% y-o-y on the back of a 50% y-o-y growth in newly registered entities.

During the Covid-19 pandemic, the average number of daily buyers for Alibaba’s wholesale marketplace arms, 1688.com, and Alibaba.com, achieved 51% and 100% growth y-o-y.

Shares in Alibaba closed HK$275.60 on Oct 2.