Ant Group Co’s (螞蟻集團) profit fell to US$2.1 billion in the March quarter after Chinese regulators thwarted its record initial public offering and told it to overhaul its sprawling operation.
Billionaire Jack Ma’s (馬雲) fintech giant contributed nearly 4.5 billion yuan (US$696 million) to Alibaba Group Holding Ltd’s (阿里巴巴) earnings, a company filing showed yesterday.
Based on Alibaba’s one-third stake in Ant, that translates to 13.6 billion yuan in profit, down 37 percent from the previous three months. Ant’s earnings lag one quarter behind Alibaba’s.
Photo: Bloomberg
Ant declined to comment.
The fall in profit underscores the challenges facing Ant following a widespread crackdown on China’s most powerful technology companies. In response, the nation’s largest fintech agreed to turn itself into a holding company that would be regulated more like a bank. Regulators have also issued a battery of proposals that threaten to curb Ant’s dominance in online payments and scale back its expansion into consumer lending and wealth management.
China has widened its net of crackdowns, expanding tightening to everything from ride-hailing and educational technology to food delivery and monopolistic practices in music streaming. The policies shook global investors, sparking a US$1 trillion selloff.
Regulators approved Ant’s consumer finance unit about two months ago as part of its overhaul, limiting the company’s ability to lend on its own and in partnership with banks. The operation folds in its two most well-known consumer lending businesses, Huabei and Jiebei. The unit will need to provide 30 percent of funding for all co-loans, based on rules released earlier this year. At 10 times leverage of its registered capital, that means its total amount of joint loans would be capped at 266 billion yuan.
Alibaba yesterday reported that revenue for the three months ended June climbed from a year earlier to 205.7 billion yuan, compared with analysts’ average estimates of 209.4 billion yuan. Net income was 45.1 billion yuan, rebounding from a loss in the previous quarter following the firm’s record antitrust penalty.
Separately, China yesterday launched a probe into possible price manipulation, putting a brake on share surges buoyed by a global semiconductor shortage that was approaching the 12-month mark. The market regulator said it was looking into some auto-chip sellers over allegations of price misconduct.
The State Administration for Market Regulation vowed to continue watching chip prices and punish any companies found to be hoarding chips, manipulating prices or raising prices through collusion.
It did not name any firms.
Ryanair, Transavia, Volotea and other low-cost airlines are feeling the financial pain from high jet fuel prices as a result of the Middle East war and are cutting flights. The closure of the Strait of Hormuz has taken a huge chunk of oil supplies off the market, sending the price of jet fuel soaring and triggering fears of shortages that could force airlines to cancel flights. Airlines are not waiting for a lack of supplies to react. “Travel alert: Airlines are cutting thousands of flights right now,” Travel Therapy host Karen Schaler said in an Instagram reel this past weekend.
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