(Yicai Global) Nov. 18 -- Shares in Alibaba Group Holding soared as much as 6.7 percent today after the Chinese e-commerce giant logged a 19 percent jump in net profit for the second fiscal quarter ended Sept. 30 from a year earlier, although this figure does not take into account big losses from some of its investments.

Alibaba’s Hong Kong-traded shares [HKG:9988] closed up 2.1 percent at HKD79.95 (USD10). Earlier in the day they hit HKD83.50. In the US, the stock [NYSE:BABA] closed up 7.8 percent at USD84.26 yesterday.

Alibaba raked in net income by non-Generally Accepted Principles and Practices, which does not take into account gains and losses from changes in the fair value of investments, of CNY33.8 billion (USD4.7 billion) in the three months ended Sept. 30, according to the Hangzhou-based company’s latest earnings report released yesterday. Revenue jumped 3.2 percent to CNY207.2 billion (USD29.1 billion). 

However, reduced investment returns due to falling equity prices meant the firm logged losses of CNY20.6 billion (USD2.9 billion) in the fiscal quarter ended Sept. 30, compared with profit of CNY3.4 billion (USD477.3 million) a year before. A performance forecast was not provided.

Vendors are spending more cautiously on marketing in an uncertain market, Chairman and Chief Executive Officer Daniel Zhang said at the earnings call. The biggest change before and after the pandemic is that merchants now "want to ensure that the advertising they're paying for is effective and paying off."

The company’s China retail business contributed 63 percent of its total operating revenue over the period, amounting to CNY131.2 billion (USD18.4 billion), dipping 1 percent from a year ago. 

Revenue from customer management tumbled 7 percent to CNY66.5 billion (USD9.3 billion) due to a drop in turnover on its main e-marketplaces Tmall and Taobao.

However direct sales saw a 6 percent jump in revenue to CNY64.7 billion (USD9 billion), largely driven by its grocery chain Freshippo and healthcare arm Alibaba Health.

The high rate of returned orders was due to the platform improving how customer returns are handled, thus making returns easier, as well as the impact of Covid-19 outbreaks on deliveries, Zhang said.

Alibaba will not complete its dual-primary listing in Hong Kong before the end of the year as planned because it needs to put to shareholders a new employee stock ownership plan that complies with newly revised rules in Hong Kong, it added. 

Editors: Liao Shumin, Kim Taylor