Investment Rating - The report maintains a "Buy" rating for Alibaba Group, with a target valuation of 25,047 billion RMB, corresponding to a target price of 147 USD per ADS and 143 HKD per share, indicating an upside potential of 48% and 45% respectively [5][9][118]. Core Insights - The report emphasizes that the domestic internet cloud business has emerged from a low point, with AI and international expansion serving as new growth drivers. The shift in focus towards AI-driven public cloud services is expected to enhance revenue growth and profitability [6][7][12]. - Alibaba's cloud business is identified as a core strategic focus, with significant investments in AI capabilities and self-developed chips, which are anticipated to drive revenue growth in the coming years [10][11][12]. - The report highlights that AI applications are beginning to show tangible contributions to revenue, particularly in cloud services and advertising, with significant growth in AI-related product revenues [75][110]. Financial Data and Earnings Forecast - For FY2025 to FY2027, the projected revenues for Alibaba Group are 10,186 billion RMB, 10,934 billion RMB, and 11,843 billion RMB, with corresponding growth rates of 8.2%, 7.3%, and 8.3% respectively. Adjusted net profits are forecasted to be 1,570 billion RMB, 1,706 billion RMB, and 1,838 billion RMB, with growth rates of -0.9%, 8.7%, and 7.8% respectively [4][118][119]. - The adjusted EBITA margin is expected to improve, with forecasts of 7.5%, 7.8%, and 8.0% for FY2025 to FY2027 [118][121]. Key Assumptions - The report posits that Alibaba's self-developed chips and model capabilities will enhance the growth of its cloud business, with revenue growth rates for Alibaba Cloud projected at 7.5%, 10.0%, and 11.0% for FY2025 to FY2027 [10][118]. - The strategic focus on public cloud products is expected to lead to improved profit margins, as the company reduces low-margin integrated projects [7][10][110]. Market Comparison - The report notes that Alibaba's cloud business has maintained the largest market share in IaaS and PaaS, although it has seen a decline from over 40% to below 30% from 2019 to 2023, while competitors like Huawei have gained market share [63][66]. - The competitive landscape is evolving, with AI becoming a critical factor in cloud service growth, as seen in the performance of international peers like Microsoft and Amazon [39][112].

Investment Rating - The investment rating for the company is "Buy" (maintained) [1][3] Core Insights - The company is expected to see stable monetization rates and continued investment in core businesses, with a focus on international digital commerce and cloud services [1][3] - For FY2025Q2, the overall revenue is projected to grow by 7% year-on-year to 2,396 billion RMB, with adjusted EBITA expected to decline by 7% to 398 billion RMB [2][3] - The international digital commerce group is anticipated to achieve a revenue of 313 billion RMB, reflecting a year-on-year growth of 28% [2][3] Financial Performance Forecast - The company forecasts total revenue for FY2025E at 1,010,044 million RMB, with a growth rate of 7% [4] - The net profit attributable to the parent company is expected to be 101,934 million RMB for FY2025E, representing a growth rate of 28% [4] - The adjusted EBITA margin for the Taobao group is projected to be 44% for FY2025Q2, with revenue expected to reach 1,013 billion RMB, a 4% increase year-on-year [2][4] Segment Performance - The Taobao group's revenue is expected to grow by 4% year-on-year to 1,013 billion RMB, driven by stable consumer recovery and improved monetization tools [2][3] - The cloud intelligent group is projected to achieve a revenue of 299 billion RMB for FY2025Q2, with an 8% year-on-year growth, primarily driven by AI product revenue [3][4] Valuation Metrics - The company is expected to have a diluted EPS of 5.10 RMB for FY2025E, with a P/E ratio of 17x [4][6] - The target market capitalization for FY2025 is estimated at 20,708 billion RMB, corresponding to a target price of 108 RMB [3][4]

Investment Rating - The investment rating for the company is "Outperform" [1][4][11] Core Views - The company is expected to report a revenue increase of 6% year-over-year for Q2 FY25, with an estimated revenue of 237.2 billion yuan. The adjusted EBITA margin is projected to be 18%, reflecting a year-over-year decline of 1.1 percentage points [3][5][11] - The report anticipates that the company's revenue growth will slightly improve quarter-over-quarter, primarily driven by an acceleration in the revenue growth of Taobao [3][5] - The company is focusing on enhancing user experience, which has led to increased investments, particularly in the 88VIP program, impacting profit margins [3][4][5] Revenue Forecasts - The revenue forecasts for FY2024 to FY2026 have been slightly adjusted to 997.2 billion yuan, 1,091.8 billion yuan, and 1,199.2 billion yuan, respectively, with a reduction of 0.2% for each year [4][11] - The adjusted net profit forecasts for the same period are 149.2 billion yuan, 171.8 billion yuan, and 182.3 billion yuan, with an increase of 1.5% for FY2024 and slight reductions for the following years [4][11] Segment Performance - For Q2 FY25, the expected revenue growth rates for various segments are as follows: Taobao at 1%, International Digital Commerce at 30%, Local Services at 16%, Cainiao at 18%, and Cloud Intelligence at 8% [5][6] - The report highlights that the Taobao GMV growth is expected to be close to the overall market growth, with a significant promotional investment planned for the Double 11 shopping festival [8][11] Valuation - The company is valued using a sum-of-the-parts (SOTP) approach, with Taobao Group assigned a PE ratio of 12-13x for FY2025, Cloud Intelligence at 3x PS, and International Digital Commerce at 1x PS. The target price has been adjusted to 120-127 HKD, indicating an upside potential of 17%-23% from the current price [4][11]

Investment Rating - The investment rating for Alibaba is "Buy" (maintained) [5] Core Views - Alibaba is positioned as a leader in domestic internet e-commerce and cloud computing, facing three marginal changes: the core business Taobao's GMV is returning to growth, international e-commerce revenue continues to grow rapidly, and other businesses are nearing breakeven [1] - The company is undergoing fundamental adjustments, has high valuation attractiveness, and is in a favorable funding environment, indicating medium to long-term investment value [1] Summary by Sections 1. Taobao Group - Taobao's GMV share is expected to stabilize and recover due to the peak of live e-commerce and internal strategic adjustments [2] - The new service fee rules are anticipated to bring commission increments and enhance monetization rates, with the "All-Station Push" advertising product expected to improve ROI for small and medium-sized merchants [2][3] - The internal strategy focuses on enhancing user experience, increasing platform traffic, and promoting merchant return, which is expected to boost GMV [2] 2. International E-commerce - The cross-border e-commerce sector is experiencing a trend towards refined development, with significant growth potential in Southeast Asia [3] - The international e-commerce business, driven by the "Choice" service, is expected to maintain high growth rates, with projected revenues of 1296.32 billion, 1556.20 billion, and 1842.97 billion for FY25, FY26, and FY27 respectively [10] 3. Cloud Computing - The cloud computing industry in China is growing rapidly, with market size increasing from 322.9 billion to 616.5 billion from 2021 to 2023, representing a CAGR of 38.18% [4] - Alibaba Cloud remains the leader in the IaaS market, benefiting from the demand for high computing power driven by AI models [4][7] 4. Financial Forecasts and Valuation - Revenue projections for Alibaba are 10125.53 billion, 10983.71 billion, and 11968.13 billion for FY25, FY26, and FY27, with growth rates of 7.58%, 8.48%, and 8.96% respectively [10] - The expected net profit for the same periods is 1045.19 billion, 1217.72 billion, and 1678.78 billion, with growth rates of 30.78%, 16.49%, and 37.82% respectively [10][11] - The company is expected to maintain a PE ratio of 14.56X, 12.50X, and 9.07X for FY25, FY26, and FY27 [10][11]

Investment Rating - The report maintains a **Buy** rating for Alibaba-W (09988 HK) [1] Core Views - Alibaba's GMV growth is benefiting from user repurchase behavior and payment interoperability, with expectations of further CMR revenue growth driven by the rollout of site-wide promotion tools [1] - The report highlights Alibaba's competitive advantages in the e-commerce sector, particularly through its comprehensive SKU ecosystem and user experience [3] - Alibaba's integration of Pinduoduo's traffic strategies and the innovation of its promotion tools are expected to drive CMR revenue growth [3] Financial Projections - Revenue is projected to grow from RMB 941 168 million in FY2024 to RMB 1 194 600 million in FY2027, with a CAGR of 8 34% [2] - Non-GAAP net profit is expected to increase from RMB 158 359 million in FY2024 to RMB 181 541 62 million in FY2027 [2] - EPS (Non-GAAP) is forecasted to rise from RMB 8 13 in FY2024 to RMB 9 47 in FY2027 [2] Competitive Analysis - Alibaba's Taobao and Tmall are leveraging a **store logic** approach, focusing on comprehensive shopping experiences and brand-centric SKU ecosystems, which contrasts with Pinduoduo's **product logic** that emphasizes low prices and limited SKUs [3][12] - Alibaba's strategy includes subsidizing merchants and users to enhance stickiness, with the integration of WeChat Pay expected to drive new user growth [3][22] - The report notes that Pinduoduo's cost advantages are diminishing due to rising logistics and commission fees, while Alibaba is replicating promotional strategies to support small and medium-sized merchants [3][20] Promotion and Monetization - Alibaba's site-wide promotion tools are expected to improve advertising ROI and increase Take Rate, creating a positive cycle for GMV and CMR revenue growth [3][33] - The report highlights that Alibaba's promotion tools, such as the upgraded "Wanxiangtai Wujieban" and "Site-wide Promotion," are designed to simplify advertising processes and enhance efficiency [3][35] - The integration of promotion tools is expected to accelerate the monetization of natural traffic, with advertising revenue and GMV projected to rise simultaneously [3][39] User Growth and Engagement - E-commerce user growth is nearing saturation, but Alibaba's integration with WeChat Pay could unlock new growth opportunities, given WeChat's higher MAU compared to Taobao [3][24] - The report emphasizes that Alibaba's strategy is shifting towards increasing order frequency rather than user acquisition, with subsidies and low prices driving user stickiness [3][27] Industry Trends - The report compares Alibaba to Walmart and Pinduoduo to Costco, highlighting Alibaba's focus on supply chain efficiency and comprehensive SKU coverage as key competitive advantages [12] - The e-commerce industry is moving towards a model where increasing order frequency and user engagement are more critical than acquiring new users [3][27]

Investment Rating - The report gives a "Recommend" rating for the company, with an expected adjusted EPS of 7.85/8.62/9.53 yuan for FY2025-2027, and a corresponding adjusted PE of 9/9/8 times based on the closing price on September 10 [2] Core Views - The company has reorganized its strategy to focus on "user-first" and "AI-driven" priorities, with a renewed emphasis on e-commerce and cloud computing [1] - E-commerce competition is easing, and the company's traditional strengths in shelf-based e-commerce are expected to stabilize market share [2] - Cloud computing, driven by AI, has significant growth potential, with the company leading in both scale and technology [1][2] E-commerce - The e-commerce sector is seeing a slowdown in low-price competition, with the company improving user experience and optimizing merchant operations [1] - Measures include "refund-only" policies, free shipping to Xinjiang, and upgrades to the 88VIP program [1] - The company has introduced new tools like "Full-Site Promotion" to boost merchant growth and CMR revenue [1] Cloud Computing - The company leads in domestic IaaS and PaaS market share, with a comprehensive IaaS+PaaS+MaaS architecture [1] - 80% of tech companies and over half of AI large model companies in China operate on the company's cloud platform [1] - AI and large models are expected to drive significant growth in cloud computing [1] Financial Projections - Revenue is projected to grow from 941.168 billion yuan in FY2024 to 1,169.964 billion yuan in FY2027, with a CAGR of 7.6% [3] - Adjusted net profit is expected to grow from 158.359 billion yuan in FY2024 to 183.445 billion yuan in FY2027, with a CAGR of 11% [3] Shareholder Returns - The company has the largest share buyback program among Chinese internet companies, with a shareholder return rate of 9.4% (dividends + buybacks) for FY2024 [2] Historical Development - The company has evolved from a B2B platform to a comprehensive internet giant, with key milestones including the launch of Taobao, Tmall, and AliCloud [6][7] - Recent strategic shifts include a focus on e-commerce and cloud computing, with significant organizational changes in 2023 [8][9] Organizational Changes - The company has undergone multiple organizational restructurings, including the "1+6+N" reform in 2023, which established six major business groups [10][11] - Key leadership changes include the appointment of Joseph Tsai as Chairman and Eddie Yongming Wu as CEO in September 2023 [12] Market Position - The company is a leader in both e-commerce and cloud computing, with Taobao and Tmall being the largest digital retail platforms globally [6] - AliCloud is the fourth-largest IaaS provider globally and the largest in the Asia-Pacific region [6] Competitive Landscape - The e-commerce sector is facing increased competition from platforms like Pinduoduo and Douyin, but the company's traditional strengths in shelf-based e-commerce are expected to stabilize market share [1][2] - Cloud computing is expected to see significant growth, driven by AI and large models, with the company leading in both scale and technology [1][2]

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Investment Rating - The report maintains a "Buy" rating for the company [6][8]. Core Insights - The company plans to introduce WeChat Pay capabilities on its Taobao and Tmall platforms to enhance consumer shopping experiences, aligning with the trend of interconnectivity in the internet ecosystem [19][20]. - The introduction of a 0.6% basic software service fee on confirmed transactions from September 1, 2024, is expected to boost the company's revenue and profit while facilitating the smooth implementation of WeChat Pay [1][19]. - The company has seen a recovery in GMV growth and is expected to accelerate its inclusion in the Hang Seng Stock Connect Index [20]. Financial Summary - Revenue projections for FY2023 to FY2027 are as follows: - FY2023: 868.7 billion - FY2024: 941.2 billion - FY2025E: 1,017.3 billion - FY2026E: 1,089.1 billion - FY2027E: 1,159.5 billion - Revenue growth rates are projected at: - FY2023: 1.83% - FY2024: 8.34% - FY2025E: 8.09% - FY2026E: 7.06% - FY2027E: 6.46% [7][23]. - Net profit attributable to ordinary shareholders is forecasted as follows: - FY2023: 72.5 billion - FY2024: 79.7 billion - FY2025E: 85.4 billion - FY2026E: 90.7 billion - FY2027E: 94.6 billion - The net profit growth rates are projected at: - FY2023: 16.92% - FY2024: 9.93% - FY2025E: 6.80% - FY2026E: 6.15% - FY2027E: 4.26% [7][23].

Investment Rating - The report gives a "Buy" rating for the company, expecting a 15%+ relative return over the next 6-12 months [181] Core Views - The company has been a pioneer in China's e-commerce and internet finance sectors, shaping the current e-commerce ecosystem [18] - It has faced significant challenges since 2020, including market share loss in e-commerce, slowing cloud growth, and regulatory issues, leading to an 80%+ drop in market cap [56] - The company is undergoing strategic adjustments to improve platform competitiveness, with signs of marginal improvement [154] Historical Performance - The company achieved a David vs Goliath victory over eBay in the early 2000s through superior platform design, including free listings, built-in chat, and payment guarantees [8] - It played a crucial role in building China's e-commerce infrastructure, including payment systems and logistics networks [9][10][14] - The company's market share in e-commerce has declined from around 80% to 40% due to competition from Pinduoduo and Douyin [30] Competitive Landscape - Pinduoduo's success is attributed to its consumer-first approach and efficient platform design, which has led to rapid GMV growth [32][43] - Douyin has rapidly expanded in live-streaming e-commerce, reaching over 2 trillion GMV in 2023 [48][77] - The company is facing competition from multiple fronts, including Pinduoduo, Douyin, and emerging players like Xiaohongshu [60] Strategic Adjustments - The company has recognized its platform efficiency issues and is implementing reforms, including price competitiveness initiatives [89][114] - It is shifting from a merchant-centric to a consumer-centric approach, with changes in traffic allocation rules [115] - The company is adopting a gradual reform strategy to balance platform competitiveness and merchant interests [93][119] Financial Performance - The company has generated over 1 trillion RMB in free cash flow over the past decade, with an average of 150 billion RMB annually in the last five years [141] - It has significantly increased shareholder returns, with 42.8 billion USD in buybacks and dividends over the past 3.5 years [144] - The company's ROIC is currently low at 6.9%, but management aims to improve it to double digits [127] Valuation - The company's non-business assets are valued at 815.2 billion RMB, including 446.5 billion RMB in net cash [148] - The core e-commerce business is valued at 6.3-9.5x PE based on current profitability [135][148] - Including growth potential, the total valuation could reach 2.64 trillion RMB, representing a 47% margin of safety [153][167] Future Outlook - The company is expected to achieve 7.6% revenue growth in FY2025, with e-commerce growing at 2.2% and international business growing at 32.3% [155][168][170] - Cloud business is expected to grow at 8-10% annually, with improving profitability [191] - The company is focusing on improving capital allocation efficiency and divesting non-core assets [127]

Investment Rating - The report maintains a "Buy" rating for the company [1][2][25] Core Views - The regulatory risks have significantly decreased, leading to a more favorable investment environment for the company. The report anticipates improvements in the company's fundamentals, which could drive valuation upward [2][19] - The company is focusing on enhancing service efficiency across its business segments. Although large-scale investments may impact short-term performance, they are expected to build long-term competitive advantages [2][6] Financial Projections - The earnings per share (EPS) forecasts for the fiscal years 2025, 2026, and 2027 are projected at 8.00, 8.67, and 9.38 yuan respectively. The corresponding price-to-earnings (PE) ratios (Non-GAAP) are 9.36, 8.64, and 7.98 [2][18] - The total revenue is expected to grow from 941,168 million yuan in 2024 to 1,194,600 million yuan in 2027, reflecting a compound annual growth rate (CAGR) of approximately 8.15% [18] - The net profit attributable to the parent company is projected to increase from 80,009 million yuan in 2025 to 134,062 million yuan in 2027, with a notable growth rate of 45.05% in 2026 [18] Market Data - The closing price of the company's stock is 81.45 HKD, with a one-year low of 64.60 HKD and a high of 94.00 HKD. The price-to-book ratio is 1.66, and the market capitalization is approximately 1,575,689.79 million HKD [4][6]