ab 6 March 2025 Global Research China AI Intelligence AI agents: AI applications' frontier What are AI agents and why does it matter? Given the strong traction gained through DeepSeek-R1 (which emphasizes iterative problem-solving capability with high cost efficiency) and recently unveiled general- purpose AI agent Manus, we believe LLM development in China is entering the inference-dominated phase, which echoes Microsoft's comments that AI investments are increasingly dictated by real-world application dem ...

ab 3 March 2025 Global Research EM & APAC Equity Strategy China rally: How far have we travelled? EM earnings cuts accelerate After a volatile start to the year - MSCI EM is up c2% YTD (underperforming DM's 3%) - although we point out that this is heavily lifted by China. EM ex-China has underperformed DM by 5%. Overall, we also see a decent YTD trend of reversal of 2024 winners and losers (with the exception of China and Singapore, which continue to outperform). Fundamentally, EM continues to see earnings ...

Investment Rating - The report assigns a 12-month rating of "Buy" for Alibaba Group with a price target of US$140.00, while the current price is US$125.79 [6][35]. Core Insights - Alibaba Group reported a revenue increase of 8% YoY to Rmb280 billion, with adjusted EBITA growing by 4% YoY to Rmb54.9 billion, marking a return to positive growth after three quarters [2][3]. - The growth in core businesses, particularly Taobao Tmall and AI-driven cloud services, has been a significant driver of performance [2][4]. - The report highlights a recovery in consumption and an optimistic outlook for CMR (Customer Managed Revenue) growth, with expectations for continued market share recovery in the upcoming quarters [4][10]. Summary by Segment - **Taobao Tmall**: Revenue increased by 5% YoY, with CMR accelerating from +2.5% in the September quarter to +9.4% in December. This growth is attributed to GMV growth and the full-quarter benefit of a 0.6% platform service fee [3][11]. - **AIDC**: Revenue grew by 32% YoY, driven by cross-border initiatives. However, EBITA widened due to seasonal factors and increased strategic investments [3][4]. - **Cloud Services**: Revenue rose by 13% YoY, with external cloud revenue growing by 11% and AI-related revenue experiencing triple-digit growth. EBITA margin improved from 9.0% to 9.9% [3][4]. - **Overall Financial Performance**: Adjusted EBITA margin was reported at 19.6%, down 0.7 percentage points YoY, reflecting ongoing investments in user acquisition across various segments [3][11]. Financial Forecasts - Revenue forecasts for Alibaba Group are projected to reach Rmb965 billion in FY25, with continued growth expected in subsequent years [9]. - EPS estimates for FY25 are projected at Rmb64.41, surpassing consensus estimates [7][9]. Market Reaction Expectations - Positive reactions are anticipated following the results, contingent on management's outlook regarding CMR growth and margin strategies during the earnings call [10][12].