Hua Er Jie Jian Wen·2025-05-16 00:50Core Viewpoint - Alibaba's stock price fell approximately 8% after the earnings report, which showed a 7% year-on-year revenue growth that did not meet expectations, despite a significant increase in net profit. Morgan Stanley believes that the market's expectations for Alibaba Cloud were too high, but the growth logic remains solid and monetization capabilities are continuously improving [1][2]. Group 1: Financial Performance - Alibaba's Q4 revenue growth of 7% was below market expectations, while net profit saw a substantial year-on-year increase [1]. - The actual adjusted EBITA profit for the quarter was 2.42 billion, with a profit margin decline of 1.9 percentage points, which was worse than market expectations by 1.5 percentage points [2]. - Morgan Stanley maintains an "overweight" rating on Alibaba with a target price of $180, indicating confidence in the company's future performance [1][3]. Group 2: Cloud Business Insights - The decline in Alibaba's stock is attributed to the market's overly optimistic expectations of a 20% growth in Alibaba Cloud, while the actual growth was 18%, aligning with Morgan Stanley's predictions [2]. - AI-related product revenue has shown triple-digit growth for seven consecutive quarters, indicating strong investment appeal [2][3]. - Morgan Stanley forecasts a 22% revenue growth for Alibaba Cloud in Q1 FY2026, which could act as a catalyst for stock price recovery [3]. Group 3: E-commerce Business Performance - Alibaba's Taobao Tmall Group (TTG) customer management revenue (CMR) grew by 12% in Q4, surpassing analyst expectations of 9% [4]. - CMR growth is expected to continue leading GMV growth for at least two more quarters, driven by a 0.6% service fee implementation and increased marketing penetration [5]. - The strategy involves embedding AI features into the Taobao Tmall platform to enhance user engagement and frequency of use [5]. Group 4: Valuation and Shareholder Returns - Alibaba has repurchased approximately $11.99 billion in stock over the past 12 months and announced a dividend of $2 per American Depositary Share for FY2025, totaling $4.6 billion in dividends [6]. - The expected P/E ratio for Alibaba in FY2026 is only 12 times, while Morgan Stanley's target price implies a 16 times P/E ratio for FY2027, indicating a reasonable valuation range [7].