Hua Er Jie Jian Wen·2025-08-28 19:24Core Viewpoint - Alibaba is set to release its Q2 2026 financial report, with analysts predicting a modest revenue growth of 5% year-on-year to approximately 255.2 billion RMB (about 35.5 billion USD) and a 6% decline in adjusted EPS to 2.16 USD [1] Revenue and Profit Forecast - Analysts from Guohai Securities predict Alibaba's Q2 total revenue will reach 249 billion RMB, a 2% year-on-year increase, but adjusted EBITA is expected to decline by 15% to 38.2 billion RMB, resulting in a profit margin of 15% [2] - Citigroup forecasts Q2 total revenue at 252.6 billion RMB, a 3.9% increase, but non-GAAP net profit is expected to drop to 32.1 billion RMB due to increased investment in the delivery business [2] Cloud and AI Business Growth - Alibaba's cloud business is anticipated to be a key growth driver, with Citigroup predicting a 21% year-on-year revenue increase to 32.1 billion RMB, while Bank of America expects a 25% growth [3][4] - Alibaba plans to invest over 380 billion RMB (over 50 billion USD) in cloud and AI infrastructure over the next three years, exceeding the total investment of the past decade [3] Competitive Landscape and Market Strategy - Alibaba is aggressively investing in its core e-commerce business to capture market share amid a slowing domestic consumption environment and strong competition [5] - The launch of "Taobao Flash Purchase" has significantly increased daily order volume, reaching over 100 million orders during a promotional event, but this rapid growth has come at a high cost [6] Business Integration and Synergies - The integration of Ele.me and Fliggy into Alibaba's e-commerce group is beginning to show synergies, with a unified membership system enhancing user engagement [7] - The new Taotian Group (TTG) is expected to generate 134.6 billion RMB in Q2 revenue, a 6.5% year-on-year increase, although EBITA is projected to decline by 18.4% [7] Profitability Challenges - Bank of America has significantly lowered its EBITA margin forecast for TTG from 41.2% to 34.2%, with overall EBITA expected to decline by 15% [8] - Despite the pressure on profits, the International Digital Commerce Group (AIDC) is expected to turn profitable soon, which may alleviate some of the overall profit pressure [8] Market Valuation and Investor Sentiment - Alibaba's valuation remains significantly lower than international peers, with a trading price approximately 11.3 times the expected earnings for FY2027 and a PEG ratio of only 0.55 [8] - Market concerns regarding the regulatory environment and geopolitical risks continue to affect investor sentiment, posing challenges for Alibaba's management [9]