Zhi Tong Cai Jing·2025-09-16 08:01Core Viewpoint - Huachuang Securities maintains a "Buy" rating for Alibaba-W (09988) with a target price of HKD 173.86, driven by rapid growth in instant retail revenue and synergistic effects [1] Financial Performance - For FY26 Q1, Alibaba reported revenue of CNY 247.65 billion, a year-over-year increase of 2%, and a 10% increase when excluding disposed businesses [1] - Adjusted EBITA for FY26 Q1 was CNY 38.84 billion, down 14% year-over-year, with an EBITA margin of 16% [1] - Capital expenditures for FY26 Q1 were CNY 38.7 billion, up from CNY 24.6 billion in the previous quarter [1] Business Segment Analysis - China E-commerce: Revenue increased by 9.7% year-over-year, with customer management revenue (CMR) up 10.1% due to new software service fees and improved penetration of "full-site promotion" [1] - International Business: Revenue grew by 19% year-over-year, with adjusted EBITA showing a loss of CNY 0.59 billion, significantly reducing losses [3] - Cloud Business: Revenue rose by 26% year-over-year, with adjusted EBITA also up 26%, and an EBITA margin of 8.8%, driven by growth in public cloud services and increased adoption of AI-related products [1][2] Instant Retail Insights - Instant retail showed a year-over-year growth of 12%, with management highlighting operational metrics such as a peak daily order volume of 12 million and 300 million monthly active buyers [2] - Management aims to reduce unit economics (UE) for instant retail by half while projecting an additional CNY 1 trillion in GMV over the next three years [2] Cloud Business Outlook - The cloud business is expected to continue its upward trajectory, with a 26% growth rate in FY26 Q1 and AI revenue accounting for over 20% of external commercial income [2] - Management reiterated a commitment to invest CNY 380 billion over three years to bolster cloud growth [2]