Zhi Tong Cai Jing·2025-11-05 02:13Core Viewpoint - East Asia Securities has lowered Alibaba's target price from HKD 178 to HKD 196, a decrease of 10%, and downgraded the investment rating from "Buy" to "Hold" [1] Financial Performance - Alibaba is expected to announce its Q2 fiscal results in mid-October, with overall revenue growth anticipated to slow to 4% year-on-year [1] - Cloud business revenue is projected to accelerate growth to over 30%, representing a potential highlight [1] - Revenue from China's e-commerce business is expected to increase by 12% year-on-year, primarily driven by contributions from the flash purchase business [1] Profitability and Investment - The company will need to increase investments in its food delivery and flash purchase businesses, along with a significant rise in capital expenditures related to AI infrastructure, which may continue to pressure adjusted profit margins in the short term [1] Valuation Metrics - The forecasted price-to-earnings ratio for Alibaba over the next 12 months is 21.1 times, which is higher than the average of 19.2 times since its listing in Hong Kong, approximately 0.2 standard deviations above the average [1] - Compared to AI cloud companies listed in Europe and the US, Alibaba still trades at a significant discount [1] - As domestic AI applications become more widespread, the valuation of Alibaba's cloud business is expected to have upward adjustment potential, supporting a valuation recovery [1] - The target price-to-earnings ratio for the fiscal year 2027 is set at 21.8 times, with an adjusted earnings per share forecast of RMB 8.4 for the same fiscal year [1]