BABA(HK:09988) Guoxin Securities·2024-10-13 13:47Investment Rating - The investment rating for the company is "Outperform" [1][4][11] Core Views - The company is expected to report a revenue increase of 6% year-over-year for Q2 FY25, with an estimated revenue of 237.2 billion yuan. The adjusted EBITA margin is projected to be 18%, reflecting a year-over-year decline of 1.1 percentage points [3][5][11] - The report anticipates that the company's revenue growth will slightly improve quarter-over-quarter, primarily driven by an acceleration in the revenue growth of Taobao [3][5] - The company is focusing on enhancing user experience, which has led to increased investments, particularly in the 88VIP program, impacting profit margins [3][4][5] Revenue Forecasts - The revenue forecasts for FY2024 to FY2026 have been slightly adjusted to 997.2 billion yuan, 1,091.8 billion yuan, and 1,199.2 billion yuan, respectively, with a reduction of 0.2% for each year [4][11] - The adjusted net profit forecasts for the same period are 149.2 billion yuan, 171.8 billion yuan, and 182.3 billion yuan, with an increase of 1.5% for FY2024 and slight reductions for the following years [4][11] Segment Performance - For Q2 FY25, the expected revenue growth rates for various segments are as follows: Taobao at 1%, International Digital Commerce at 30%, Local Services at 16%, Cainiao at 18%, and Cloud Intelligence at 8% [5][6] - The report highlights that the Taobao GMV growth is expected to be close to the overall market growth, with a significant promotional investment planned for the Double 11 shopping festival [8][11] Valuation - The company is valued using a sum-of-the-parts (SOTP) approach, with Taobao Group assigned a PE ratio of 12-13x for FY2025, Cloud Intelligence at 3x PS, and International Digital Commerce at 1x PS. The target price has been adjusted to 120-127 HKD, indicating an upside potential of 17%-23% from the current price [4][11]