BABA(US:BABA) Zhao Yin Guo Ji·2024-11-18 02:40Investment Rating - The report maintains a "BUY" rating for Alibaba with a target price of US$132.2, reflecting a potential upside of 49.2% from the current price of US$88.59 [2]. Core Insights - Alibaba's 2QFY25 results were in line with Bloomberg consensus, with total revenue of RMB236.5 billion, representing a 5.2% year-over-year increase. Adjusted EBITA and non-GAAP net income were RMB40.6 billion and RMB36.5 billion, down 5.3% and 9.0% year-over-year, respectively, due to increased investments in user experience and strategic areas [1][2]. - The company is on track to meet its targets for customer management revenue (CMR) and gross merchandise volume (GMV) growth, as well as double-digit cloud revenue growth in the second half of FY25 [1][2]. - Non-core businesses are expected to achieve profitability within 1-2 years, with significant improvements noted in user engagement and merchant adoption [1][2]. Financial Performance Summary - Total revenue for FY25E is projected at RMB991.9 billion, with a year-over-year growth of 5.4%. Adjusted net profit is expected to be RMB152.9 billion, reflecting a decline of 3.4% year-over-year [5][17]. - The adjusted EBITA margin for the Taobao and Tmall Group was 43.1% in 2QFY25, slightly below consensus expectations [7][16]. - Revenue from the Alibaba International Digital Commerce Group (AIDC) grew by 29% year-over-year to RMB31.7 billion, with a narrowing adjusted EBITA loss of RMB2.9 billion [9][10]. Segment Performance - Taobao and Tmall Group generated revenue of RMB99.0 billion in 2QFY25, up 1% year-over-year, with CMR revenue at RMB70.4 billion, up 2.5% year-over-year [7]. - Cainiao's revenue increased by 8% year-over-year to RMB24.6 billion, although adjusted EBITA declined due to increased investments [8]. - The Cloud Intelligence Group (CIG) reported revenue of RMB29.6 billion, up 7% year-over-year, with an adjusted EBITA margin of 9.0%, reflecting improved operational efficiency [10]. Shareholder Returns - During 2QFY25, Alibaba repurchased 52 million American Depositary Shares (ADS) for a total of US$4.1 billion, resulting in a 2.1% net reduction in outstanding shares [13].