BABA(US:BABA)2024-11-18 07:27Investment Rating - The report maintains a "Buy" rating for Alibaba (BABA US) with a target price of $111.00, indicating a potential upside of 25.3% from the current price of $88.59 [1][5]. Core Insights - Alibaba's e-commerce segment has shown a recovery with double-digit growth in order volume, and there are optimistic long-term opportunities for improving monetization rates [1][2]. - The company reported total revenue of 236.5 billion RMB for the second quarter of FY2025, reflecting a year-on-year increase of 5.2%, aligning closely with market expectations [1][6]. - Adjusted earnings per share (EPS) for the quarter were 15.06 RMB, a decrease of 4% year-on-year, slightly below expectations [1][6]. Summary by Sections Performance Highlights - Taobao's order volume increased by double digits year-on-year, with a stable conversion rate [2]. - International business revenue grew by 29% year-on-year, driven by AliExpress and Trendyol [2]. - Cloud revenue accelerated with a 7% year-on-year increase, supported by public cloud and AI-related products [2]. - Local services saw a 14% revenue increase, with significant growth in orders from Ele.me and Gaode [2]. Future Outlook - The report anticipates an overall revenue growth of 8.6% for the December quarter, with adjusted EBITA expected to reach approximately 573 billion RMB, a year-on-year increase of 8% [3]. - The report highlights the potential for long-term improvement in monetization rates, supported by increased user engagement and the integration with WeChat [3]. Valuation - The current price corresponds to a 10x price-to-earnings ratio for the calendar year 2025, which is considered attractive [3]. - The target price is based on a 13x price-to-earnings ratio for the same period, reinforcing the "Buy" recommendation [3]. Financial Projections - Revenue projections for the fiscal years 2024 to 2027 show a steady growth trajectory, with expected revenues of 941.2 billion RMB in FY2025 and 1,187.1 billion RMB in FY2027 [4]. - Net profit is projected to reach 180.7 billion RMB by FY2027, with an EPS of 77.96 RMB [4]. Segment Performance Forecast - The report provides detailed forecasts for various segments, indicating growth in e-commerce, cloud services, and local life services, while also addressing challenges in profitability for certain divisions [10][12].