BABA(HK:09988) Tianfeng Securities·2024-11-20 07:51Investment Rating - The investment rating for Alibaba -W (09988) is "Buy" with a target price of 85.25 HKD, maintaining the rating for the next six months [1]. Core Views - The report indicates that Alibaba's performance met expectations, with continuous profit release from cloud intelligence and local services. The company reported a revenue of 236.5 billion CNY for FY25Q2, slightly below Bloomberg consensus by 1.2% [1]. - Adjusted EBITA was 40.6 billion CNY, also below consensus by 1.3%, while adjusted net profit was 36.4 billion CNY, in line with expectations [1]. - The company has repurchased 414 million shares for a total of 4.1 billion USD, with a remaining buyback capacity of 22 billion USD as of September 30, 2024 [1]. Business Segment Summaries Taobao Tmall Group - Revenue for FY25Q2 was 99 billion CNY, slightly below consensus by 0.1%. Retail revenue was 93 billion CNY, with customer management revenue at 70.4 billion CNY and direct sales revenue at 22.6 billion CNY. Adjusted EBITA reached 44.6 billion CNY, below consensus by 2.9% [1]. - The company is increasing investments in strategic initiatives, including competitive pricing, customer service, membership benefits, and technological innovation, which are expected to enhance purchase frequency and shopping experience [1]. - The number of 88VIP members grew by double digits year-on-year, reaching 46 million, indicating increased purchasing frequency among high-end consumers [1]. Cloud Intelligence Group - Revenue for FY25Q2 was 29.6 billion CNY, with adjusted EBITA of 2.7 billion CNY. The overall revenue grew over 7% year-on-year, driven by double-digit growth in public cloud services, particularly AI-related products [1]. - AI-related product revenue has seen triple-digit growth for five consecutive quarters, showcasing strong demand and adoption [1]. Other Business Segments - Cainiao reported revenue of 24.6 billion CNY with adjusted EBITA of 55 million CNY, driven by growth in cross-border logistics solutions [1]. - Local services generated revenue of 17.7 billion CNY, with adjusted EBITA of -400 million CNY, primarily due to order growth from Ele.me and marketing services [1]. - AIDC reported revenue of 31.7 billion CNY with adjusted EBITA of -2.9 billion CNY, benefiting from the expansion of cross-border business, particularly the AliExpress "Choice" business [1]. Financial Projections - The report projects Alibaba's revenue for FY 2025-2027 to be 990.6 billion CNY, 1,080.3 billion CNY, and 1,165.4 billion CNY respectively. The expected net profit attributable to shareholders (Non-GAAP) for the same period is projected to be 157.1 billion CNY, 176.3 billion CNY, and 189.5 billion CNY respectively [1].