BABA-阿里巴巴：Solid cloud rev growth with improved earnings growth outlook for e-commerce business-20250221

Investment Rating - The report maintains a "BUY" rating for Alibaba with a target price of US $157.7, up from the previous target of US$ 132.2, indicating a potential upside of 25.4% from the current price of US $125.79 [2][27]. Core Insights - Alibaba's total revenue for 3QFY25 was RMB280.2 billion, reflecting a year-over-year growth of 7.6%, which was 1% above Bloomberg consensus estimates. Adjusted EBITA and non-GAAP net income for the quarter were RMB54.9 billion and RMB51.3 billion, respectively, showing increases of 3.8% and 6.5% year-over-year, both exceeding consensus expectations [1][5]. - The growth outlook for Alibaba's EBITA in FY26E is becoming more positive, driven by factors such as increased merchant adoption of Quanzhantui, quicker-than-expected loss reduction from Alibaba International Digital Commerce Group (AIDC), and accelerated cloud revenue growth due to rising AI inference demand across various industries [1][24]. Summary by Relevant Sections Financial Performance - Revenue for FY25E is projected at RMB1,001.6 billion, with a year-over-year growth of 6.4%. Non-GAAP net profit is expected to reach RMB159.9 billion, reflecting a growth of 1.0% [6][25]. - The adjusted EBITA margin for the consolidated group is anticipated to be 19.6% for 3QFY25, which is 0.5 percentage points ahead of consensus [23]. Business Segments - **Taobao and Tmall Group**: Revenue was RMB136.1 billion in 3QFY25, up 5.4% YoY, with customer management revenue (CMR) contributing RMB100.8 billion, a 9.4% increase YoY [8][9]. - **Cloud Intelligence Group (CIG)**: Revenue reached RMB31.7 billion, up 13% YoY, driven by strong demand for AI-related products. The adjusted EBITA margin was 9.9%, indicating improved operational efficiency [13][24]. - **Alibaba International Digital Commerce Group (AIDC)**: Revenue grew by 32% YoY to RMB37.8 billion, although adjusted EBITA loss widened to RMB5.0 billion due to increased investments [12][24]. Forecast Revisions - The FY25-27E revenue forecast has been increased by 1-3%, and non-GAAP net profit estimates have been raised by 5-9%, primarily due to better-than-expected performance in CMR and cloud revenue [24][25]. Valuation - The new SOTP-based target price of US$ 157.7 translates into a price-to-earnings ratio of 17.0x for FY25E and 14.9x for FY26E [27][30].