BABA(US:BABA) Goldman Sachs·2025-05-15 13:48Investment Rating - The report maintains a "Buy" rating for Alibaba Group (BABA) with a 12-month price target of $159.00, indicating an upside potential of 18.6% from the current price of $134.05 [10][15]. Core Insights - Alibaba reported strong results with Customer Management Revenue (CMR) growth of 12% year-over-year (yoy) and EBITA growth of 8% yoy for the Taobao-Tmall Group, exceeding expectations. Cloud revenue grew by 18% yoy, and non-GAAP EPS increased by 23% yoy, aligning with forecasts [1][10]. - The report highlights the focus on AI capital expenditures and cloud strategies, particularly in light of recent AI model advancements and the implications for revenue growth and margin outlook for Alibaba Cloud [2]. - The report notes a slight decline in cloud EBITA margin to 8.0% quarter-over-quarter (qoq), attributed to reinvestments aimed at expanding scale leadership [1][2]. Summary by Sections Financial Performance - Total revenues for 4QFY25 were reported at Rmb 236,454 million, reflecting a 7% yoy increase. CMR reached Rmb 71,077 million, up 12% yoy, while cloud revenue was Rmb 30,127 million, growing 18% yoy [12][14]. - Non-GAAP EPS for 4QFY25 was Rmb 12.52, a 23% increase yoy, although it fell short of the Visible Alpha Consensus Data by 5% [12][14]. Segment Performance - Taobao-Tmall Group revenue grew to Rmb 101,369 million, a 9% yoy increase, with CMR growth contributing significantly [14]. - The Alibaba International Digital Commerce Group reported revenue of Rmb 33,579 million, up 22% yoy, with a narrowed EBITA loss of Rmb 3.6 billion compared to Rmb 5.0 billion in the previous quarter [13][14]. - The Local Services Group saw revenue growth of 10% yoy, reaching Rmb 16.1 billion, with a narrowed EBITA loss of Rmb 2.3 billion [13]. Future Outlook - The report anticipates continued growth for Taobao-Tmall, driven by a stabilizing eCommerce competitive landscape and the impact of the software service fee introduced last September [2][9]. - There is an expectation for narrowing losses in international eCommerce, with a trajectory towards quarterly breakeven over the next 3-4 quarters [9].