2025-05-16 04:48Investment Rating - The report maintains a "BUY" rating for Alibaba with a target price of US$155.5, reflecting a potential upside of 25.5% from the current price of US$123.90 [1][2]. Core Insights - Alibaba's 4QFY25 results showed total revenue of RMB236.5 billion, a 6.6% year-over-year increase, and adjusted EBITA of RMB32.6 billion, up 36% year-over-year, indicating strong earnings growth across business segments [1]. - The report highlights the potential for accelerated cloud revenue growth, driven by investments in infrastructure and R&D, alongside solid performance in the Taobao and Tmall Group [1][5]. - Adjustments to revenue forecasts for FY26-27E reflect a 5% decrease due to the deconsolidation of Sun Art and increased investments in instant commerce, but the long-term outlook remains positive, particularly in the AI sector [18][19]. Financial Performance Summary - Revenue and Profitability: - FY25 total revenue reached RMB996.3 billion, with a projected FY26 revenue of RMB1,041.0 billion, reflecting a 4.5% year-over-year growth [6]. - Adjusted net profit for FY25 was RMB157.9 billion, with an expected increase to RMB166.8 billion in FY26 [6]. - Segment Performance: - Taobao and Tmall Group generated RMB101.4 billion in revenue for 4QFY25, up 9% year-over-year, with customer management revenue (CMR) at RMB71.1 billion, up 12% year-over-year [7][8]. - Cloud Intelligence Group (CIG) reported revenue of RMB30.1 billion, an 18% increase year-over-year, driven by strong demand for digitalization and AI-related products [12][13]. - AIDC revenue grew 22% year-over-year to RMB33.6 billion, with management targeting profitability in FY26 [10][11]. Valuation and Forecast - The new target price of US$155.5 translates to a 15.7x FY26E PE (non-GAAP), reflecting a SOTP-based valuation approach [22][25]. - The report indicates a decrease in the target price from the previous US$157.00, primarily due to adjustments in revenue forecasts and competitive pressures [2][22].