Soochow Securities·2025-05-27 13:04Investment Rating - The report maintains a "Buy" rating for Alibaba-W (09988.HK) [1] Core Insights - The company's core business performance exceeded expectations, with a strong focus on AI investments [1][19] - Revenue for FY2025Q4 reached RMB 236.45 billion, a year-on-year increase of 6.6%, slightly below Bloomberg consensus expectations [12] - Non-GAAP net profit for the same quarter was RMB 29.85 billion, up 22.2% year-on-year, surpassing Bloomberg consensus [12] Revenue Performance - The revenue breakdown for FY2025Q4 shows significant growth in various segments: - Taobao and Tmall business revenue increased by 8.7% to RMB 101.37 billion [17] - International digital commerce revenue grew by 22.3% to RMB 33.58 billion, driven by strong cross-border business performance [22] - Local life services revenue rose by 10.3% to RMB 16.13 billion, aided by order growth from Gaode and Ele.me [25] - Alibaba Cloud revenue increased by 17.7% to RMB 30.13 billion, benefiting from strong AI-related demand [29] - The entertainment segment (Big Entertainment) reported revenue of RMB 5.55 billion, a 12% increase [30] Profitability and Margin Analysis - The adjusted EBITA margin for Taobao and Tmall was 40.1%, reflecting a year-on-year decline of 1.2% due to increased investments in user experience and AI technology [19] - The overall EBITA margin is expected to remain in a recovery phase, with adjustments made to future Non-GAAP net profit forecasts for FY2026 and FY2027 [35] Future Earnings Forecast - The report adjusts Non-GAAP net profit forecasts for FY2026 and FY2027 to RMB 171.16 billion and RMB 188.58 billion, respectively, with an expected Non-GAAP net profit of RMB 210.31 billion for FY2028 [35] - Corresponding P/E ratios for FY2026, FY2027, and FY2028 are projected at 12, 11, and 10 times [35] Market Positioning - The company is positioned favorably compared to peers, with a price-to-earnings ratio (P/E) of 16.09 for FY2025, indicating it is relatively cheaper than similar companies [2]