Guoxin Securities·2025-07-14 05:14Investment Rating - The investment rating for the company is "Outperform the Market" [2][7]. Core Views - The company is expected to report a revenue growth of 2% year-on-year for Q1 FY26, with an adjusted EBITA margin of 16%. The revenue growth is primarily impacted by the divestiture of certain retail operations [4][6]. - The company is increasing its investment in instant retail, which is expected to pressure profits in the short term but may enhance user engagement and purchase frequency in the long term [5][23]. - Revenue forecasts for FY2026 to FY2028 have been slightly adjusted upwards, while net profit forecasts have been adjusted downwards due to increased investment in flash sales [5][23]. Summary by Sections Financial Performance - For Q1 FY26, the company is projected to achieve a revenue of CNY 247.8 billion, reflecting a 2% year-on-year increase. The revenue growth rates for various segments are as follows: Taobao +9%, International Digital Commerce +19%, Cloud Intelligence +22%, Local Services +10%, Cainiao -5%, and Digital Entertainment +5% [4][6]. - The adjusted EBITA for Q1 FY26 is expected to be CNY 39.2 billion, with a year-on-year decline of 13% [6]. Segment Analysis - Taobao Group: Projected GMV growth of 6% year-on-year for Q1 FY26, with a CMR increase of 11% driven by site-wide promotions and a 0.6% contribution from service fees. The EBITA for Taobao and Local Services combined is expected to decline by 16% to CNY 40.8 billion due to increased promotional spending [11]. - Cloud Intelligence: Anticipated revenue growth of 22% year-on-year for Q1 FY26, driven by rising AI demand. The company continues to advance its AI initiatives, including the launch of the Qwen3 model [15][16]. - AIDC: Expected revenue growth of 19% year-on-year, with a slight decline in adjusted EBITA margin due to strategic decisions to enhance profitability [22]. Financial Projections - Revenue forecasts for FY2026, FY2027, and FY2028 are adjusted to CNY 1,062.3 billion, CNY 1,149.0 billion, and CNY 1,217.4 billion respectively, reflecting increases of 1.0%, 2.2%, and 0.8% [5][23]. - Adjusted net profit forecasts for the same period are revised to CNY 138.8 billion, CNY 171.8 billion, and CNY 195.4 billion, with adjustments of -16.8%, -5.7%, and -2.9% respectively [5][23].