HTSC·2025-11-26 06:06Investment Rating - The report maintains a "Buy" rating for Alibaba Group [6] Core Insights - Alibaba's cloud revenue continues to accelerate, and the flash purchase business is reducing losses, indicating a positive trajectory for the company [1] - The management expresses confidence in the growth of AI demand and plans to invest further in AI and cloud services to enhance synergies [3] - The company has adjusted its profit forecasts for FY26, FY27, and FY28, reflecting better-than-expected performance in Q2 FY26 and improvements in the flash purchase business [4][17] Financial Performance - Alibaba's total revenue for Q2 FY26 was 247.8 billion yuan, a year-on-year increase of 4.8%, surpassing market expectations [1] - The adjusted EBITA for Q2 FY26 was 9.1 billion yuan, down 77.6% year-on-year, but better than the forecasted 7.7 billion yuan [1] - The cloud segment's revenue grew by 34.5% year-on-year, exceeding the expected growth rate of 28% [3] Business Segments - The Chinese e-commerce group's revenue increased by 15.5% to 132.6 billion yuan in Q2 FY26, driven by improved monetization rates [2] - The flash purchase business has shown a significant reduction in losses, with management indicating that losses per order have halved since October [2] - AI-related revenue has been growing at a triple-digit rate for nine consecutive quarters, now accounting for over 20% of external commercial revenue [3] Profit Forecasts and Valuation - The adjusted non-GAAP net profit forecasts for FY26, FY27, and FY28 are set at 105.8 billion yuan, 131.0 billion yuan, and 159.7 billion yuan, respectively [4][17] - The target price for Alibaba's stock is set at 214.9 USD for US shares and 209.0 HKD for Hong Kong shares, corresponding to PE ratios of 36.3, 29.3, and 24.1 for FY26, FY27, and FY28 [4][19]