Shenwan Hongyuan Securities·2025-12-24 13:59Investment Rating - The report maintains a "Buy" rating for Alibaba Group [6][9]. Core Views - The report emphasizes that Alibaba Cloud has emerged from its low point, with a positive outlook on its fundamentals and a consensus in the market regarding its revaluation [4][37]. - The growth of AI cloud services is expected to continue, driven by improvements in domestic AI penetration and the alleviation of upstream chip supply pressures [8][21]. - Alibaba's comprehensive self-research technology stack, which includes chips, servers, cloud computing operating systems, and large models, positions it favorably in the competitive landscape [12][32]. Financial Data and Earnings Forecast - Revenue projections for Alibaba Group are as follows: - FY2024: 941.2 billion CNY - FY2025: 996.3 billion CNY - FY2026E: 1,038.6 billion CNY - FY2027E: 1,143.4 billion CNY - FY2028E: 1,250.6 billion CNY - Year-on-year growth rates are projected at 8% for FY2024, 6% for FY2025, 4% for FY2026, 10% for FY2027, and 9% for FY2028 [5]. - Adjusted net profit forecasts are: - FY2024: 158.4 billion CNY - FY2025: 157.9 billion CNY - FY2026E: 101.9 billion CNY - FY2027E: 145.5 billion CNY - FY2028E: 183.6 billion CNY - The diluted earnings per share are expected to be 7.8 CNY for FY2024, 8.2 CNY for FY2025, 5.3 CNY for FY2026, 7.6 CNY for FY2027, and 9.6 CNY for FY2028 [5]. Market Position and Competitive Landscape - Alibaba Cloud is recognized as a leading domestic cloud provider, with revenue scale, growth rate, and profit margins in the top tier of the industry [32][37]. - The report highlights that despite competition from new entrants like ByteDance's Volcano Engine, Alibaba Cloud's advantages in full-stack solutions and ecosystem integrity are difficult to replicate in the short term [11][12]. - The domestic AI cloud market is expected to benefit from the increasing penetration of AI applications, with a significant user base projected to reach 515 million by June 2025, reflecting a penetration rate of 36.5% [22]. Valuation and Price Target - Using the SOTP valuation method, the target valuation for Alibaba Group is set at 34,124 billion CNY, corresponding to a target price of 203 USD per ADS and 197 HKD per share, indicating an upside potential of 34% [9][10].