BABA-Driving long-term growth while enhancing shareholder return

Investment Rating - Maintain BUY rating with a target price of US $131.9 per ADS [1][7] Core Views - Alibaba is expected to deliver in-line-with-consensus revenue growth for 4QFY24, with estimated revenue of RMB221.4bn, up 6% YoY [1] - The company is focusing on long-term growth through investments in international business, cloud, and Taobao and Tmall (T&T) Group, despite short-term margin pressure [1] - Alibaba is committed to improving shareholder return through loss reduction in non-core businesses, enhanced share buyback, and dividend payout [1] - The strategic move to drive an integrated group strategy is expected to enhance long-term value [1] Financial Performance - For 4QFY24, group-level adjusted EBITA is forecasted to decline 5% YoY to RMB24.0bn, with an adjusted EBITA margin of 10.8% [1] - T&T Group's adjusted EBITA is expected to decline 1.5% YoY to RMB38.5bn, implying a margin of 42.1% [1] - Customer management revenue growth is forecasted at 3% YoY in 4QFY24, driven by 7% YoY GMV growth from T&T GMV [1] Revenue and Profit Forecasts - Revenue for FY24E is estimated at RMB940.7bn, with FY25E and FY26E revenues projected at RMB1,027.6bn and RMB1,117.5bn, respectively [2][4] - Adjusted net profit for FY24E is forecasted at RMB155.5bn, with FY25E and FY26E projections at RMB158.2bn and RMB175.2bn, respectively [4] - Gross margin for FY24E is estimated at 37.8%, with FY25E and FY26E margins projected at 38.0% [4] Valuation and Shareholder Return - The SOTP-based target price is US$ 131.9 per ADS, translating into 15.7x FY24E P/E [7] - Alibaba is enhancing shareholder return through an integrated group strategy, including investments in international business and cloud infrastructure [1] - The next key event for shareholder return will likely be the announcement of annual fiscal year dividends in May [1] Segment Valuation - Taobao and Tmall Group is valued at US $59.1 per ADS, based on 7.0x FY24E EV/adjusted EBITA [8] - Cloud Intelligence Group is valued at US$ 24.4 per ADS, based on a 4.2x EV/S multiple on FY24E revenue [8] - Cainiao is valued at US$2.6 per ADS, based on the latest valuation given by Alibaba to repurchase Cainiao shares from minority shareholders [8] Financial Summary - Revenue for FY24E is projected at RMB940.7bn, with gross profit of RMB356.0bn [4] - Operating profit for FY24E is forecasted at RMB113.7bn, with net profit of RMB89.9bn [13] - Adjusted net profit for FY24E is estimated at RMB155.5bn, with an adjusted net profit margin of 16.5% [4]