BABA(BABA) 招银国际·2024-05-15 03:22Investment Rating - The report assigns a "Buy" rating to the company with a target price of $124.90 per ADS [7][24] Core Views - The company's business adjustments show higher visibility in delivering results [7] - Management emphasizes investments to support core businesses, particularly in the T&T Group, which saw double-digit GMV growth [7] - The company's increased shareholder returns and potential primary listing in Hong Kong are expected to support valuation [7] - The cloud business's adjusted EBITA margin continues to expand, with management confident in returning to double-digit revenue growth [7] Financial Performance Valuation Metrics - P/E ratio is expected to decrease from 26.6x in 2022A to 9.4x in 2027E [1] - P/B ratio is projected to decline from 1.7x in 2022A to 0.9x in 2027E [1] - P/CFPS is forecasted to decrease from 18.6x in 2022A to 10.3x in 2027E [1] Growth Metrics - Revenue growth is expected to be 7.9% in 2025E, 8.4% in 2026E, and 6.6% in 2027E [3] - Net profit growth is projected at 56.3% in 2025E, followed by 10.0% in 2026E and 10.3% in 2027E [3] - Adjusted net profit growth is forecasted at -3.3% in 2025E, 9.4% in 2026E, and 9.3% in 2027E [3] Profitability Metrics - Gross margin is expected to remain stable around 37% from 2025E to 2027E [3] - Operating margin is projected to increase from 13.6% in 2025E to 14.7% in 2027E [3] - Adjusted net profit margin is forecasted to be 15.1% in 2025E, 15.2% in 2026E, and 15.6% in 2027E [3] Key Business Updates T&T Group - In Q4FY24, T&T Group's revenue was RMB 93.2 billion, up 3.7% YoY, with CMR revenue of RMB 63.6 billion, up 5.0% YoY [17] - Adjusted EBITA for the group was RMB 38.5 billion, down 1.4% YoY due to increased investments in user experience and technology infrastructure [17] AIDC - AIDC's revenue in Q4FY24 was RMB 27.4 billion, up 45.1% YoY, with international retail and wholesale revenues growing 56.4% and 10.8% respectively [17] - Adjusted EBITA loss widened to RMB 4.1 billion in Q4FY24 from RMB 2.2 billion in Q4FY23 due to increased investments in AliExpress Choice and Tredyol [17] Local Services Group - LSG's revenue in Q4FY24 was RMB 14.6 billion, up 18.5% YoY, driven by order growth in Ele.me and Amap [18] - Adjusted EBITA loss narrowed to RMB 3.2 billion in Q4FY24 from RMB 4.1 billion in Q4FY23, thanks to reduced losses in the "To-Home" business [18] Cainiao - Cainiao's revenue in Q4FY24 was RMB 24.6 billion, up 29.8% YoY, driven by increased cross-border fulfillment services [19] - Adjusted EBITA margin was -5.5% in Q4FY24, compared to -1.7% in Q4FY23, mainly due to retention incentives for employees following the IPO withdrawal [19] Valuation Breakdown - T&T Group is valued at $58.5 per ADS based on 7.0x FY25E EV/adjusted EBITA [26] - AIDC is valued at $11.3 per ADS based on 1.5x FY25E EV/Sales [26] - Local Services Group is valued at $5.7 per ADS based on 1.5x FY25E EV/Sales [26] - Cainiao is valued at $2.6 per ADS based on the latest valuation from Alibaba's minority stake buyback [26] - Cloud Intelligence Group is valued at $24.3 per ADS based on 3.9x FY25E EV/Sales [26] - Digital Media and Entertainment Group is valued at $1.3 per ADS based on 1.0x FY25E EV/Sales [26] - All Others are valued at $9.7 per ADS based on 1.0x FY25E EV/Sales [26] - Strategic investments are valued at $11.6 per ADS with a 30% holding discount [26]