BABA(HK:09988)2024-05-17 02:01Investment Rating - The report maintains a "Hold" rating with a target price of HKD 85 and USD 87 for Alibaba [2][20]. Core Insights - The report indicates that while there are signs of recovery in Alibaba's business, short-term profit margins are expected to remain under pressure due to the competitive environment and business expansion challenges [2][31]. - Alibaba's FY4Q24 revenue reached RMB 221.9 billion, a year-on-year increase of 7%, surpassing market expectations by 1%. However, the adjusted net profit was RMB 24.4 billion, a decline of 11% year-on-year, falling short of market expectations by 4% [1][2]. - The company announced a total annual dividend of USD 1.66 per ADS, with a dividend yield of 2% [1]. Financial Performance Summary - FY4Q24 cloud revenue grew by 3% year-on-year to RMB 25.6 billion, with core public cloud revenue experiencing double-digit growth. Adjusted EBITA was RMB 1.4 billion, a 45% increase year-on-year, with an EBITA margin of 5.5% [14]. - The report projects that Alibaba's cloud business is expected to return to double-digit growth in the second half of FY25, driven by AI-related revenue, which saw a three-digit year-on-year growth in FY4Q24 [14]. - The report highlights that Alibaba's Taobao and Tmall revenue increased by 4% year-on-year to RMB 93.2 billion, with customer management revenue up by 5% [31]. Market Expectations - The report outlines that the target price corresponds to a FY25E/FY26E P/E of 10.7x/9.9x, indicating a cautious outlook on Alibaba's profitability in the near term [2][34]. - The report notes that Alibaba's international business continues to show strong growth, with FY4Q24 revenue increasing by 45% year-on-year to RMB 27.4 billion, despite a widening loss in the cross-border business segment [31].