BABA(US:BABA) 中信证券研究·2025-04-14 00:10Core Viewpoint - The outlook for the Chinese internet sector in 2025 will revolve around AI advancements, macroeconomic and liquidity changes, competitive landscape shifts, and shareholder returns [1][11] Group 1: 2024Q4 Review and 2025 Outlook - Major domestic internet companies achieved a 12% year-on-year revenue growth in 2024Q4, with notable performers including Manbang (+32%), Pinduoduo (+24%), Bilibili (+22%), and Meituan (+20%) [2] - The operating efficiency of internet companies continues to improve, with a 23% year-on-year growth in Non-GAAP net profit for 2024Q4 and a 35% increase for the entire year [2] - For 2025, the Chinese internet sector is expected to maintain a revenue growth rate of around 10% and a Non-GAAP net profit growth rate of approximately 11% [2] Group 2: Trading Perspective - The implementation of U.S. tariff policies on April 3, 2025, triggered panic in global capital markets, leading to a short-term decline in the Hang Seng Tech Index [3] - As of April 9, 2025, the Hang Seng Tech Index's NTM PE was 16.7x, positioned at the 50.6% percentile over the past two years, indicating a valuation drop [3] - Comparatively, the U.S. tech companies (M7) had a forward PE of 23x with revenue and net profit growth rates of 12.6% and 15.1%, while the top ten Chinese tech companies had a forward Non-GAAP PE of 15x with growth rates of 12.4% and 13.7% [3] Group 3: AI Business - The iteration of foundational models among leading internet companies is accelerating, with significant improvements in model performance and deep thinking capabilities [5] - Major companies are actively exploring AI-native applications and integrating AI with their existing business ecosystems, indicating a burgeoning application ecosystem [6] - Capital expenditures (CAPEX) for AI are on the rise, with Alibaba planning to invest over 380 billion yuan in the next three years and Tencent indicating a CAPEX-to-revenue ratio of about low teens for 2025 [7] Group 4: Shareholder Returns - In 2024, major internet companies continued to enhance shareholder returns, with Tencent repurchasing 112 billion HKD and planning to repurchase at least 80 billion HKD in 2025 [8] - Alibaba repurchased 11.8 billion USD in FY2025, achieving an annualized return rate of 5.1% [8] - The diluted share count for many internet companies decreased year-on-year, indicating improved profitability and cash flow supporting sustainable shareholder return plans [8]