Investment Rating - The report assigns an "Outperform" rating to multiple companies including Nike, Midea Group, JD Group, Gree Electric, Anta Sports, and Haier Smart Home among others [1]. Core Insights - The pet and gold jewelry sectors have shown the best performance, with significant growth driven by online sales and geopolitical factors affecting gold prices [4][5]. - The report highlights a divergence in sector performance, with luxury goods and pet sectors outperforming MSCI China, while other sectors like cosmetics and sportswear are experiencing negative growth [4][10]. Sector Performance Summary - **Pet Sector**: Increased by 4.2% this week, benefiting from high online sales growth, with brands like MaiFuDi and FrieGat showing year-on-year growth of 26% and 147% respectively [5][14]. - **Luxury Goods**: Continued strong performance in gold jewelry due to rising gold prices influenced by geopolitical risks and expectations of interest rate cuts in the US [5][14]. - **Snacks**: Experienced a slight pullback after previous gains, but companies show resilience with increasing production capacity and new product placements [5][14]. - **Sportswear**: Mixed performance with local brands experiencing a downturn, while international brands like Lululemon face challenges after lowering earnings guidance [5][14]. - **Cosmetics**: Continued decline over four weeks, impacted by discussions around collagen restructuring and pressure on domestic brands [5][14]. - **US Hotels and Credit Cards**: Both sectors declined due to risk-averse market sentiment [5][14]. Valuation Analysis - Most sectors are valued below their historical averages, with expected PE ratios for 2025 indicating potential undervaluation: - Sportswear: 14.5x (72% of 5-year average) - Luxury Goods: 23.1x (65% of 5-year average) - Gambling: 14.6x (24% of 5-year average) - Cosmetics: 33.9x (84% of 5-year average) - Pet Sector: 52.6x (54% of 5-year average) - Snacks: 25.3x (39% of 5-year average) - US Hotels: 28.0x (17% of 5-year average) - Credit Cards: 31.2x (60% of 5-year average) [6][15].

Core Viewpoint - Alibaba reported a revenue of 2364.54 billion yuan for Q4 of fiscal year 2025, marking a 7% year-on-year increase, with a non-GAAP net profit of 298.47 billion yuan, up 22% from the previous year [1] Financial Performance - Revenue for Q4 FY2025 was 2364.54 billion yuan, a 7% increase year-on-year [1] - Non-GAAP net profit reached 298.47 billion yuan (approximately 41.13 billion USD), up from 244.18 billion yuan in the same quarter last year, representing a 22% growth [1] Cloud Business Insights - Cloud revenue growth accelerated to 18% in the last quarter, driven by AI-related demand [2] - AI-related demand has shown triple-digit growth for seven consecutive quarters, primarily from new enterprises adopting AI services [2][3] - Various industries, including agriculture and manufacturing, are migrating workflows to the cloud due to AI technology [3] AI Applications in E-commerce - AI is expected to significantly enhance user experience in e-commerce, improving search recommendations and advertising efficiency [5][6] - The company is focusing on how AI can improve the efficiency of internal staff and merchants, as e-commerce is a labor-intensive industry [6] Monetization Strategies - The company aims to stabilize long-term market share while enhancing monetization rates through new products and improved user experience [8] - Recent initiatives like "full-site promotion" and increased commission rates have positively impacted monetization rates [7][16] Investment in Instant Retail - Alibaba plans to invest 10 billion yuan in the "instant retail" sector, leveraging existing infrastructure and user base to enhance service efficiency [12] - The company has seen positive initial results from "Taobao Flash Purchase," exceeding expectations in terms of growth and efficiency [12][14] Customer Management Revenue (CMR) - CMR growth is driven by the introduction of software service fees and the penetration of "full-site promotion" [15][16] - The company anticipates continued growth in CMR due to the gradual removal of promotional policies related to software service fees [15] EBITDA Considerations - The company's EBITDA is expected to fluctuate due to ongoing investments in user experience and competitive pricing [17][18] - Short-term investments in "instant retail" may impact EBITDA, but are expected to drive user growth and engagement in the long run [17][18]