Core Viewpoint - Alibaba is undergoing a strategic retreat by selling off non-core assets to focus on its primary business areas, particularly in instant retail and AI/cloud computing, rather than facing financial distress or "running away" [1][11]. Group 1: Asset Sales - Alibaba has sold various assets, including a portion of its stake in Sanjiang Shopping, realizing 2.52 billion yuan. Overall, it has recouped over 30 billion yuan through divestments from Intime Retail, a complete exit from RT-Mart, and other sales [1][3]. - The sold assets are characterized as heavy, slow-growing, and increasingly unprofitable traditional retail businesses, which are no longer aligned with Alibaba's core focus [3][5]. - Alibaba's Chairman, Cai Chongxin, stated that exiting these non-core businesses is a reasonable decision, indicating a shift from a "big and complete" empire to a "focused core" entity [3][5]. Group 2: Strategic Focus Areas - The 30 billion yuan raised from asset sales will be directed towards two main battles: instant retail and AI/cloud computing [5][10]. - In instant retail, Alibaba is investing heavily in delivery services, with initiatives like "one-hour delivery" and significant subsidies to compete against rivals like Meituan and JD.com. Instant retail revenue has shown rapid growth, with increases between 37% and 60% [5][10]. - For AI and cloud computing, Alibaba plans to invest 380 billion yuan over the next three years, which exceeds its total investment in these areas over the past decade. This investment aims to establish a foundational infrastructure for AI, positioning Alibaba as a key player in the future tech landscape [6][10]. Group 3: Leadership and Organizational Changes - The leadership structure at Alibaba has shifted, with power concentrated among three key figures: Cai Chongxin, Wu Yongming, and Jiang Fan, indicating a strong leadership drive for the new strategic direction [8][10]. - The partner committee has been streamlined from 26 to 17 members, reflecting a transition from a diverse expansion phase to a focused core strategy [8][10]. - Jiang Fan's return to a central role in overseeing e-commerce signifies a commitment to tackling the challenges in instant retail with experienced leadership [8][10]. Group 4: Lessons and Implications - The strategic shift at Alibaba serves as a lesson for businesses, emphasizing the need to adapt and evolve core competencies in response to changing market conditions [10][11]. - Focusing resources on high-value areas is crucial in the current economic landscape, where efficiency and technological advancement are paramount [10][11]. - Observing the capital flows of major companies like Alibaba, Tencent, and JD.com can provide insights into future economic trends, particularly in instant consumption and AI technology [10][11].

Core Insights - Alibaba has been selected as a core asset in the digital economy for 2026, reflecting its significant role in China's digital landscape and its potential in the AI infrastructure wave [2] - The company is undergoing a strategic transformation, focusing on two main pillars: "AI + Cloud" technology platform and "Shopping + Lifestyle Services" consumer platform [2][3] - Since 2021, Alibaba has made multiple organizational and executive adjustments, stabilizing its governance structure and strategic focus [4] Organizational and Governance Changes - The recent organizational restructuring aims to shift from a "complex and diverse" model to a "focused and efficient" execution model, centering around consumption and AI cloud [7] - Leadership roles have been clarified, with key figures like Daniel Zhang and Wu Yongming taking on specific responsibilities to enhance strategic execution [7][8] - The number of partners in the company has decreased from 26 to 17, marking a significant management transition and a new phase focused on execution efficiency [8][9] E-commerce Business Stability - E-commerce remains Alibaba's core pillar, contributing approximately 58.4% of total revenue as of FY26Q1, with the Chinese e-commerce group accounting for 56.6% [13] - Customer Management Revenue (CMR) has shown an upward trend since FY25Q3, indicating a recovery in the core cash flow engine [17] - The improvement in CMR is attributed to product and structural optimizations rather than simple price increases, with a focus on service value [18][19] Instant Retail Strategy - Alibaba is investing in instant retail through platforms like Taobao Flash and Ele.me, which has led to significant order growth despite short-term losses [24][25] - The strategic importance of instant retail is highlighted by its potential to drive e-commerce synergy and defend market share, with projections indicating a market size of 3 trillion yuan by 2030 [26] AI + Cloud as a Growth Engine - The "AI + Cloud" segment is crucial for Alibaba's long-term valuation, with the global public cloud market expected to exceed $1 trillion by 2025 [28] - Alibaba Cloud holds about one-third of the Chinese public cloud market, with AI becoming a key growth driver, evidenced by triple-digit growth in AI-related revenue over eight consecutive quarters [28][29] - The company is entering a new capital expenditure expansion cycle, with plans to invest 380 billion yuan in AI infrastructure over the next three years [28] Redefining Core Asset Value - Alibaba is evolving from a pure e-commerce company to a hybrid enterprise with stable cash flow and high-growth technology businesses [31] - The company's overall valuation is projected to reach approximately 3.55 trillion yuan by 2026, with potential stock price targets around 200 HKD [34] - The strategic focus and organizational restructuring position Alibaba as a key player in defining the digital infrastructure of the AI era in China [39]

Core Viewpoint - The Hong Kong stock market is experiencing a downturn, but the technology sector is seeing a counter-trend investment as the AI sector moves towards value creation and commercialization, indicating potential for future profit growth [1] Group 1: Market Trends - Despite the recent weakness in the Hong Kong stock market, there is a notable influx of funds into the technology sector, reflecting market recognition of the long-term fundamentals [1] - Since November 2025, ETFs tracking the Hang Seng Technology Index have seen a total of 27 billion yuan in net inflows, with the Hang Seng Technology ETF (513130) attracting 4.7 billion yuan and increasing its shares by 6.2 billion [1] - The Hang Seng Technology Index's current price-to-earnings (P/E) ratio is 23.13, which is at a mid-low percentile level compared to the past five years [2] Group 2: Comparative Valuation - The valuation of the Hang Seng Technology Index is lower than that of major technology indices in the A-share and US markets, such as the Nasdaq Index at 41.09 and the Sci-Tech Innovation 50 Index at 156.57 [2] - The recent market correction has released some risk factors, making the technology sector's valuation more attractive for investment [2] Group 3: Future Outlook - With the anticipated interest rate cuts by the Federal Reserve and improving overseas liquidity, along with stable performance from domestic tech leaders since Q3 2025, the long-term investment value of the Hong Kong technology sector is expected to increase [2] - The Hang Seng Technology ETF (513130) closely tracks the Hang Seng Technology Index, which includes 30 leading Hong Kong internet and tech companies across various sectors, providing comprehensive exposure to the AI industry chain [2] Group 4: Investment Tools - The Hang Seng Technology ETF (513130) offers advantages such as large scale, good liquidity, and support for T+0 trading, making it a key tool for investors looking to access core assets in the Hong Kong technology sector [3] - Investors can also consider the off-market linked funds (Class A 015310, Class C 015311) for additional investment opportunities [3]

Core Viewpoint - Alibaba's recent share reduction in Aojie Technology reflects its strategic focus shift towards AI and cloud sectors, despite still being the largest shareholder with a 12.69% stake after the reduction [1][2]. Group 1: Shareholding Changes - Alibaba reduced its stake in Aojie Technology by 5.439 million shares from November 24 to December 1, 2023, bringing its ownership down to 12.69% [1]. - The total market value of the shares sold during this period is approximately 500 million yuan, calculated at an average price of 89.90 yuan per share [2]. - This marks the second reduction in shares by Alibaba within the month, having previously sold about 4.2392 million shares from November 6 to November 17 [2]. Group 2: Future Reduction Plans - Alibaba has announced plans to further reduce its holdings by up to 12.549 million shares over the next three months, which represents 3% of the total share capital [2]. - As of the announcement date, Alibaba has 1.0585 million shares remaining that can be sold, all of which were acquired before the IPO [2]. Group 3: Financial Performance of Aojie Technology - Aojie Technology has not achieved profitability since its listing, with projected net losses of 252 million yuan, 506 million yuan, and 693 million yuan for the years 2022 to 2024, respectively [3]. - Despite the losses, the company's revenue has shown steady growth, increasing from 2.14 billion yuan in 2022 to an expected 3.386 billion yuan in 2024 [3]. - In the first three quarters of this year, Aojie Technology reported revenue of 2.88 billion yuan, a year-on-year increase of 13.42%, while the net loss narrowed to 327 million yuan [3]. Group 4: Business Segment Performance - Sales of various cellular baseband chip products experienced slight growth in Q3, with smartphone SoC chip sales continuing to rise and initial shipments of 5G RedCap recorded [3]. - The core business of cellular baseband chips saw a revenue increase of 25% year-on-year, contributing to an overall gross margin rise of 4.71% to 26.65% [3].

Core Viewpoint - Alibaba has reduced its stake in Aojie Technology (688220) from 13.99% to 12.69% by selling 5,439,008 shares through centralized bidding and block trading from November 24 to December 1, 2025 [1][4]. Summary by Relevant Sections Shareholding Changes - Alibaba's shareholding in Aojie Technology decreased from 13.99% to 12.69% after the sale of 5,439,008 shares [1][4]. - Prior to this reduction, Alibaba had announced a plan to sell up to 12.549 million shares, representing a maximum of 3% of the total share capital [4]. Financial Performance of Aojie Technology - Aojie Technology reported a revenue of 2.88 billion yuan for the first three quarters of the year, reflecting a year-on-year growth of 13.42% [5]. - The company recorded a net profit attributable to shareholders of -327 million yuan during the same period [5]. Alibaba Group's Financial Performance - For the second quarter of fiscal year 2026, Alibaba Group reported revenues of 247.795 billion yuan, with a year-on-year growth of 15% after excluding the impact of divested businesses [5][6]. - The cloud computing segment saw a significant revenue increase of 34% year-on-year, marking a new high [6]. - Alibaba's CEO highlighted the ongoing investments in AI technology and infrastructure, which are expected to create long-term strategic value [6].

Core Points - Alibaba has reduced its stake in Aojie Technology (688220) from 13.99% to 12.69% by selling 5,439,008 shares between November 24 and December 1, 2025 [2] - Aojie Technology had previously announced a share reduction plan on August 29, allowing Alibaba to sell up to 12.549 million shares, representing a maximum of 3% of the total share capital [4] - As of the latest announcement, Alibaba has sold a total of 11.4905 million shares, leaving a remaining sellable quantity of 1.0585 million shares [5] Company Overview - Aojie Technology is a platform-based chip enterprise specializing in wireless communication and large-scale chips, with capabilities in developing full-standard cellular baseband chips and non-cellular IoT chips [6] - For the first three quarters of the year, Aojie Technology reported revenue of 2.88 billion yuan, a year-on-year increase of 13.42%, but recorded a net loss of 327 million yuan [6] Alibaba's Financial Performance - In the second quarter of fiscal year 2026, Alibaba Group reported revenue of 247.795 billion yuan, with a year-on-year growth of 15% after excluding the impact of divested businesses [6] - The company has seen strong growth in its core businesses, particularly in AI and cloud services, with cloud revenue accelerating by 34% year-on-year [7] - Alibaba's CEO highlighted ongoing investments in AI technology and infrastructure, which are expected to create long-term strategic value [7]

Core Viewpoint - Alibaba has reduced its stake in Aojie Technology (688220) from 13.99% to 12.69% by selling 5,439,008 shares through various trading methods [1][4]. Summary by Sections Shareholding Changes - On December 1, Aojie Technology announced that Alibaba Network has notified them of a reduction in shareholding, decreasing its stake from 13.99% to 12.69% [1]. - Alibaba's total share reduction amounts to 11,490,500 shares, with 1,058,500 shares remaining available for sale [5]. Company Performance - Aojie Technology reported a revenue of 2.88 billion yuan for the first three quarters of the year, reflecting a year-on-year growth of 13.42%. However, the company recorded a net loss of 327 million yuan [5]. - Aojie Technology specializes in wireless communication and large-scale chip platforms, with capabilities in developing cellular baseband chips and IoT chips [5]. Alibaba's Financial Results - Alibaba Group reported a revenue of 247.795 billion yuan for the second quarter of fiscal year 2026, with a year-on-year growth of 15% after excluding the impact of sold businesses [5][6]. - The cloud computing segment saw a significant revenue increase of 34% year-on-year, driven by strong demand for AI-related products [6].

E-commerce and New Retail - Alibaba Group donated 20 million HKD following a fire in Hong Kong, while ByteDance and Didi contributed 10 million HKD each. Pinduoduo also donated 10 million HKD and launched a public welfare section for firefighting supplies [1] - Alibaba's Q2 revenue for FY2026 reached 247.8 billion CNY, a 5% year-on-year increase, with cloud revenue growing 34% and AI-related products seeing triple-digit growth for nine consecutive quarters [2] - JD Industrial has received approval for an IPO on the Hong Kong Stock Exchange, with projected revenues of 14.135 billion CNY in 2022, increasing to 20.4 billion CNY in 2024 [3] Logistics and Supply Chain - Jitu Express launched its first industrial-grade automated sorting system in Thailand, improving sorting efficiency by over 100% and achieving a sorting accuracy of over 99% [4] Life Services - Meituan reported a Q3 loss of 14.1 billion CNY in its core local business segment due to irrational competition in the food delivery industry, with expectations of continued losses in Q4 [5][6] - Didi's Q3 order volume reached 4.685 billion, a 13.8% year-on-year increase, with a net profit of 1.5 billion CNY [7] - Taobao Flash Sale announced the cancellation of late fee deductions, expanding to 60 cities, aiming to enhance rider protection and user experience [8] Innovation and Investment - Ruiyun Cold Chain completed nearly 100 million CNY in A+ round financing, focusing on digital capabilities and international expansion [9] - Soul App submitted a listing application to the Hong Kong Stock Exchange, reporting a revenue CAGR of over 15% from 2022 to 2024 and achieving stable profitability since 2023 [10][11]

Investment Rating - The report maintains an "Outperform" rating for Alibaba-SW (09988.HK) [5][25] Core Insights - Alibaba's revenue for FY26Q2 reached 247.8 billion yuan, a year-on-year increase of 5%. The Chinese e-commerce group, international digital commerce group, and cloud intelligence group achieved year-on-year growth rates of 16%, 10%, and 34%, respectively, while other segments saw a decline of 25% [1][9] - The adjusted EBITA for the quarter was 9.1 billion yuan, down 78% year-on-year, resulting in an adjusted EBITA margin of 3.7%. The non-GAAP net profit was 10.3 billion yuan, a decrease of 71.7% year-on-year, with a net profit margin of 4.2% [1][9] - Free cash flow for the quarter was a net outflow of 21.8 billion yuan, primarily due to increased investments in flash sales and cloud infrastructure [1][9] Summary by Sections E-commerce Performance - The Chinese e-commerce group's CMR revenue grew by 10% year-on-year in FY26Q2, benefiting from increased technology service fees and improved site penetration rates. Instant retail revenue reached 22.9 billion yuan, up 60% year-on-year [2][13] - The adjusted EBITA for the Chinese e-commerce group was 10.5 billion yuan, down 76% year-on-year, with an adjusted EBITA margin of 7.9%, a decline of 31 percentage points [2][14] - The company is focusing on optimizing user experience while maintaining market share, with logistics costs significantly reduced compared to previous large-scale investments [2][14] Cloud Computing - The cloud intelligence group's revenue for FY26Q2 was 39.8 billion yuan, a year-on-year increase of 34%. Overall revenue, excluding intercompany transactions, grew by 29% year-on-year, with AI-related product revenue continuing to show triple-digit growth [3][15] - The adjusted EBITA margin for the cloud segment was 9.0%, reflecting a slight increase from the previous quarter. Capital expenditures (CAPEX) for the quarter were 31.5 billion yuan, up 70% year-on-year [3][15] - The company anticipates a strong demand for AI over the next three years, with potential for additional CAPEX investments beyond the planned 380 billion yuan [3][15] Financial Projections - Revenue forecasts for FY2026 to FY2028 have been slightly adjusted to 1,046.3 billion yuan, 1,182.3 billion yuan, and 1,293.0 billion yuan, respectively, with minor downward adjustments due to a focus on profitability in international e-commerce [4][25] - Adjusted net profit projections for FY2026 to FY2028 are set at 111.7 billion yuan, 145.0 billion yuan, and 172.0 billion yuan, with slight adjustments reflecting better-than-expected profit improvement in international e-commerce [4][25] - The company is currently trading at a PE ratio of 24 times for FY2026 [4][25]

Core Insights - Alibaba's financial results for the second quarter of fiscal year 2026 reflect a strategic focus on AI and cloud services, leading to revenue growth but a decline in net profit [2][3][5] - The company reported a record revenue of 495.447 billion yuan, a 3% year-on-year increase, while net profit fell by 6% to 64.106 billion yuan [3][4] - Significant capital expenditures of 31.5 billion yuan in the second quarter indicate a commitment to long-term growth despite short-term profit pressures [5][7] Revenue and Profit Analysis - In Q2 of fiscal year 2026, Alibaba achieved revenue of 247.795 billion yuan, a 5% increase year-on-year, but net profit dropped by 52% to 20.990 billion yuan [3][4] - The decline in net profit is attributed to increased investments in core business areas, particularly AI and cloud services, which are expected to yield long-term benefits [5][6] - Excluding divested businesses, revenue growth on a same-store basis was 15%, driven by strong performance in AI-driven cloud services and the rapidly expanding instant retail segment [4][5] Business Segment Performance - Alibaba's cloud revenue reached 39.824 billion yuan, marking a 34% year-on-year increase, with AI-related products contributing significantly to this growth [4][5] - The instant retail business saw a remarkable 60% increase in revenue to 22.906 billion yuan, highlighting the effectiveness of the company's strategic investments [4][5] - The overall revenue from non-core businesses, including Hema and Cainiao, declined by 25% to 62.969 billion yuan, indicating challenges in these segments [5] Capital Expenditure and Future Outlook - The company reported capital expenditures of 31.5 billion yuan in Q2, with a total of approximately 120 billion yuan spent on AI and cloud infrastructure over the past four quarters [6][7] - CEO Wu Yongming indicated that previous capital expenditure estimates of 380 billion yuan may be conservative, suggesting potential for increased future investments [8][9] - The focus on strategic investments is expected to lead to future growth, despite current profit pressures, as the company aims to optimize efficiency in its operations [6][9] Market Position and Stock Performance - Alibaba's cloud services hold a 35.8% market share in China's AI cloud market, significantly outperforming competitors [10] - Despite a strong performance in 2025, Alibaba's stock price fell by 1.90% on November 26, indicating market volatility and investor sentiment challenges [11]