Core Viewpoint - Alibaba is expected to report a revenue growth of 2% year-on-year for Q1 FY26, with an adjusted EBITA margin of 16% [2][3] Revenue and Growth Projections - The anticipated revenue for Q1 FY26 is 247.8 billion, reflecting a 2% year-on-year increase, with growth rates for various segments as follows: Taotian at 9%, International Digital Commerce at 19%, Cloud Intelligence Group at 22%, Local Life at 10%, Cainiao at -5%, and Big Entertainment at 5% [2][3] - The slowdown in revenue growth is primarily attributed to the divestiture of Gaoxin Retail and Intime [3] Segment Analysis - Taotian Group is projected to achieve a GMV growth of 6% year-on-year, with a CMR increase of 11%, driven by site-wide promotions and a 0.6% contribution from technology service fees [2] - The Cloud segment is expected to accelerate with a revenue growth of 22% year-on-year, supported by increasing AI demand [2] - AIDC is forecasted to grow by 19% year-on-year, with a decrease in adjusted EBITA margin by 6%, but a significant reduction in losses [2] Profitability and Investment Impact - The adjusted EBITA for Q1 FY26 is estimated at 39.2 billion, reflecting a year-on-year decrease of 13% and a margin decline of 3 percentage points [3][4] - Increased investment in instant retail is expected to pressure short-term profits but may enhance user engagement and purchase frequency in the long term [4] Future Revenue and Profit Adjustments - Revenue forecasts for FY2026 to FY2028 have been slightly adjusted to 1,062.3 billion, 1,149.0 billion, and 1,217.4 billion respectively, with adjustments of +1.0%, +2.2%, and +0.8% [4] - Net profit forecasts for FY2026 to FY2028 have been revised to 138.8 billion, 171.8 billion, and 195.4 billion respectively, with adjustments of -16.8%, -5.7%, and -2.9% [4] Valuation - The company is currently valued at a PE ratio of 13 times for FY2026, maintaining an "outperform" rating [4]

Investment Rating - The report maintains a "Buy" rating for Alibaba [3] Core Views - Alibaba's core business in e-commerce remains stable and shows positive growth, while its cloud business is entering a high-growth cycle driven by AI demand [7][9] - The company has exceeded expectations in its latest quarterly results, with revenue and adjusted net profit showing significant growth [7][9] Financial Performance Summary - For FY4Q25, Alibaba achieved revenue of 2364.5 billion yuan, a year-on-year increase of 6.6%, slightly below Bloomberg consensus of 2379.1 billion yuan [7] - Adjusted net profit reached 298.5 billion yuan, up 22.2% year-on-year, slightly above the consensus estimate of 298.5 billion yuan [7] - The Taobao Group reported revenue of 1013.7 billion yuan, growing 8.8% year-on-year, and adjusted EBITA of 417.5 billion yuan, up 8.4% [7] - The Cloud Intelligence Group's revenue increased by 17.7% year-on-year to 301.3 billion yuan, with adjusted EBITA growing 69.0% [7] - International digital commerce revenue grew by 22.3% year-on-year to 335.8 billion yuan, while the logistics segment saw a revenue decline of 12.2% [7] Future Outlook - The report forecasts Alibaba's revenue for FY2026-2028 to be 10642 billion yuan, 11748 billion yuan, and 12725 billion yuan respectively, with adjusted net profits of 1696 billion yuan, 1849 billion yuan, and 1955 billion yuan [9][11] - The company is expected to maintain a focus on AI and cloud integration alongside its core e-commerce business, with other segments showing signs of reduced losses [9][11] Valuation - The estimated market value of Alibaba is 30954 billion yuan, corresponding to a target price of 176.86 HKD per share [9][24]

Investment Rating - The report maintains a "Buy" rating for Alibaba [3] Core Views - Alibaba's core e-commerce business remains stable and shows positive growth, while its cloud business is entering a high-growth cycle driven by AI demand [7][9] - The company has exceeded expectations in its latest quarterly results, with revenue of 2364.5 billion yuan (+6.6%) and adjusted net profit of 298.5 billion yuan (+22.2%) [7] - The report highlights the company's strategic focus on integrating AI with cloud services and its core e-commerce operations, with a projected revenue growth for FY2026-2028 [9][11] Summary by Sections Financial Performance - For FY4Q25, Alibaba achieved revenue of 2364.5 billion yuan, slightly below Bloomberg consensus of 2379.1 billion yuan, but adjusted net profit of 298.5 billion yuan exceeded expectations [7] - The Taobao and Tmall Group reported revenue of 1013.7 billion yuan (+8.8% YoY) and adjusted EBITA of 417.5 billion yuan (+8.4% YoY) [7] - The Cloud Intelligence Group's revenue reached 301.3 billion yuan (+17.7% YoY), driven by public cloud growth and AI-related revenue [7] Business Segments - Taobao Group's GMV growth is expected to align with the overall e-commerce market, with a stable market share [7] - The Cloud Intelligence Group is positioned to benefit from the AI boom, with significant investments in infrastructure [7] - International digital commerce revenue grew by 22.3% YoY, while the logistics segment faced a temporary decline due to business adjustments [7] Shareholder Returns - In FY25Q4, Alibaba repurchased 51 million shares for a total of 600 million USD, with a total of 11.97 billion shares repurchased in FY25 [8] - The company declared a regular dividend of 0.13 USD per share and a special cash dividend of 0.12 USD, totaling 4.6 billion USD for the fiscal year [8] Valuation and Forecast - The report projects FY2026-2028 revenues of 10642 billion yuan, 11748 billion yuan, and 12725 billion yuan, with adjusted net profits of 1696 billion yuan, 1849 billion yuan, and 1955 billion yuan respectively [9][11] - The estimated market value of the company is 30954 billion yuan, corresponding to a per-share value of 176.86 HKD [9][24]

Core Insights - Alibaba reported total revenue of 236.45 billion RMB for FY2025 Q4, representing a year-on-year growth of 7% [1] - Non-GAAP net profit for the quarter was approximately 30 billion RMB, up 18% year-on-year [1] Business Segment Performance - Taobao and Tmall Group generated 101.4 billion RMB in revenue, a 9% increase year-on-year, with adjusted EBITA of approximately 41.7 billion RMB, up 8% [1] - International commerce recorded 33.6 billion RMB in revenue, a 22% year-on-year increase, with adjusted EBITA narrowing to -3.6 billion RMB, a 13% improvement [1] - Alibaba Cloud achieved 30.1 billion RMB in revenue, an 18% year-on-year growth, with adjusted EBITA of approximately 2.4 billion RMB, up 69% [1][2] - Cainiao reported 21.6 billion RMB in revenue, a 12% decline year-on-year, with adjusted EBITA narrowing to -600 million RMB, a 55% improvement [1] - Local services generated 16.1 billion RMB in revenue, a 10% increase year-on-year, with adjusted EBITA of approximately -2.3 billion RMB, narrowing by 28% [1] - Digital entertainment recorded 5.55 billion RMB in revenue, a 12% increase year-on-year, with adjusted EBITA turning positive, primarily driven by profitability from Youku [1] Strategic Focus and Future Outlook - The company emphasized a commitment to user growth and merchant experience, with customer management revenue (CMR) increasing by 12% to approximately 71.1 billion RMB, driven by an increase in take rate [2] - Alibaba Cloud's revenue growth is expected to continue accelerating, with AI product demand remaining strong, achieving triple-digit year-on-year growth for seven consecutive quarters [2] - Capital expenditure for the quarter was approximately 24.6 billion RMB, reflecting the company's ongoing investment in AI technology and product development [2] - The company aims to focus on core businesses and drive AI and cloud as new long-term growth engines [2] Valuation and Rating - The company maintains a "Buy" rating, projecting revenues of 1,118.5 billion RMB, 1,236.0 billion RMB, and 1,355.1 billion RMB for the fiscal years 2026-2028, with non-GAAP net profits of 161.3 billion RMB, 184.5 billion RMB, and 208.1 billion RMB respectively [3] - The target price is set at 164 HKD for Hong Kong stocks and 168 USD for US stocks, based on a 10x P/E for core e-commerce, 30x P/E for Alibaba Cloud, and 1x P/S for other businesses [3]

Core Viewpoint - Alibaba Group's CEO, Wu Yongming, emphasizes the need for a "return to the original intention and re-entrepreneurship" in light of the AI technology revolution, advocating for a startup mentality to create opportunities and mitigate risks [1][2]. Group 1: Strategic Focus and Management Changes - The term "re-entrepreneurship" has been frequently mentioned by Alibaba's management in recent years, reflecting the company's ongoing challenges in finding new growth amid market share losses to competitors like Pinduoduo and Douyin [2][3]. - Wu Yongming, upon becoming CEO, established "user-first, AI-driven" as the strategic focus, aiming for a younger management team and prioritizing technology and globalization [2][3]. - In December 2023, Wu was appointed CEO of Taotian to enhance strategic collaboration and resource allocation within Alibaba's core e-commerce business [2][3]. Group 2: Business Performance and Strategic Adjustments - Alibaba has faced significant pressure due to slowing growth in its core e-commerce business and market share losses, prompting reflections on past mistakes and a renewed focus on customer needs [3][4]. - The company has completed strategic refocusing, identifying e-commerce and cloud computing as core businesses while reducing investments in non-core assets [3][4]. - Despite these adjustments, Alibaba still faced challenges, including declining EBITA and revenue shortfalls, leading to the establishment of an e-commerce business group to consolidate resources [3][4]. Group 3: Embracing AI and Future Investments - Wu Yongming's renewed call for "re-entrepreneurship" comes with a commitment to significant investments in AI and cloud infrastructure, with over 380 billion allocated for the next three years, marking the largest investment cycle in Alibaba's history [8][9]. - The company aims to leverage AI to enhance product and service synergies, improve user experiences, and reshape organizational operations [8][9]. - The upcoming "Ali Day" symbolizes Alibaba's commitment to embracing transformative innovations and the challenges of re-entrepreneurship in the AI era [9].

Core Perspective - Alibaba must adopt a startup mentality to create opportunities amidst the AI technology revolution, or it will face risks [1][2][6] Group 1: Company Strategy - CEO Wu Yongming emphasizes "restarting entrepreneurship" as a recurring theme in Alibaba's management, indicating a shift in strategy to adapt to market challenges [1][2] - The company has integrated its internal networks across various business units, allowing for cross-departmental mobility, which reflects a new approach to collaboration [1][8] - Alibaba's strategic focus has shifted to "user-first, AI-driven" initiatives, with a commitment to management team rejuvenation and investment in technology and globalization [2][4] Group 2: Business Performance - Alibaba's e-commerce market share has been eroded by competitors like Pinduoduo and Douyin, leading to a search for new growth avenues [2][3] - The company has faced significant pressure due to slowing growth in core e-commerce and declining market share, prompting reflections on past mistakes and a renewed focus on customer needs [2][3] Group 3: Future Outlook - The company plans to invest over 380 billion in cloud and AI infrastructure over the next three years, marking the largest investment cycle in its history [7][8] - Alibaba's management is focused on leveraging AI to enhance product and service synergies, aiming to create new user experiences and improve operational efficiency [8][9] - The upcoming "Ali Day" symbolizes a commitment to transformative innovation, with the company poised to navigate the challenges of the AI era [9]