Group 1: Market Outlook - External negative factors are improving faster than expected, suggesting the market may reach new heights in the second half of the year[2] - The Hang Seng Index has the potential to break resistance levels with only a risk sentiment adjustment needed[3] - The third round of the Hong Kong stock market rally may start earlier than previously anticipated, driven by the Hang Seng Technology Index[12] Group 2: Investment Strategy - Focus on sectors with improving sentiment and low valuations, such as e-commerce and local services, which are showing signs of stabilization[3] - The technology sector is at the intersection of recovery and low valuation, making it suitable for institutional investors to "buy low"[3] - The coal, cement, and cyclical goods sectors may accelerate their recovery due to the "anti-involution" policy[3] Group 3: Capital Flow and Valuation - Southbound trading accounts for 40% of the turnover, indicating a shift in the importance of foreign capital in the Hong Kong market[5] - The AH premium is expected to decrease to around 26% or lower, driven by a weaker dollar and market dynamics[6] - Corporate earnings are improving, with the MSCI China Index's EPS expected to rise for the third consecutive year in 2025[7] Group 4: Long-term Investment Themes - Two long-term investment themes are highlighted: large financials and technology, which are seen as core assets for differentiated allocation in the Hong Kong market[7] - The Hong Kong capital market is undergoing profound changes, with policies supporting its status as an international financial center[7]

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 - The report from CITIC Securities indicates that mainstream internet companies exhibit strong performance resilience, with expectations for continued high resilience in the first half of 2025, despite potential adjustments in the second half due to changes in tariff policies [1] Group 1: Performance Outlook - Internet companies are expected to maintain strong performance resilience in the first half of 2025 [1] - The worst-case scenario for performance has likely already occurred, suggesting a stabilization in outlook [1] Group 2: Sector Analysis - Streaming, gaming, and local services sectors are less affected by tariffs and are seen as safe havens in the short to medium term [1] - If tariff negotiations improve, cyclical sectors such as online advertising, e-commerce, and consumer finance may experience a reversal in performance expectations [1] Group 3: Investment Recommendations - The report recommends focusing on aggressive selections related to tariff and policy reversals [1] - Defensive selections for the short to medium term are also advised [1] - Attention should be given to potential deregulation targets in the future [1]