Core Viewpoint - Huachuang Securities maintains a "Buy" rating for Alibaba-W (09988) with a target price of HKD 173.86, driven by rapid growth in instant retail revenue and synergistic effects [1] Financial Performance - For FY26 Q1, Alibaba reported revenue of CNY 247.65 billion, a year-over-year increase of 2%, and a 10% increase when excluding disposed businesses [1] - Adjusted EBITA for FY26 Q1 was CNY 38.84 billion, down 14% year-over-year, with an EBITA margin of 16% [1] - Capital expenditures for FY26 Q1 were CNY 38.7 billion, up from CNY 24.6 billion in the previous quarter [1] Business Segment Analysis - **China E-commerce**: Revenue increased by 9.7% year-over-year, with customer management revenue (CMR) up 10.1% due to new software service fees and improved penetration of "full-site promotion" [1] - **International Business**: Revenue grew by 19% year-over-year, with adjusted EBITA showing a loss of CNY 0.59 billion, significantly reducing losses [3] - **Cloud Business**: Revenue rose by 26% year-over-year, with adjusted EBITA also up 26%, and an EBITA margin of 8.8%, driven by growth in public cloud services and increased adoption of AI-related products [1][2] Instant Retail Insights - Instant retail showed a year-over-year growth of 12%, with management highlighting operational metrics such as a peak daily order volume of 12 million and 300 million monthly active buyers [2] - Management aims to reduce unit economics (UE) for instant retail by half while projecting an additional CNY 1 trillion in GMV over the next three years [2] Cloud Business Outlook - The cloud business is expected to continue its upward trajectory, with a 26% growth rate in FY26 Q1 and AI revenue accounting for over 20% of external commercial income [2] - Management reiterated a commitment to invest CNY 380 billion over three years to bolster cloud growth [2]

Core Viewpoint - Huachuang Securities maintains a "Buy" rating for Alibaba-W (09988) with a target price of HKD 173.86, driven by rapid growth in instant retail revenue and synergistic effects [1] Financial Performance - For FY26 Q1, Alibaba reported revenue of CNY 247.65 billion, a year-over-year increase of 2%, and a 10% increase when excluding disposed businesses [1] - Adjusted EBITA for FY26 Q1 was CNY 38.84 billion, down 14% year-over-year, with an EBITA margin of 16% [1] - Capital expenditures for FY26 Q1 were CNY 38.7 billion, up from CNY 24.6 billion in the previous quarter [1] Business Segment Analysis - **China E-commerce**: Revenue increased by 9.7% year-over-year, with customer management revenue (CMR) up 10.1% due to new software service fees and improved penetration of "full-site promotion" [1] - **International Business**: Revenue grew by 19% year-over-year, with adjusted EBITA showing a significant reduction in losses [1] - **Cloud Business**: Revenue rose by 26% year-over-year, with adjusted EBITA also increasing by 26%, and an EBITA margin of 8.8%, driven by growth in public cloud services and AI-related product adoption [1][2] Instant Retail Insights - Instant retail achieved a peak daily order volume of 12 million, with monthly active buyers reaching 300 million, a 200% increase since April [3] - The number of active riders reached 2 million daily, a 300% increase compared to April [3] - Management aims to reduce unit economics in instant retail by half while maintaining current consumer incentives [3] International Digital Business - AIDC revenue grew by 19% year-over-year, with adjusted EBITA showing a significant reduction in losses to CNY 0.59 billion [4] - The unit economics of AliExpress Choice continue to improve through collaboration with local merchants and AI tools to enhance marketing and procurement efficiency [4]

Core Insights - Alibaba's revenue for the quarter ending June 30, 2025, was RMB 247.65 billion (USD 34.57 billion), representing a year-on-year growth of 2% [1] - Operating profit decreased to RMB 34.99 billion (USD 4.88 billion), down 3% year-on-year, primarily due to a reduction in adjusted EBITA [1] - Net profit attributable to ordinary shareholders surged 78% year-on-year to RMB 43.12 billion (USD 6.02 billion), driven by changes in the valuation of equity investments and gains from the disposal of Trendyol's local services business [1] AIDC Performance - AIDC reported a revenue increase of 19% year-on-year to RMB 34.74 billion (USD 4.85 billion), mainly fueled by strong cross-border business performance [2] - The unit's losses significantly narrowed year-on-year and quarter-on-quarter, with improved unit economics in the AliExpress Choice business due to logistics optimization [2] - Trendyol's international business unit also showed improved unit economics quarter-on-quarter [2] Cloud Intelligence Group - The Cloud Intelligence Group's revenue reached RMB 33.40 billion (USD 4.66 billion), marking a 26% year-on-year growth [2] - Overall revenue growth (excluding Alibaba's consolidated business) accelerated to 26%, driven by increased public cloud business revenue, including a rise in AI-related product adoption [2] - AI-related product revenue has achieved triple-digit year-on-year growth for eight consecutive quarters, with sustained demand for computing, storage, and other public cloud services to support AI applications [2] Strategic Focus - The CEO emphasized a focus on consumer and AI + cloud strategies, achieving strong growth through significant investments in instant retail and integration of consumer platforms [3] - The CFO highlighted a 10% year-on-year growth in customer management revenue and a 26% increase in Cloud Intelligence Group revenue, with AI-related product revenue continuing to grow significantly [3] - The company aims to maintain its market leadership in AI and cloud services while investing in major initiatives in instant retail and AI [3]