1 September 2025 | 6:09AM HKT We revise our FY26E-FY28E adj. net profit by -9%~ to +2% on larger quick commerce loss, part offset by faster int'l eCommerce Ronald Keung, CFA +852-2978-0856 | ronald.keung@gs.com Goldman Sachs (Asia) L.L.C. Steve Qiu Alibaba Group (BABA) 1QFY26 Review: Cloud/capex beat with a renewed AI-driven narrative; Buy | BABA | 12m Price Target: $163.00 | Price: $135.00 | Upside: 20.7% | | --- | --- | --- | --- | | 9988.HK | 12m Price Target: HK$158.00 | Price: HK$115.70 | Upside: 36.6% ...

Core Insights - Interest in "China Travel" is increasing significantly due to streamlined visa, transportation, payment, and departure tax refund policies, with foreign inbound tourists reaching 7,367,400 in Q1 2025, marking a 39.2% year-on-year increase [1] Company Developments - Alibaba Group's Amap launched China's first multilingual map on July 9, 2025, expanding from existing Chinese and English versions to support 14 additional languages including Spanish, Portuguese, French, and more [2] - Amap previously introduced an English-language map for overseas users, enhancing the travel experience in China [3] - The multilingual version of Amap features a fully localized interface and geographic information, aiding foreign visitors in navigating China [4] Service Enhancements - The multilingual Amap integrates core functions such as driving, walking, cycling, and public transport navigation, providing services comparable to local users [5] - Amap includes an English-language ride-hailing function, allowing foreign visitors to book vehicles easily while accessing key information like pick-up locations and fare estimates [5] - Amap aims to continue enhancing its multilingual services to cover more languages and usage scenarios for overseas users [6]

Investment Rating - The report assigns a 12-month rating of "Buy" for Alibaba Group with a price target of US$176.00, up from a prior target of US$160.00 [5][10][31]. Core Insights - The management of Alibaba Group identifies capacity as a key constraint on growth, with a focus on monetizing AI capabilities primarily on the B2B side. The company is leveraging its QWen model for MaaS and has integrated LLM into various products [3][4]. - The report highlights strong growth potential in the cloud sector driven by digitalization in Chinese enterprises and SMEs, with expectations of margin improvements in the long term [3][10]. - The Taobao Tmall Group (TTG) is expected to benefit from a new software service fee and improved marketing tools, with a focus on user acquisition and enhancing customer experience [4][10]. Financial Metrics - Revenue projections show growth from Rmb941.17 billion in FY24 to Rmb970.25 billion in FY25, with net earnings expected to rise from Rmb158.36 billion to Rmb160.42 billion in the same period [7]. - The report anticipates a diluted EPS increase from Rmb62.23 in FY24 to Rmb67.18 in FY25, with a projected CAGR of 12% [7][10]. - The company's market capitalization is noted at US$331 billion, with a free float of 97% and an average daily trading volume of 3,609,000 shares [5][7]. Valuation and Returns - The report employs a sum-of-the-parts (SOTP) valuation method, projecting a target price of US$176, reflecting an improved outlook for TTG and cloud growth potential [10][12]. - Forecasted returns include a price appreciation of 24.7% and a dividend yield of 1.2%, leading to an expected total stock return of 26.0% [12][10].