Summary of Alibaba Group Holding FY3Q26 Preview Company Overview - **Company**: Alibaba Group Holding - **Ticker**: 9988.HK (HKD), BABA (USD) - **Market Cap**: HK$2,723.6 billion, US$350.4 billion Key Financial Metrics - **Total Consolidated Revenues**: Rmb289.8 billion (+3.4% YoY) [2] - **Non-GAAP Net Profit**: Rmb28.7 billion (9.9% margin) [2] - **China E-commerce Group Revenues**: Rmb164.0 billion, with CMR growth of 2.7% YoY to Rmb103.5 billion [2] - **Cloud Revenues**: Rmb42.9 billion (+35% YoY) [2] - **AIDC Revenues**: Rmb40.5 billion (+7.3% YoY) [2] - **Adjusted EBITA**: Rmb27.7 billion (-49% YoY) [2] - **EBITA Margin**: 9.6% [2] - **Revised Estimates**: Revenue and non-GAAP profit adjusted down by -2% and -27% respectively for FY3Q26E [2][62] Core Insights - **Market Conditions**: Anticipated softer macroeconomic conditions and high base effects are expected to impact CMR growth negatively [1][60] - **E-commerce Performance**: The e-commerce EBITA is expected to decline due to lower growth in CMR and ongoing reinvestment [1][62] - **Cloud Business**: Cloud revenue growth is projected to remain strong at 35% YoY, with stable EBITA margins at 9% [1][62] - **Investment Strategy**: Alibaba is focusing on market share gain for Taobao Shangou, with significant investments planned to solidify its leadership position [12] Business Updates - **E-commerce VAT Implementation**: Strengthened VAT regulations are being implemented, which may impact SMEs more than larger merchants due to increased tax burdens [9][11] - **Taobao Shangou**: Achieved an average of 10 million non-meal orders per day, with a focus on market share growth [12] - **Amap Upgrades**: Amap has introduced significant feature upgrades, attracting 860,000 new merchants and increasing order volumes by over 330% [15] - **Lazada Performance**: Lazada reported a 26x surge in GMV during the 11.11 sale, indicating strong consumer demand [44][45] Risks and Considerations - **Consumer Spending**: There is a potential decline in consumer purchasing willingness post-Singles Day, which may lead to softer retail sales in December [60] - **Revised Growth Forecasts**: CMR growth forecast has been revised down from 8.3% to 2.7% due to slower GMV and other factors [61] - **Investment in AI and Cloud**: Increased spending on AI tools and cloud services may lead to higher losses in the short term [63] Conclusion - **Investment Recommendation**: Despite the challenges, the company maintains a "Buy" rating due to its strong positioning in AI and cloud services, along with operational efficiency improvements [1]

Core Viewpoint - The company is expanding its overseas business through various cross-border platforms while maintaining its traditional market channels to enhance profitability [1] Group 1: Overseas Business Expansion - The company is leveraging platforms such as Alibaba International Station, China Manufacturing Network, Lazada, Shopee, and TikTok to broaden its international business [1] Group 2: Traditional Market Strategy - The company aims to stabilize and deepen value in existing markets, thereby consolidating its foundational business [1] - The company is activating market potential through strategic efforts in traditional channels [1] Group 3: Product Innovation - The company is attempting to drive profit growth through the introduction of new products [1]

Summary of Key Points from the Conference Call Industry Overview - The logistics industry is experiencing a transformation driven by the reshaping of global supply chains, with Chinese logistics companies expanding into emerging markets such as Southeast Asia and Latin America, creating new demand through capital output [1][2][3] Core Insights and Arguments - **Investment Strategy for 2026**: The strategy focuses on two main lines: leveraging domestic advantages in global markets and reshaping the competitive ecosystem in the domestic logistics industry [2][3] - **Drivers for Chinese Logistics Companies Going Global**: The primary driver is the fundamental change in the global supply chain, moving away from a US-China trade-centric model to new growth points in Southeast Asia and Latin America, which are rich in population and resources [3][4] - **Modes of Expansion**: Chinese logistics companies are expanding through three main models: following mining companies, manufacturing, and e-commerce platforms, with the first and third models showing strong explosive potential [5][6] Market Developments - **E-commerce Market in Southeast Asia and Latin America**: Major platforms like Shopee, TikTok Shop, and Lazada dominate the Southeast Asian market, holding over 50% market share, while Chinese-backed platforms are rapidly entering Latin America [6] - **J&T Express's Overseas Expansion**: J&T Express has rapidly expanded its overseas business through a unique profit-sharing system, achieving over 32% market share in Southeast Asia and planning further expansion into the Middle East and Latin America [7] Impact of Mining Companies on Logistics - Following mining companies requires logistics firms to provide infrastructure in exchange for overseas resources, with significant Chinese investment in African ports and infrastructure [8] Changes in Domestic Express Delivery Industry - The domestic express delivery industry is shifting from price competition to a focus on quality, service, and stability due to the fading of internet traffic dividends and intensified competition among e-commerce platforms [9] E-commerce Tax Policy Changes - Starting in 2025, a new e-commerce tax compliance policy will require platforms to report operator information quarterly, increasing tax pressure on businesses with annual revenues over 5 million yuan [11] Effects of Anti-Competition Policies - The anti-competition policies implemented in 2025 have led to improvements in express delivery prices and profitability, shifting the focus back to service quality and operational efficiency [13] Future Investment Recommendations - Future investments in the logistics sector should focus on companies with advantageous industries going global, restructuring domestic order, and positioning for commodity price cycle reversals [14] Outlook for Bulk Commodity Supply Chain Companies - Bulk commodity supply chain companies are expected to see improved performance as they expand into overseas markets, with top companies achieving 30% of their revenue from international operations [15][16]

Core Insights - Sea Limited's (SE) reliance on shipping subsidies has significantly contributed to Shopee's GMV growth, which increased by over 28% year over year to $32.2 billion in Q3 2025, indicating a strong market position in Southeast Asia, Taiwan, and Brazil [1][10] Financial Performance - Despite the impressive GMV growth, the cost of services surged by 38.8% due to increased logistics spending, leading to a 5.7% decline in value-added services revenues [2][10] - Shopee's adjusted EBITDA margin fell to 0.6% of GMV, highlighting ongoing profitability pressures from shipping and fulfillment costs [3][10] Competitive Landscape - Shopee faces intense competition from Alibaba and MercadoLibre, with Alibaba leveraging its logistics and technology ecosystem to maintain a strong market presence [5][6] - MercadoLibre reported a GMV of $16.5 billion, up 28% year over year, showcasing its robust position in Brazil and Latin America [7] Future Outlook - Sea Limited is working to regain cost control by expanding its in-house logistics arm, SPX Express, which is expected to handle most deliveries in key regions [4] - The Zacks Consensus Estimate projects revenue growth of 37.43% in 2025 and 26.21% in 2026, indicating potential for continued top-line growth [4] Valuation Metrics - Sea Limited's stock is currently trading at a forward price-to-earnings ratio of 21.38, which is lower than the sector average of 27.76 [12] - The earnings estimates for 2025 and 2026 are $3.60 and $5.64 per share, respectively, reflecting year-over-year growth of 114.29% and 56.67% [15]

Core Insights - Southbound funds increased their holdings in Alibaba-W (09988.HK) by 5.99 million shares on December 1, 2025, marking a total net increase of 85.34 million shares over the past five trading days [1] - Over the last 20 trading days, southbound funds have increased their holdings on 12 occasions, resulting in a cumulative net increase of 112 million shares [1] - As of now, southbound funds hold a total of 2.208 billion shares of Alibaba-W, which represents 11.56% of the company's total issued ordinary shares [1] Trading Data Summary - On December 1, 2025, total shares held reached 2.208 billion, with a change of 5.99 million shares, reflecting a 0.27% increase [2] - On November 28, 2025, total shares held were 2.202 billion, with a change of 9.77 million shares, indicating a 0.45% increase [2] - On November 27, 2025, total shares held were 2.192 billion, with a change of 35.39 million shares, showing a 1.64% increase [2] - On November 26, 2025, total shares held were 2.157 billion, with a change of 26.40 million shares, representing a 1.24% increase [2] - On November 25, 2025, total shares held were 2.130 billion, with a change of 7.77 million shares, indicating a 0.37% increase [2] Company Overview - Alibaba Group Holding Limited provides technology infrastructure and marketing platforms, operating through seven business segments [2] - The China commerce segment includes retail businesses such as Taobao, Tmall, and Hema, as well as wholesale operations [2] - The international commerce segment encompasses international retail and wholesale businesses, including Lazada and AliExpress [2] - The local services segment includes location-based services such as Ele.me, Amap, and Fliggy [2] - The Cainiao segment offers domestic and international logistics services and supply chain management solutions [2] - The cloud segment provides public and hybrid cloud services to domestic and international enterprises, including Alibaba Cloud and DingTalk [2] - The digital media and entertainment segment includes Youku, Quark, Alibaba Pictures, and other content and distribution platforms, as well as online gaming [2] - The innovation and other segment includes DAMO Academy, Tmall Genie, and other businesses [2]

Core Insights - Amazon has launched Amazon Bazaar, a low-cost shopping app targeting 14 countries in Asia, Africa, and Latin America, as part of its strategy to expand its e-commerce presence in competitive markets [2][4][5] - The app is an extension of Amazon Haul, which was previously introduced in the U.S. and parts of Europe and Asia, and aims to compete with platforms like PDD's Temu [3][4] - Amazon's stock experienced a decline of 1.3% to $239.78 amid a broader market downturn, while shares of competitors such as MercadoLibre and Sea Limited also fell [5][7] Amazon's International Strategy - The Bazaar app will offer products primarily priced under $10, with free delivery on minimum purchases, although delivery times may take up to a couple of weeks [5] - Amazon's international revenue grew by 14% year-over-year to $40.9 billion, although operating income fell by 8% to $1.2 billion [11] - The international division was previously unprofitable but showed signs of margin expansion in Q3 2023, excluding severance costs from layoffs [11] Competitive Landscape - E-commerce competition is intensifying in Latin America, with MercadoLibre defending its market share against Amazon and other competitors like Temu and Shein [5][6] - Shopee is also facing increased competition in Southeast Asia from Temu and Alibaba's Lazada [6] - Despite a strong start to the year, shares of MercadoLibre and Sea Limited have pulled back due to competitive concerns, with MercadoLibre down 20% from its mid-May highs [7][8]

Core Insights - Sea's founder, Li Xiaodong, expressed optimism about the company's potential to reach a market value of $1 trillion, driven by advancements in artificial intelligence, which he likened to the revolutions of personal computers and smartphones [1] - The company has made significant investments in AI, integrating it into customer service and gaming operations, indicating a shift in strategy compared to previous warnings about the challenges of transitioning to AI [1][2] - Sea's financial health is reportedly stronger than in the past, with all three business segments now profitable, reducing reliance on external funding for growth [2] Company Strategy - The company aims to leverage AI for value creation, emphasizing the need for disciplined execution and competitive spirit to achieve its ambitious market valuation [1] - Li Xiaodong highlighted the importance of making correct decisions and maintaining high discipline as the company navigates the technological transformation [1] - Future plans for AI development were not disclosed, leaving questions about how the company will address increasing competition in the market [2] Competitive Landscape - Sea faces intense competition from global players like TikTok's shop and Alibaba's Lazada, as well as emerging companies like Shein and Temu, in the Southeast Asian e-commerce market [3] - The company is also looking to expand its Shopee online empire into Brazil, indicating a strategy to grow beyond its home market [3] - New initiatives in digital finance and logistics are being pursued to solidify market dominance and reassure investors about growth potential [3]

Core Viewpoint - Palantir Technologies has experienced significant growth but is highly valued, while Alibaba, despite slower growth, presents a more sustainable valuation opportunity in the current market environment [1][6]. Palantir Technologies - Palantir's annual revenue increased from $1.1 billion in 2020 to $2.9 billion in 2024, achieving profitability in 2023 and more than doubling its net income in 2024 [2]. - Analysts project Palantir's revenue and earnings per share (EPS) to grow at a CAGR of 38% and 63%, respectively, from 2024 to 2027 [3]. - The growth is supported by increased government contracts and the expansion of its commercial business, with geopolitical factors favoring its Gotham platform and rising demand for its Foundry services [4]. - Palantir's current market cap is $423 billion, trading at over 300 times next year's earnings and 75 times next year's sales, indicating a potential market cap reduction to $227 billion if valuations normalize [5]. Alibaba Group - Alibaba, the largest e-commerce and cloud infrastructure company in China, trades nearly 50% below its all-time high due to regulatory fines, COVID-19 lockdowns, and U.S.-China trade tensions [7][8]. - The company is stabilizing its business by expanding into higher-growth overseas markets and enhancing its logistics platform [9]. - Alibaba's cloud infrastructure is benefiting from the rollout of its large language models (LLMs) and increased spending on cloud services driven by the AI boom [10]. - From fiscal 2025 to fiscal 2028, Alibaba's revenue and EPS are expected to grow at a CAGR of 8% and 12%, respectively, while trading at just 19 times next year's earnings and 2.3 times next year's sales [11][12]. - If Alibaba meets analysts' expectations and achieves a valuation of four times its forward sales, its market cap could nearly double to $710 billion, potentially surpassing Palantir's market cap [13].

Core Insights - This year's Double 11 event will allow all Tmall merchants to sell simultaneously on Lazada, Alibaba's overseas e-commerce platform [1] - Tmall has completed the integration of merchant systems with Lazada, enabling seamless operations for merchants [1] - Merchants on Tmall do not need to register a new store; they can create a mirror store on Lazada by signing an agreement in the backend, with products, inventory, marketing, and promotions synchronized [1]

Core Insights - The Chinese e-commerce market is primarily dominated by Alibaba Group and PDD Holdings, with Alibaba being the pioneer and PDD emerging as a disruptive force through its innovative social commerce model [1][2] Company Overview - Alibaba offers a comprehensive ecosystem that includes e-commerce, cloud computing, digital media, and logistics, while PDD focuses on value-driven commerce through gamification and group-buying [2] - Both companies are expanding internationally but have different strategies to capture consumer spending [2] Financial Performance - Alibaba reported steady performance in its second-quarter fiscal 2026 results, with significant cash flows from Taobao and Tmall funding technology investments [4] - PDD Holdings has shown remarkable momentum, with its Pinduoduo platform gaining market share and Temu's international expansion exceeding expectations [8][9] Growth Prospects - Alibaba's growth has decelerated, facing challenges from market maturation and competition, while PDD's growth trajectory appears substantial, particularly with Temu's early-stage international presence [6][11] - PDD's operational efficiency and healthy profitability, combined with aggressive growth investments, provide a competitive advantage [10] Valuation Comparison - PDD trades at a forward P/E of 11.63x, significantly lower than Alibaba's 19.57x, suggesting better value for investors [12] - Recent price performance shows Alibaba shares have surged 113.6% year-to-date, while PDD gained 37.9%, indicating diverging investor sentiment [15] Investment Recommendation - PDD Holdings is viewed as a superior investment opportunity in Chinese e-commerce due to its growth momentum, advanced AI capabilities, and asset-light operational model [17] - The recommendation is to buy PDD stock while adopting a hold stance on Alibaba, given its mature growth profile and ongoing competitive challenges [17]