July 9, 2025 12:10 PM GMT Alibaba Group Holding | Asia Pacific 1QF26 Preview: Earnings Pressure with Heightened Investments | What's Changed | | | | --- | --- | --- | | Alibaba Group Holding (BABA.N) | From | To | | Price Target | US$180.00 | US$150.00 | With estimate ~Rmb10bn in instant commerce investments and expect consolidated EBITA to fall 16% YoY (TTG + local services EBITA -20%) in F1Q with investments potentially peaking (~Rmb20bn) in F2Q. We forecast cloud revenue growth at 22% YoY. Reiterate OW a ...

Core Insights - Alibaba Group (BABA) and JD.com (JD) are major players in China's e-commerce sector, each contributing significantly to the digital economy [1][2] - Investors are closely monitoring which platform will deliver stronger and more sustainable growth as China's economy stabilizes [2] Alibaba Group (BABA) - BABA reported revenues of $32.81 billion in Q4 fiscal 2025, marking a year-over-year increase of 6.96% [3] - The company has expanded its loyalty program, 88VIP, to over 50 million members, enhancing user retention [4] - International commerce segment revenues grew by 22% year-over-year, aided by localized supply chains and improved unit economics [5] - Alibaba Cloud revenues increased by 18%, with AI product revenues experiencing triple-digit growth for seven consecutive quarters [6] - A RMB 10 billion investment in instant commerce initiatives has shown promising early results in user engagement [7] JD.com (JD) - JD reported revenues of $41.79 billion in Q1 2025, reflecting a year-over-year growth of 16.01% [8] - The company has seen a 20% year-over-year increase in active customers, driven by enhanced shopping frequency and personalized services [9] - JD's 3P marketplace has expanded, resulting in a 16% year-over-year growth in marketing and marketplace revenues [10] - The food delivery segment is growing, with nearly 20 million daily orders and a strategy of onboarding merchants at zero commission [11] - JD Logistics contributed to an 11% revenue growth, with gross profit rising by 20% and non-GAAP net income increasing by 43% year-over-year [12] Price Performance and Valuation - Year-to-date, BABA shares have increased by 42.4%, while JD shares have decreased by 3.8% [13] - BABA's forward 12-month P/E ratio is 11.13X, compared to JD's 7.63X, indicating higher investor confidence in BABA's growth potential [16] - The Zacks Consensus Estimate for BABA's Q1 fiscal 2026 earnings is $2.48 per share, a 9.73% year-over-year increase, while JD's Q2 2025 earnings estimate indicates a 24.81% decline [20][21] Conclusion - BABA is positioned as a more attractive investment option due to its strong momentum in cloud, AI, and international e-commerce, alongside a balanced business model [22] - JD is facing challenges in profitability due to aggressive investments and losses in new business segments [22]

Equity Research China Technology 15 May 2025 Alibaba Group Holding Ltd. Cloud Growth Accelerating but Margins Under Pressure Due to Investments Ecommerce CMR growth and TTG's EBITA above expectations; Surging demand for AI cloud services to drive continued growth acceleration; Reiterate OW and PT of $180. Summary: March-Q's 12% yoy CMR growth was better than expected and the highest in a few years, driven mostly by better monetization (tech service fees and QZT). TTG's EBITA growth of 8% yoy with flattish y ...