Increased competition and the downturn in the overall market of superimposed consumption dragged down performance below expectations. Taking into account the slowdown in revenue and the short-term strong supervision of profit margins into the downward channel, the annual Non-GAAP net profit of FY2022/2023/2024 was reduced to 1524x1622max 1712 (- 51lb SOTP). The segment valuation method (SOTP) was used to give the company 3.2612 trillion yuan for fiscal year 2022, corresponding to the target market value of HK $3.9231 trillion, and the target price was lowered to HK $181.20 to increase its holdings.

Performance summary: FY22Q2 revenue of 200.69 billion yuan / + 29%, adjusted net profit of 285.24 billion yuan /-39%; adjusted EBITDA of 348.40 billion yuan /-27%, adjusted EBITA of 280.33%.

There are environmental and competitive reasons for the stall of core e-commerce. The overall performance of the revenue side of ① is lower than expected (200.69 billion VS is expected to be 206.173 billion yuan). Excluding Gao Xin, the income growth rate is 16%. The income of ② core e-commerce, Cainiao and local life services is generally weak, and the trend of CRM income is consistent with the previously tracked Q3GMV growth rate, falling to 3%. ③ lowered its guidance on total revenue growth in fiscal year 2022 from 30% to 20-23%, which is rare, indicating that the growth pressure is obvious. ④ weakness can not be entirely attributed to the market recession, competition intensified e-commerce increment has been continuously diverted, BABA is currently in a period of disconnected core performance drivers, cloud computing still needs to get out of the impact of the head customer loss base, the volume of new retail business is still small.

Customer acquisition is a bright spot this quarter, and short-term profit margins are still in a downward range. ① 's AAC has returned to 32 million this quarter, at the cost of 14% of its purchases and sales expenses. Under the background that all major e-commerce companies are strengthening the construction of near-field e-commerce system, the overall performance of the combination strategy of Alitot + Taocai + high frequency is in line with expectations. The annual active users of Taocai GMV+150%, has exceeded 240 million, and sinking is still the most important increment. ③ 's profit-side performance was also lower than expected, affected by falling gross margins and investment in new businesses such as vegetable shopping. After the core e-commerce has adjusted EBITA to 19%/-16pct, the losses of innovation business and digital entertainment have increased; under the background of declining ④, intensified competition and profit-making merchants, it is expected that the profit margin of BABA's core business will still be in the downward range.

Risk hint: industry competition aggravates risk; antitrust policy risk; data security supervision risk.