Events:
The company announces FY2023Q1 financial report (corresponding to natural year 2022Q2), realizing operating income of 205.6 billion yuan (YoY+0%,QoQ+1%), operating profit of 24.9 billion yuan (YoY-19%,QoQ+49%), adjusted EBITDA411 billion yuan (YoY-15%,QoQ+76%), net profit of 20.3 billion yuan (YoY-53%, QoQ+211%), net profit of 22.7 billion yuan (YoY-50%,QoQ+240%) and net profit of 30.3 billion yuan (YoY-30%,QoQ+53%) for Non-GAAP.
Our view:
Overall performance: the revenue in this quarter is higher than expected, and the year-on-year growth rate is under pressure to 0% due to the local epidemic, but the overall business development is very resilient and continues to focus on the three major strategies of domestic demand, globalization and cloud computing.
China commercial business: FY2023Q1 revenue increased by-1% year-on-year to 141.9 billion yuan, of which 1) Chinese retail revenue reached 137 billion yuan (YoY-2%,QoQ+1%). Among them, the revenue of ① customer management business reached 72.3 billion yuan (YoY-10%,QoQ+14%), mainly due to the interruption of regional supply chain and logistics in April and May, resulting in a decrease in the number of physical GMV (excluding unpaid orders) on Taobao and Tmall online and an increase in cancellation orders. ② and other businesses realized revenue of 64.7 billion yuan (YoY+8%,QoQ-11%), the growth mainly came from the contribution of revenue growth of direct business including Box Horse and Alibaba Health Information Technology; 2) China wholesale business realized revenue of 5 billion yuan (YoY+26%,QoQ+13%), which was mainly due to the increase in revenue from new tax-free wholesale business and the provision of value-added services for paying members.
International business: FY2023Q1 revenue increased 2% year-on-year to 15.5 billion yuan, of which 1) cross-border and global retail business achieved revenue of 10.5 billion yuan (YoY-3%,QoQ+6%). The slowdown in year-on-year growth was mainly due to the revision of EU value-added tax, the depreciation of the euro against the US dollar, and the continued impact of supply chain and logistics disruptions caused by the conflict between Russia and Ukraine. But it was partly offset by the GMV growth of Lazada and the revenue increase brought about by the 46% year-on-year increase in overall Trendyol orders. 2) the revenue of cross-border and global wholesale businesses reached 4.9 billion yuan (YoY+12%,QoQ+11%), which was mainly due to the increase in revenue from value-added services related to cross-border business.
Local living services business: FY2023Q1 revenue increased 5% year-on-year to 10.6 billion yuan. Due to repeated outbreaks, orders in this quarter decreased by 5% year-on-year, and overall GMV declined compared with the same period last year. However, as the impact of epidemic control faded, the overall GMV recorded positive growth in June 2022.
Cainiao logistics services business: FY2023Q1 revenue rose 5 per cent year-on-year to 12.1 billion yuan, mainly due to the improvement of logistics compliance solutions and value-added services provided to China's retail business (70 per cent of revenue in the quarter came from external customers).
Cloud computing business: FY2023Q1 cloud computing revenue rose 10% year-on-year to 17.7 billion yuan, slowing year-on-year growth, mainly driven by non-Internet industries (financial / public services, telecommunications, etc.). In the quarter ended June 30, 2022, revenue from customers in the non-Internet industry accounted for 53% of Aliyun's total revenue after offsetting the impact of cross-segment transactions, up more than 5% from the same period last year.
Profit forecast and investment rating: we estimate that the company's FY2023-FY2025 annual revenue is 927710493max 1167.5 billion, the parent net profit is 9181022max 1164.4billion, the corresponding diluted EPS is 4.2pm 4.7max, and the corresponding Pmax E is 1917max 155.According to the SOTP valuation method, we give BABA a total target market capitalization of 2.4916 trillion yuan and the corresponding target price of HK $137bn in fiscal year 2023, maintaining a "buy" rating.
Risk tips: repeated impact of the national epidemic; macroeconomic growth is not as expected; the Internet industry policy regulation and valuation adjustment risk; market competition intensified, industry growth is not as expected; excessive business diversification, lack of organizational coordination, and so on.