The world's largest retail business, stepping into high-quality growth
BABA is the largest retail business in the world. As of FY2022, BABA's annual retail business in China has reached 903 million active consumers, and the ecosystem GMV has reached 8.317 trillion yuan, of which the GMV from Chinese consumers is about 7.976 trillion yuan. In the short term, the willingness to consume tends to be cautious under the weak macro economy, the competition for online traffic growth is fierce, and the company continues to invest in near-field e-commerce layout, logistics implementation and supply chain construction, resulting in income and profit pressure; in the long run, as consumers cover more demand in the near-field retail scene, cloud computing profit margins continue to improve, and it is expected to maintain healthy growth in the future. We estimate that FY2023-FY2025 's non-GAAP homing net profit is 1415 yuan, 1627 yuan and 191.4 billion yuan respectively, and the corresponding EPS is 6.6,7.6 and 8.9 yuan respectively, and the corresponding year-on-year growth rate is-4.5%, + 14.9% and + 17.6% respectively. The current share price of HK $91.75 corresponds to 11.9,10.3 and 8.8 times PE respectively. For the first time, coverage gives a "buy" rating.
People with high consumption power, supply of various business services and infrastructure construction jointly set up barriers to drive online retail penetration to increase, but with the slowdown of Internet traffic growth and fierce competition in the online retail industry, although BABA's domestic GMV growth rate and market share have declined, BABA's core competitiveness is still: the demand side fully covers high-quality groups. In 2021, BABA (adjusted according to the calendar year), JD.com and Pinduoduo contributed 8883 yuan, 5787 yuan and 2810 yuan to the GMV of individual active consumers respectively. The supply side covers a variety of business models and scenarios to meet more diversified needs; input logistics and other infrastructure layout to strengthen business service capabilities.
Future growth point: consumption far, middle and near field retail full layout, industrial cloud computing profit release (1) consumption side: through the far, middle and near field layout to improve the penetration of food, daily necessities and fresh products with high purchase frequency, high time sensitivity and high degree of localization, at the same time to meet the diverse needs of different consumption power and preferences, time sensitivity and consumption patterns. (2) Industrial end: Aliyun's domestic market share ranks first, and there is still room for growth under the advantages of capital and technology. According to Canalys data, 2022Q1 Aliyun's market share in domestic cloud computing is 36.7%. Aliyun has made profits for 13 consecutive quarters under scale effect, and its profitability is expected to continue to improve in the future.
Risk tips: new business development is not as expected, competition intensifies, regulatory policy changes, economic growth slows.