The company's recent situation
We invited Alibaba management to conduct a non-transactional roadshow where the company answered key questions about shareholder returns, Taotian Group, Cloud Intelligence Group, and international business developments.
reviews
Shareholder returns are certain, and the dual major listings are progressing in an orderly manner. The company said that the current asset and cash flow situation can ensure sufficient repurchase capital, and sufficient overseas capital and remittance amounts to complete the repurchase. Currently, the company promises an annual net share reduction ratio of 3% or more. The company said that if a cash dividend ratio of 1% or more is added, the shareholder return is expected to exceed 4%, and the company's investment in Taotian, international business and cloud computing will not affect repurchases and dividends. We believe that if Ali's long-term market share and net profit margin remain stable, shareholder return levels of 4% or more are already very attractive. In terms of dual major listing, the company said that due to delays in organizational structure adjustments and employee incentive plans in '23, there are currently no major obstacles, and it will continue to push forward the dual major listing plan in '24.
Taotian Group: The company said it will return to Taobao and users, focusing on increasing investment in algorithms, price power, services and technology to increase user retention and purchase frequency: reduce human intervention in algorithms and refine operations for different categories and groups of people based on user orientation; pursue price power and better price matching mechanisms in terms of price, and further enrich the supply of cost-effective products; and continue to invest in return, refund and shopping experiences in services to ensure that the service experience is in a leading position; unify Taobao App design and advertising product updates in terms of technology and products. The company expects GMV to maintain positive growth this year. After a three-year investment period, the company expects to stabilize its market share first. The GMV growth rate remains the same as the zero growth rate of social networks on this basis. On this basis, it pursues zero growth with online physical goods companies, and even surpasses the average growth rate of the industry.
Cloud Intelligence Group: The company said that the public cloud strategy continues to advance. Alibaba Cloud uses public cloud market share as an important target, and recently announced a sharp price reduction for products, mainly due to the strong scale effect of public cloud products, providing room for leading companies to reduce prices, hoping to exchange profits for progress in revenue growth. The company believes that the prosperity of the AI ecosystem is an important opportunity to promote the development of public clouds, and will maintain investment in AI in the future.
International business: The company said that international business is expected to maintain high investment and growth. Cross-border business is the main direction of investment and growth. Currently, it is still considering whether to focus on the US region. When Choice's share of orders reaches a high level, the cross-border business will focus on customer acquisition to attract new user groups. The company is expected to begin large-scale investment in customer acquisition in '24, so the annual loss margin may increase compared to the previous one.
Profit forecasting and valuation
Currently, the company's US and Hong Kong stocks are trading 8/7 times and 8/7 times the non-GAAP price-earnings ratio for the 2024/2025 fiscal year. We maintain revenue forecasts and profit forecasts. Maintaining an outperforming industry rating and target price, corresponding to the 2024/2025 fiscal year non-general accounting price-earnings ratio of US stocks and Hong Kong stocks was 12/11 times and 12/11 times, with room for growth of 56% and 56%, respectively.
risks
COVID-19 uncertainty, macroeconomic and regulatory uncertainty, and increased competition.