Alibaba's results for the 24Q3 fiscal quarter were in line with expectations. Ali's revenue for the 24Q3 fiscal quarter was 26.35 billion yuan, an increase of 5% over the previous year. Among them, Taotian Group, International Digital Business Group, Local Life Group, Cainiao Group, Cloud Intelligence Group, and Dawen Entertainment Group were 1290.7/285.2/151.6/284.8/280.7/5.04 billion yuan respectively, an increase of 2%/44%/13%/3%/18% over the previous year. Adjusted EBITA increased 2% year over year to $52.84 billion. NONGAAP's net profit to mother was 48.18 billion yuan, down 4% year on year, in line with market expectations.
Taotian: Focus on “customer first” to enhance price competitiveness. In the 24Q3 fiscal quarter, China's retail revenue increased 1% year on year to 123.8 billion yuan. Among them, customer management revenue remained flat year over year, and online GMV grew healthily year over year, partly offset by the decline in overall conversion rates due to the increase in GMV of Taobao merchants. Under the user participation and price competitiveness strategy, the company will continue to increase interactive content and actively expand the range of cost-effective products. The number of merchants on the platform continued to maintain double-digit year-on-year growth during the quarter, with 88VIP members exceeding 32 million, a year-on-year double-digit increase.
Cloud intelligence: Public clouds drive profit improvements, and Alibaba Cloud initiated price reductions across the board. Alibaba Cloud's smart revenue this quarter was 28.07 billion yuan, up 3% year on year. Revenue from public cloud products and services grew healthily, driving up profitability.
Adjusted EBITA was 2.36 billion yuan, yoy +86%, adjusted EBITA margin was 8.4%, yoy+3.8pct.
On February 29, Alibaba Cloud announced price reductions for all products, involving more than 100 products and more than 500 specifications. Among them, cloud servers were reduced by up to 36%, object storage OSS was reduced by up to 55%, and cloud databases were reduced by up to 40%. We expect ARPU in the short term or impact on cloud business, and we expect to further expand the number of public cloud customers and the scale of cloud usage in the long term.
AIDC's international business increased investment and grew strongly. Overall AIDC orders increased by about 24% year over year in the 24Q3 fiscal quarter. Among them, Choice led AliExpress to achieve more than 60% year-on-year order growth, Trendyol achieved strong double-digit growth, and Lazada's losses per order continued to narrow year over year. AIDC's adjusted EBITA for the quarter was 3.15 billion yuan. The increase in losses was mainly due to increased investment in international business.
Cainiao and Local Life's profits continue to improve. On Cainiao's side, international logistics fulfillment solutions continue to grow, optimize mainline transportation, and last-mile delivery costs continue to improve. Cainiao's adjusted EBITA was 960 million yuan, compared to a loss of 12 million yuan in the same period last year. In terms of local life, group orders increased nearly 20% year over year, annual active consumers exceeded 310 million, annual purchase frequency increased strongly year over year, and business losses continued to narrow.
Raise the share repurchase plan to focus on core business and promote the sale of non-core assets. In terms of share repurchases, the company plans to increase the repurchase plan of 25 billion US dollars, which is valid until the end of March 2027. After the scale is raised, there will be a share repurchase amount of 35.3 billion US dollars over the next three fiscal years.
The company's strategy focuses on core business, increasing investment in e-commerce and cloud computing at home and abroad, and promoting the sale of non-core assets.
In the nine months of fiscal year 2024, the company has completed the withdrawal of 1.7 billion US dollars of non-core assets, and a professional team has been set up to implement the exit plan for some shares of listed companies. In the future, it may push forward the withdrawal of traditional retail business.
Investment advice: Maintain a “buy” rating. We expect Ali's revenue for the 2024-2026 fiscal year to be 9383/10015/108.49 billion yuan; non-GAAP net profit of 1596/1646/175.2 billion yuan. Based on core e-commerce 10x 2024e P/E, cloud computing 3x 2024e P/S, big entertainment and other businesses 2x 2024e P/S, Alibaba Hong Kong Stock (9988.HK) was given a target price of HK$114 /US stock (BABA.N) of $117, maintaining the “buy” rating.
Risk warning: The impact of industry policies on business exceeded expectations, progress in e-commerce and cloud computing fell short of expectations, and changes in the macro environment exceeded expectations.