Since the new management took office, the organizational structure has continued to be adjusted, and the repurchase of Cainiao shares has increased investment. Since Cainiao's new management took office in September 2023, the organizational structure and strategy have continued to be adjusted. Ali initially announced a comprehensive asset restructuring plan in May 2023, which included Cainiao's IPO. At the time, Ali believed that a separate listing would better reflect the value of Cainiao as an important business for Ali. However, the situation has changed so far. Based on comprehensive considerations, the current IPO cannot highlight the intrinsic value of Cainiao. On March 26, 2024, Alibaba Group announced the withdrawal of Cainiao's IPO application and plans to acquire Cainiao's employees' and minority shareholders' shares for US$3.75 billion. Currently, Alibaba Group holds about 63.7% of Cainiao's fully diluted shares. We believe this will facilitate strategic collaboration between Taotian Group and Alibaba International Digital Business Group.
FY24Q3 (2023Q4, natural year): Revenue was basically in line with expectations. Raising the share repurchase amount, Ali achieved revenue of 26.348 billion yuan this quarter, yoy +5%, which is basically in line with consistent expectations. Operating profit was 22.511 billion yuan, or -36%, mainly due to impairment of intangible assets of Gaoxin Retail, owned by Alibaba Group, and impairment of Youku's goodwill. The adjusted EBITA was $52,843 billion, yoy +2%, in line with consistent expectations. Non-GAAP net profit was $47.951 billion, yoy -4%, and net profit attributable to common shareholders was $14.433 billion.
Business in China: GMV is growing steadily, and Taobao's monetization rate is improving. FY24Q3 revenue was 129.070 billion yuan, yoy +2%, and adjusted EBITDA of 55.9 billion yuan yoy +1%. Mainly due to the steady growth of online GMV YOY, although the average order amount declined, the number of transaction buyers and order volume grew strongly. The number of orders in the second half of FY24Q3 achieved YOY double-digit growth, and the number of platform merchants continued to increase in double digits over the same period last year; 88VIP member Double Eleven surpassed 32 million, and the proportion of users with high purchasing power increased significantly. CMR revenue was 92.1 billion yuan, and YOY remained flat. The slight year-on-year decline in commission revenue was due to an increase in Taobao GMV, and commission income in CMR was highly correlated with return rates. Currently, Taobao merchant commissions continue to increase, and Tmall merchant commissions have remained unchanged this quarter. We believe that with the mixed transfer of GMV to Taobao merchants, there may be room for an increase in monetization rates.
Cloud business: Revenue structure optimization is beginning to show results. FY24Q3 revenue of 28.066 billion yuan, yoy +3%, higher than the agreed forecast of 9%. Adjusted EBITDA reached US$23.6 billion, Yoy +86% higher than the agreed estimate of 75%. This stems from Alibaba Cloud's previous optimization of the revenue structure. By reducing project-based contracts with low profit margins and strengthening revenue from public cloud products and services, Alibaba Cloud improved revenue quality and promoted profits.
International commerce: AE Choice drives the total number of orders. FY24Q3 revenue was 28.516 billion yuan, yoy +44%, order yoy +24%, adjusted EBITA loss of 3.1 billion yuan. Adjusted EBITA losses stemmed from AIDC's investment in AE Choice and Trendyol's addition to the Middle East, partially offset by increased monetization rates across all mainstream platforms. Thanks to the increase in overall revenue, 1) AChoice drove AliExpress to achieve more than 60% increase in orders. In January '24, AE Choice accounted for 50% of AliExpress's order volume. The rapid increase in orders stemmed from enhanced logistics timelines and user experience. 2) Trendyol orders continue to grow in double digits, maintaining the leading position in the Turkish e-commerce industry. 3) Lazada's average loss per unit continues to narrow, due to increased monetization rates and lower logistics costs.
Other businesses: Cainiao EBITDA turned losses into profits, and local life losses continued to narrow. Cainiao Group's revenue was 28.476 billion yuan, yoy +24%, higher than the agreed forecast of 10.5%. EBITDA was 961 million yuan, compared to a loss of 12 million yuan in the same period last year. Local life, revenue of 15.160 billion yuan, yoy +13%, mainly due to Are You Hungry? Gaode's production increased dramatically. The Group's total orders were YOY +20% or more, and losses continued to narrow.
Increase in share repurchases: By the end of March 2027, share repurchase plans will increase by US$25 billion. There is still a share repurchase limit of US$35.3 billion over the next three fiscal years. In the 23 natural year, the share repurchase program reduced tradable shares by a net of 3.3%.
Investment suggestions: In view of the company's earnings conference, we expect Alibaba's FY2024-2026 revenue to be 9382/10258/1127.1 billion yuan, up 8%/9%/10% year on year; FY 2024 to 2026 net profit (non-GAAP) of 1594/1683/179.5 billion yuan (previous value: 1654/1716.189.4 billion yuan), up 13%/6%/7% year on year, maintaining the “buy” rating.
Risk warning: macroeconomic downturn, repeated epidemics, weak consumption; policy and regulatory risks; increased competition in the e-commerce industry; new business development falls short of expectations