Introduction to this report:
Continuously promote the price power strategy and optimize the user experience strategy. It is expected that FY24Q4 Taotian GMV and revenue will grow healthily, and there is broad room for growth in international commerce and cloud intelligence.
Summary:
Profit forecast and investment advice: adjusted Alibaba's FY2024E/FY2025E/FY2026E operating income was $9,397/10,154/10,993 billion yuan (RMB, same below) (previous value was $9420/10,497/1,1483 billion yuan), up 8.2%/8.1%/8.3% year over year, adjusted adjusted for FY2024E/FY2025E/FY2026E adjusted net profit to 1,483/1,507/169.9 billion yuan respectively, up 5% /2 year on year %/ 13% Alibaba was given a target price of HKD 89 for Hong Kong stocks (9988.HK), maintaining the “Overweight” rating.
Taotian Group: Focus on user experience and get on the right track of growth. Guided by the goal of “returning to shelf e-commerce and improving user experience,” FY24Q4 Taotian achieved healthy growth. CMR revenue is expected to increase 4% year-on-year to 62.7 billion yuan, mainly driven by GMV growth. The gap between GMV growth and online retail sales growth in January-March is expected to narrow sharply. On March 1688, it was officially announced that it was fully purchased, which is expected to further strengthen the low price mentality. In terms of profit, the adjusted EBITA of Taotian Group's FY24Q4 is expected to drop 1% year-on-year to 38.5 billion yuan due to increased investment on the user side and support for AI applications on the merchant side.
International commerce and cloud business continue to gain strength. 1) International business: AliExpress continued to grow at a high rate. In March, orders from about 20,000 and a half custodian merchants doubled, and preparations for the 10 billion subsidized brand overseas plan were accelerated. FY24Q4 international retail revenue is expected to increase by about 45% year-on-year to 20.5 billion yuan, and adjusted EBITA losses are about 4.1 billion yuan, mainly due to increased investment in Choice and Trendyol. 2) Local life: Hungry's income, order volume, and UE are all expected to improve month-on-month. Gaode's investment in taxis and maps has increased. FY24Q4's local living income is expected to increase 13% year over year to 141 billion yuan, and adjusted EBITA losses are about 3.1 billion yuan. 3) Cainiao: It is estimated that FY24Q4 will accrue a one-time employee retention bonus of about 1 billion yuan, resulting in an adjusted EBITA loss of about 1.2 billion yuan. 4) Cloud: FY24Q4's revenue is expected to increase 4% year-on-year to 25.7 billion yuan, and the adjusted EBITA is about 1.6 billion yuan. Alibaba Cloud announced an overall price reduction in overseas markets, with an average drop of 23%. After the price reduction, the price of cloud products is lower overall than other mainstream international cloud vendors, which is expected to increase market share.
Catalysts: Taotian continues to invest and recover market share; international commercial and cloud businesses continue to expand.
Risk warning: Competition in the industry intensifies; reform progress falls short of expectations; consumption recovery falls short of expectations.