The company's recent situation
On March 28, we were invited to participate in the Taobao Live E-commerce Festival. At the conference, the company shared Taobao Live's goals, business plans, investment direction, etc.
reviews
Taobao Live has set a high growth target for FY25, with an incremental cash investment of 10 billion yuan in exchange for growth. The company stated that Taobao's live streaming target for FY25 is “a 100% year-on-year increase in the average number of daily purchasing users.” Taobao's live streaming GMV exceeded 500 billion yuan in FY21. If the target growth target for purchasing users is achieved as scheduled, we believe that the content scenario is expected to become an important driving force for Taotian Group's GMV growth in FY25. In terms of investment, Taobao Live streaming plans to invest 10 billion yuan in incremental cash. The principle of investment is to pay in increments. Of this, more than 4 billion yuan is invested in the celebrity ecosystem, more than 3 billion yuan is invested in the store broadcast ecosystem, more than 1 billion yuan is invested in the small industrial store ecosystem, and more than 1 billion yuan is invested in the content ecosystem. In addition to cash, there are also plenty of incentives such as traffic support and commission rebates.
Content and live streaming scenarios have been further integrated, and Taobao live streaming traffic has increased. Since this year, Taobao live streaming and shopping have been further integrated. Content scenarios such as short videos and graphics are an important traffic foundation for the live streaming scene. The company said that after the content and live streaming scenes are opened, Taobao Live can make up for the shortcomings in traffic entry and complete the complete process of “from generating interest to becoming a transaction” within Taobao. The traffic weight of live streaming is expected to further expand in search and recommendation scenarios.
The strategic goal of Taobao Live streaming once again reflects Alibaba's user-centered transformation. Taobao Tmall is a trading platform. Because it has many categories and large scale, it is highly efficient. From the perspective of transaction efficiency, pushing the scale to a larger scale and higher efficiency is an important goal of Taobao Tmall. However, to verify whether content-based traffic is more efficient, there is actually no clear answer: either because the user's own shopping intentions are unclear, or because the content platform still doesn't have enough categories, etc., it is difficult to explain that content-based transactions must have higher transaction efficiency. However, as consumers are increasingly accustomed to making purchasing decisions based on content, a user-centered platform has the motivation and even the responsibility to meet the needs of consumers. We believe that Taobao Live's firm investment in content itself is also a user-centered reflection of the company's e-commerce business.
Profit forecasting and valuation
Currently, the company's US and Hong Kong stocks are trading 8/7 times the non-GAAP price-earnings ratio for the 2024/2025 fiscal year. We maintained revenue and profit forecasts, introduced revenue forecasts of $1,105.3 billion and non-GAAP net profit of $196.2 billion, and maintained the target prices of US and Hong Kong stocks of $112 and HK$109, corresponding to the 2024/2025 non-general accounting price-earnings ratio of 12/11 times, with room for growth of 54% and 54%, respectively.
risks
Macroeconomic and regulatory uncertainty; e-commerce competition intensifies.