Zhongtong Finance App learned that China Merchants Securities released a research report stating that it reiterated its "strongly recommended" rating for Alibaba-SW (09988) and is bullish on its e-commerce business's growth resilience and the long-term growth potential of international commerce and cloud business. In addition, the main listing in Hong Kong is about to land and is expected to be listed in the future. The current valuation is still low. The non-GAAP net income for FY2025-2027 is expected to be 151.6, 169.8, and 188.5 billion yuan, with a target price of HKD 101. Since FY2024, the company has increased its repurchase and dividends. The shareholder return rate of FY2024 (dividend & dividend/FY2024 year-end market value) is about 9%. According to calculations, it is expected that the shareholder return rate of 6.2 to 8.1% or higher will be achieved in FY2025.

The main points of China Merchants Securities are as follows:

The source of Taobao's recovery lies in optimizing the organization and putting users first.

Since FY2024, Alibaba has carried out organizational and management personnel adjustments. Wu Yongming serves as CEO of the group and chairman and CEO of Taotian Group and Yunzhiguan, realizing internal rectification; in terms of strategy, the company focuses on the main business and emphasizes users first, driving the healthy growth of Taotian business fundamentally.

Prospects for the growth of Taotian:

Increase user input to return to healthy growth, improve the future industry pattern, and long-term competitiveness will be consolidated, and Alibaba's share will continue to stabilize. Based on the user-first strategy, Taotian increases user input, launches multiple service optimization measures such as refund only, upgraded store experience rating system, and develops Taofactory to improve the platform's pricing power, increase member benefits, improve user stickiness and frequency, and improve user experience in multiple ways. Driving the platform to return to healthy development, the market share has gradually stabilized.

Looking at the future growth of Taotian, marginal live-streaming e-commerce growth slowdown and a slowdown in low-price competition will bring about an industry pattern improvement; in the long term, there is broad room for improvement in e-commerce penetration rate. Taobao and Tmall have abundant commodity supply, rich brand resources, and a strong core competitiveness of genuine product protection, which support long-term steady growth. It is expected that by 2026, Alibaba's growth rate will be on par with the e-commerce industry, and market share will continue to stabilize

Monetization:

With the intensification of merchant competition and the enhancement of platform bargaining, the promotion of the entire station is expected to increase the monetization rate and contribute to the increase of e-commerce income and profit. In terms of commercialization, from a macro perspective, the current competition on the merchant side is intensifying and gradually accepting lower ROI, providing ample room for the platform's monetization rate; from the platform's commercialization strategy, Alibaba has launched a new tool for the entire station promotion and increased the proportion of paid traffic. According to feedback from merchants, the penetration rate is gradually increasing, and it is expected to increase the platform's monetization rate in the future. The new advertising revenue will offset platform user input to a certain extent and contribute to the increase of e-commerce income and profit.

Risk warning: macroeconomic risks, intensified industry competition, technology development falling short of expectations, overseas policy risks.