The company released FY1Q25 results: FY1Q2025, and the company achieved operating income of 243.2 billion yuan (+3.9%); adjusted net profit of 40.7 billion yuan (-9.4%).

We believe that Ali will return to focusing on GMV growth+ market share, and pay more attention to users+services. Subsequent improvements in GMV and efficiency will be an important focus; overall returns such as company profitability & dividend repurchases will continue to improve, and Hong Kong's dual listing can also increase liquidity. See for details:

Taotian Group: The number of GMV units increased, and follow-up attention was paid to the marginal improvement in the monetization rate. With FY1Q2025, Taotian Group achieved revenue of 113.4 billion yuan (-1%) and adjusted EBITA of 48.8 billion yuan (yoy= -1.0%, profit margin 43.1%, +0.2pct). 1) GMV and orders: GMV increased the number of units year over year, and order volume increased by double digits year over year. 2) CMR: The company achieved CMR revenue of 80.1 billion yuan (+0.6%) this quarter, and TR declined, mainly due to an increase in the share of GMV generated by the new model with a lower monetization rate. 3) Membership: 88VIP membership grew in double digits year over year, exceeding 42 million. 4) Outlook: We believe that GMV is expected to grow steadily throughout the year of FY25. We are optimistic that Taotian's market share will gradually stabilize. Follow up on the new advertising tool “sitewide promotion” to increase the monetization rate, and the gap between GMV and CMR growth is expected to narrow.

Cloud Intelligence Group: Profitability continues to increase, and AI-related revenue is growing rapidly. FY1Q2025, Cloud Intelligence Group achieved revenue of 26.5 billion yuan (+6%), adjusted EBITA of 2.3 billion yuan (yoy = 504%, profit margin 8.8%, +7.3 pct). 1) Core public cloud business: double-digit year-on-year revenue growth. 2) AI-related revenue: Continued to achieve three-digit year-on-year growth, and the number of paying users using Alibaba Cloud's AI platform increased by more than 200% year over year. 3) Outlook: We believe FY25H2 revenue is expected to resume double-digit growth as the cloud business is gradually adjusted.

International commerce: The revenue side continues to grow rapidly. FY1Q2025, Alibaba Digital Commerce achieved revenue of 29.3 billion yuan (yoy +32%) and adjusted EBITA of -3.7 billion yuan (profit margin -12.7%, yoy-10.8pct). Revenue growth was driven by strong growth in cross-border business, especially AliExpress Choice. 1) The international retail business achieved revenue of 23.7 billion yuan (+38%), by platform: a) AliExpress: Choice continued to achieve strong order growth, and both the monetization rate and UE increased. This quarter, AliExpress expanded its supplier base to local merchants, diversified the supply of products to better meet the needs of local consumers, and reached a partnership with Magalu, a leading Brazilian retailer. b) Trendyol:

Increase investment in selected markets in Europe and the Gulf region. c) Lazada: Continuing to focus on improving operational efficiency and achieving positive monthly EBITDA in July. 2) The international wholesale business achieved revenue of 5.6 billion yuan (+12%).

Cainiao: Cross-border logistics fulfillment services drive revenue growth. FY1Q2025 Cainiao achieved revenue of 26.8 billion yuan (yoy +16%), adjusted EBITA of 0.6 billion yuan. Cainiao will continue to develop a highly digital global logistics network to enhance synergy with cross-border e-commerce businesses.

Local life: Improved operational efficiency and increased business scale have led to a sharp narrowing of losses. FY1Q2025 Local Life achieved revenue of 16.2 billion yuan (yoy +12%), adjusted EBITA -0.4 billion yuan. This quarter, revenue was driven by Hungry and Gaode's order growth and marketing services. In addition, due to improved operational efficiency and increased business scale, Local Life Group's losses narrowed sharply year-on-year.

Big Entertainment: Ticketing platforms drive revenue growth. FY1Q2025 Entertainment achieved revenue of 5.6 billion yuan (yoy +4%), adjusted EBITA of -0.1 billion yuan. Revenue growth this quarter was driven by GMV and revenue growth from online ticketing platforms for live events.

Continue to promote repurchases and focus on the dual major listing in Hong Kong in August. 1) Buyback: FY1Q25 buys back $5.8 billion. 2) Dual major listing in Hong Kong: The conversion is expected to be completed by the end of August.

We adjusted the company's revenue forecast for FY2025-2027 to 10165/1093.3/1188.2 billion yuan (the original FY25-27 forecast was 10338/1128.5/1226.8 billion yuan), and the adjusted net profit was 152.7/173.1/196.6 billion yuan (the original FY25-27 forecast was 152.3/173.8/197.5 billion yuan). PE valuation calculates the company's market value of $1679.8 billion, corresponding to a value of HK$94.87 per share (RMB to HKD exchange rate of 1.09), maintaining a “buy” rating.

Risk warning: industry competition intensifies, industry supervision is getting stricter