Gelonghui, September 10 | China Merchants Securities released a report stating that Alibaba's inclusion in the Hong Kong Stock Connect is expected to bring about improved liquidity. It is expected that passive funds on related topics after entering the Hong Kong Stock Connect will form purchases due to component stock adjustments. At the same time, southbound capital may be actively allocated, which is expected to lead to improved liquidity. The company's main e-commerce business is mainly aimed at stabilizing its share, and its non-e-commerce business performance is expected to continue to improve. Coupled with high shareholder returns, the low valuation reaffirms the “Highly Recommended” rating and target valuation of HK$106. According to China Merchants Securities, Alibaba's fundamentals improve share stabilization and high shareholder returns. Judging from the fundamentals, Alibaba's organizational optimization and user-first strategic adjustments fundamentally drive the recovery of the main e-commerce industry. GMV regained year-on-year growth in the first half of 2024 to close to physical online retail sales, and market share stabilized; looking ahead to the future growth of Taobao and Tmall, watching the slow growth rate of live e-commerce traffic peaking and slowing competition at low prices will bring about an improvement in the pattern. Looking ahead to Taobao and Tmall's sufficient supply of products and a strong guarantee of authentic products, the core competitiveness of Taobao Tmall will continue to stabilize in the long run. Supporting steady growth, Ali is expected to increase by 2026 The speed will gradually remain at the same level as the e-commerce industry, and the market share will gradually stabilize. In terms of commercial monetization, from a macro perspective, there is plenty of room for the platform to increase its monetization rate. From a company perspective, Ali's launch of a new sitewide advertising tool is expected to increase the monetization rate, and Aotian will increase software service fees by 0.6%. The additional advertising commission revenue will offset the increase in platform user investment to a certain extent, which is expected to drive Taotian Group's profit improvement next year. Judging from shareholder returns, the company continues to increase repurchase dividends, and it is estimated that the return on shareholders for the 2025 fiscal year is expected to reach 7% or higher.