Morgan Stanley believes that due to the slowdown in growth and intense competition, Alibaba's valuation should be lower than other Chinese internet peers.
According to the Futu Securities app, Morgan Stanley released a research report stating that it is cautious about the growth of gross merchandise volume (GMV) in the consumer market, but takes a constructive attitude towards stabilizing Alibaba's market share through the improvement of value products, the maturation of live e-commerce, and the further penetration of WeChat Pay into low-tier cities. Morgan Stanley predicts that Alibaba's GMV will grow by 6% and 5% in the second and third fiscal quarters, respectively. At the same time, it is expected that Alibaba's customer management income (CMR) growth in the second and third fiscal quarters will improve to 3% and 5%, respectively.
The bank stated that competition is the most important concern for Morgan Stanley regarding Alibaba and the entire e-commerce industry. Morgan Stanley believes that due to the slowdown in growth and intense competition, Alibaba's valuation should be lower than other Chinese internet peers. Alibaba's PE ratio for fiscal year 2026 is expected to be 7-8 times, while PDD Holdings/JD.com-W's PE ratio for 2025 is 8/7 times, Ctrip Group-S's is 11 times, Tencent Holdings (00700)'s is 12 times, and Meituan-W's is 13 times. Morgan Stanley believes that there is limited room for multiple re-ratings, although an overall return on investment (ROI) of 9%-10% should provide downside support.