According to the Securities Times app, CICC released a research report stating that it maintained Alibaba-W's (09988) 'outperform industry' rating, lowering the 2025/2026 fiscal year revenue forecast by 1% and 1% to 1,011.9 billion yuan and 1,104.8 billion yuan, non-GAAP net profit attributable to mothers decreased by 2% and 3% to 156.6 billion yuan and 175.2 billion yuan, mainly due to increased investment by Taotian Group, with a target price of 109 Hong Kong dollars. The bank expects Alibaba's 2QFY25 (3Q24) revenue to increase by 6.6% to 239.7 billion yuan, in line with expectations; it is expected to adjust EBITA to decrease by 7.7% year-on-year to 39.5 billion yuan, non-GAAP net profit attributable to mothers to decline by 15.8% to 33.8 billion yuan year-on-year, mainly due to increased investment by Taotian Group.

CICC's main points are as follows:

GMV performance is affected, and the the gap between customer management revenue and GMV growth rate is expected to gradually narrow.

The bank expects domestic retail GMV to increase by 4% in 2QFY25, with the year-on-year growth rate slowing mainly due to: 1) the year-on-year growth rate of online physical goods retail sales in July and August slowed down compared to the second quarter; 2) the addition of a 0.6% technology service fee has a certain crowding out effect on transactions sensitive to monetization rate. In terms of revenue, the bank expects customer management revenue (CMR) in 2QFY25 to increase by 2% year-on-year, the monetization rate gradually stabilizing, mainly benefiting from 1) the technology service fee added since September 1, 2024, 2) full-site promotions and other new advertising products gradually playing a role. Looking ahead, the bank expects Taotian Group's monetization rate to stabilize and recover year-on-year in the second half of the 2025 fiscal year. In addition, after Taobao integrates WeChat Pay, the bank believes that in the long term, it is expected to bring Alibaba over 0.2 billion new purchasing users, driving healthy growth of Alibaba's GMV.

Improvement in overseas international business UE, cloud computing revenue may accelerate quarterly.

The bank expects international digital business revenue to increase by 31% to 32.2 billion yuan in 2QFY25, adjusted EBITA loss of 3.5 billion yuan, showing a continuous quarter-on-quarter narrowing trend, with improved average UE per unit; the bank expects cloud computing revenue to increase by 7.8% to 29.8 billion yuan in 2QFY25, focusing on public cloud and AI are expected to drive the contribution to cloud computing revenue growth rate to recover quarterly. The bank expects FY25 cloud computing revenue growth rate to reach 9% year-on-year.

The Taotian Group has increased its investment, and the EBITA of Taotian and the Group may come under pressure in 2QFY25.

The bank expects the adjusted EBITA of Taotian Group in 2QFY25 to decrease by 6% year-on-year to 44.3 billion yuan, mainly due to 1) the weakening effect of reducing losses in other businesses, 2) increased investment in user experience such as 88VIP, leading to a decline in Taotian Group's EBITA that may drive a 7.7% year-on-year decline in the Group's EBITA to 39.5 billion yuan, while local life, major entertainment, and other businesses maintain a year-on-year trend of reduced losses in EBITA.