Asia Vets Finance APP learned that Guosen Securities released a research report stating that they maintain an 'outperform market' rating for Alibaba-SW (09988), with a slight adjustment to the company's FY2024-FY2026 revenue forecasts to 997.2/1091.8/1199.2 billion yuan, with adjustments of -0.2%/-0.2%/-0.2%. This primarily reflects a slight decrease in Taotian Group's GMV growth rate on a month-on-month basis and limited improvement in CMR growth rate; adjusting the company's FY2024-FY2026 net margin forecasts to 149.2/171.8/182.3 billion yuan, with adjustments of +1.5%/-0.2%/-0.2%, mainly to reflect controlled international business investment this quarter, significant improvement in UE on a month-on-month basis, partially offset by Taotian's profit pressure. Adjusted target price to 120-127 Hong Kong dollars.

The report states that Alibaba is about to release its financial report for the second quarter of the 2025 fiscal year. 1) Expected 2QFY25 revenue to increase by 6% year-on-year, with an adjusted EBITA profit margin of 18%: In terms of revenue, the bank predicts that Alibaba will achieve revenue of 237.2 billion yuan, YoY +6%. The bank expects a slight increase in revenue growth rate this quarter, mainly due to Taotian's CMR revenue growth rate accelerating, with expected growth rates for Taotian/International digital commerce/Local life/Cainiao/Cloud intelligence revenues at 1%/30%/16%/18%/8%. The expected adjusted EBITA profit margin for 2QFY25 is 18%, a decrease of 1.1 percentage points year-on-year, with YoY-1% in adjusted EBITA profit. Non-GAAP net margin is 15%, a decrease of 2.6 percentage points year-on-year.

The bank believes that the main reason for the decrease in adjusted EBITA profit margin for the group is the increased investment by Taotian Group, especially in user experience, such as 88VIP refund and return shipping subsidies increasing with the growth in memberships. Looking ahead to the December quarter, there is still uncertainty about the scale and subsidy intensity of platform investments under the impact of competition during the Singles' Day sales promotion. Looking ahead to this year's Singles' Day sales promotion, all companies are increasing their investment, which may have a temporary impact on profit margins. Currently, it appears that Taotian has the largest increase in activity level year-on-year, with this year's Singles' Day platform investment reaching 30 billion in consumer coupons and red packets, far exceeding the over 10 billion red packets in 2023. In terms of market share, the bank expects Taotian's GMV growth rate during this Singles' Day to approach the large cap, with long-term prospects to boost merchants' confidence and lay the foundation for subsequent commercialization rate improvements.