Guosen Securities issued a research report stating that Alibaba (09988) is about to release its Q2 FY2025 financial report. The firm expects a slight increase in revenue growth this quarter, mainly due to the accelerated revenue growth of Taotian CMR. It is expected that the revenue growth rates of Taotian/International Digital Business/Local Life/Cainiao/Cloud Intelligence will be 1%/30%/16%/18%/8% respectively. Adjusted EBITA margin is expected to be 18% in 2QFY25, a year-on-year decrease of 1.1 percentage points, with adjusted EBITA profit down by 1% YoY and Non-GAAP net margin at 15%, a year-on-year decline of 2.6 percentage points. The firm believes that the main reason for the decrease in adjusted EBITA margin of the group is the increased investment in Taotian Group, especially in user experience. For example, 88VIP offers refunds and freight subsidies as the number of memberships continues to increase. Looking ahead to the December quarter, the scale and subsidy intensity of platform investment under the Singles' Day sales promotion are still uncertain due to competitive pressure. Looking forward to this year's Singles' Day sales promotion, all parties are increasing their investment efforts, which may affect profit margins in the short term. Currently, among all platforms, the one with the largest year-on-year increase in activity intensity is Taotian, with a platform investment of 30 billion consumer vouchers and red envelopes for this year's Singles' Day, far exceeding the over 10 billion red envelopes in 2023. JD.com, PDD Holdings, and Douyin platforms have all slightly strengthened their promotional efforts. In terms of market share, the company expects that the growth rate of Taotian's GMV in this year's Singles' Day will approach that of the large cap, which is expected to enhance merchants' confidence in the long term and lay a foundation for future commercialization.

The firm further pointed out that Alibaba continues to invest in core businesses and reduce costs in non-core businesses after the reorganization. Currently, the company's stock price corresponds to a 2025 FY PE ratio of 12 times. The firm slightly adjusted the company's revenue forecast for FY2024-FY2026 to 997.2/1091.8/1199.2 billion yuan, with adjustments of -0.2%/-0.2%/-0.2%, mainly reflecting a slight decrease in the GMV growth rate of Taotian Group and limited improvement in CMR growth rate on a quarter-on-quarter basis. The firm also adjusted the company's net profit forecast for FY2024-FY2026 to 149.2/171.8/182.3 billion yuan, with adjustments of +1.5%/-0.2%/-0.2%, mainly to reflect the controllable international business investment this quarter and a significant improvement in UE on a quarter-on-quarter basis, partially offset by Taotian's profit pressure. The firm values the company according to SOTP, giving Taotian Group a FY2025 12-13x PE, Cloud Intelligence Group 3x PS, Alibaba International Digital Business Group 1x PS, and adjusting the company's target price to 120-127 Hong Kong dollars, with an upward adjustment of 26%/23%, representing a potential increase of 17%/23% from the current level, maintaining an "outperform the market" rating.