CMB International's report predicts that Alibaba-W (09988.HK) will see a 6% year-on-year increase in revenue to 238.3 billion RMB in the second quarter of the 2025 fiscal year, with a non-GAAP net profit decline of 8% to 36.8 billion RMB, both meeting market expectations. At the group level, EBITA fell by 6% year-on-year to 40.4 billion RMB, indicating an adjusted EBITA profit margin of 17%, compared to 19.1% in the same period last year. Even with weakened consumer sentiment, Alibaba's management remains committed to investing in improving the user experience of its core 88VIP user group, believing it will help maintain market share and establish a solid foundation for long-term monetization improvement.

The bank believes that Alibaba Tao Tian Group's monetization improvement in the second quarter exceeded expectations, mainly benefiting from better-than-expected merchant adoption rates, as well as the potential acceleration of growth with further increases in merchant penetration and potential improvements in consumer sentiment. As for the development of Alibaba's international business, the recovery of cloud business, and the narrowing losses of non-core businesses, all are on the right track.

In addition, CMB International maintains a 'buy' rating on Alibaba (BABA.US) with a target price raised from $126.9 to $133.8, expecting stable and predictable shareholder return plans and incremental inflows of funds from southbound investors after inclusion in the Stock Connect scheme to support valuation.