Asia Vets Finance APP learned that Sealand Securities released research reports stating that it maintains a "buy" rating for Alibaba-W (09988), taking into account the gradual recovery of the company's revenue growth, but still in the core business investment period. Adjusting profit forecasts, it is expected that the company's revenue for FY2025-2027 fiscal years will be 1010/1117.7/1231.4 billion yuan respectively, with net income attributable to the parent company at 101.9/123.8/143.3 billion yuan, Non-GAAP net income attributable to the parent company at 158.2/172.4/196.8 billion yuan, and a target price of 118 Hong Kong dollars.

The main views of Zhonghai Securities are as follows:

Financial Indicators Outlook

The bank expects Alibaba to achieve a total revenue of 239.6 billion yuan in FY2025Q2 (corresponding to 2024Q3 in the calendar year) (YoY+7%, QoQ-1%), with adjusted EBITA decreasing by 7% year-on-year to 39.8 billion yuan, and adjusted EBITA margin at 17%; Among them, Taotian Group is expected to generate revenue of 101.3 billion yuan (YoY+4%, QoQ-11%), with Taotian Group's adjusted EBITA margin at 44%; Alibaba International Digital Commerce Group is expected to generate revenue of 31.3 billion yuan (YoY+28%, QoQ+7%), with Alibaba International Digital Commerce Group's adjusted EBITA margin at -11%; Cloud Intelligence Group is expected to generate revenue of 29.9 billion yuan (YoY+8%, QoQ+13%), with Cloud Intelligence Group's adjusted EBITA margin at 8%.

Taotian Group: Taotian Group's GMV growth rate has slowed down slightly, with overall monetization rate stabilizing.

The bank expects Taotian Group's revenue in FY2025Q2 to increase by 4% to 101.3 billion yuan, with China's retail business revenue increasing by 3% to 95.5 billion yuan. The bank forecasts that Taotian Group's GMV growth rate in FY2025Q2 will slow down slightly compared to the previous quarter, mainly due to:

Consumer shows steady recovery. According to the statistics from National Bureau of Statistics, from January to September 2024, the national total retail sales of consumer goods increased by 3.3% year-on-year, and the online retail sales of physical goods increased by 7.9% year-on-year.

Taobao's increase in base software service fees of 1.6 per thousand has caused some currency-sensitive merchants to experience certain GMV squeeze. However, the overall currency rate stability of Taobao as a whole is driven by the platform's promotion tools and the increase in base software service fees, with the bank forecasting a 2% year-on-year growth in customer management revenue (including commissions) to 70 billion yuan in FY2025Q2. The platform continues to invest in price competitiveness, consumer experience, and AI application. The bank expects the Taobao Group's adjusted EBITA in FY2025Q2 to decrease by 6% year-on-year to 44.3 billion yuan, with an adjusted EBITA margin of 44%.

Alibaba International Digital Business Group: International business across various platforms maintaining strong growth.

The bank forecasts that Alibaba International Digital Business Group's overall revenue in FY2025Q2 will increase by 28% to 31.3 billion yuan, with 1) international retail business achieving revenue of 25.1 billion yuan (YoY+32%), mainly driven by the strong growth of AIDC's various retail platforms, including the benefit from strong growth in the AE Choice business of AliExpress; 2) international wholesale business achieving revenue of 6.2 billion yuan (YoY+12%), remaining stable. Overall, the company continues to invest in cross-border operations, but benefited from the continuous improvement of some UE models in certain businesses, with expectations of a narrower loss margin in the international business sector, forecasting the adjusted EBITA of Alibaba International Digital Business Group in FY2025Q2 to be -3.3 billion yuan, with an adjusted EBITA margin of -11%.

Cloud Intelligence Group: AI-driven cloud revenue growth, strategically focusing on public cloud and profitability enhancement.

The bank forecasts that Cloud Intelligence Group's revenue in FY2025Q2 will increase by 8% to 29.9 billion yuan, mainly driven by price reductions in cloud products and revenue generation from AI products. The company strategically focuses on public cloud, while continuously improving revenue quality by reducing low-profit projects, partially offsetting the impact of price reductions in public cloud products. The bank expects the adjusted EBITA of Cloud Intelligence Group in FY2025Q2 to be 2.4 billion yuan, with an adjusted EBITA margin of 8%.

Risk Warning: Risks of policy regulation and valuation adjustment in the internet industry; intensified market competition resulting in lower-than-expected industry growth; excessive business diversification with insufficient organizational synergy; forward-looking performance forecasts are for reference only.