FY4Q24 revenue is expected to grow steadily. Considering that international business is in the investment period and Cainiao's overseas investment may increase, the profit side is expected to be under pressure. We expect FY4Q24 to achieve overall revenue of 22.4 billion yuan (+5.85%), adjusted EBITA of 24.30 billion yuan (-3.89%), and adjusted net profit of 28.75 billion yuan (+5.03%).
Taotian Group: GMV growth is expected to accelerate, and CMR is expected to exceed expectations. According to data from the National Bureau of Statistics, online retail sales of physical products increased 11.6% year on year. In this context, we believe that the company's FY4Q24GMV growth rate is expected to accelerate year on year, and the GMV growth rate and social zero growth rate are expected to narrow; in terms of CMR, Bloomberg agreed to expect 61.5 billion dollars (+2%). We believe that under GMV's rapid growth, CMR is expected to exceed expectations. We expect FY4Q24 Taotian Group to achieve revenue of 93.23 billion yuan (+3.7%) and adjusted EBITA of 38.53 billion yuan (-1.3%).
Cloud intelligence: Expect healthy revenue growth and steady profitability. The company reduced project-based contract revenue with low profit margins, and the revenue is expected to maintain a healthy single-digit growth rate. We expect the FY4Q24 cloud intelligence business to achieve revenue of 25.76 billion yuan (+4%), with adjusted EBITA of 1.26 billion yuan.
International business: Maintaining high investment, loss, or growth. In terms of revenue, we expect international business to continue the FY3Q24 trend and maintain a high growth rate; specifically, Choice and Trendyol are in the investment period, and Lazada will continue to reduce costs and increase efficiency, and losses will improve. We expect FY4Q24's international commercial business to achieve revenue of 25.4 billion yuan (+34%), with adjusted EBITA of 4.18 billion yuan.
Cainiao: Withdrawing from the IPO, investment is expected to increase. As Cainiao expands global logistics services and increases overseas infrastructure construction, investment is expected to increase. We expect FY4Q24 Cainiao to achieve revenue of 22.8 billion yuan (+20%), adjusted EBITA of -1.07 billion yuan.
Local life: Seasonal factors or effects are you hungry? Gaode's taxi allowances and map investment have increased, or have an impact on local lifestyle profits. In terms of revenue, we expect to continue the healthy growth trend. Considering factors such as the Spring Festival (rider allowances) and Gaode's investment, we expect FY4Q24 to achieve revenue of 142 billion yuan (+15%), with adjusted EBITA of -3.1 billion yuan.
Entertainment business: Youku's new drama “The Case of Datang Di Gong” performed relatively lackluster. We expect FY4Q24 to achieve revenue of 5.1 billion yuan (+2.5%), with adjusted EBITA of -800 million yuan.
We adjusted the company's revenue forecast for FY2024-2026 to 9397/10222/1096 billion yuan (the original FY24-26 forecast was 9379/10231/1101.2 billion yuan), and the adjusted net profit was 1618/1572/1702 billion yuan (the original FY24-26 forecast was 1604/1600/173.8 billion yuan). PE estimates the company's market value of $1728.7 billion, corresponding to a value of HK$93.36 per share (RMB 1.10 to HKD exchange rate), maintaining a “buy” rating.
Risk warning
Industry competition is intensifying, industry supervision is getting stricter, etc.