ALIBABA GROUP HOLDING LIMITED(09988.HK)：HEALTHY CORE BUSINESS GROWTH AND STRONGER GLOBAL TRAFFIC DRIVEN BY FULL-SITE PROMOTION-格隆汇

机构：申万宏源研究
研究员：赵令伊/林起贤

　　FY1Q25 Outlook. We expect Alibaba to deliver FY1Q25E revenue of Rmb249.2bn (6.4%YoY) and adjusted EBITA of Rmb39.1bn (-14% YoY), with an adjusted EBITA margin of 16%. We forecast non-GAAP net profit of Rmb37.8bn (-15% YoY). By business segment, we anticipate year-on-year growth of 2.9% for Taotian Group, 35.6% for International Business Digital Commerce Group, 15.0% for Local Life Group, 15.0% for Cainiao Group, 5.0% for Cloud Intelligence Group, 1.0% for Great Entertainment Group and -3.0% for other businesses.
　　Healthy GMV growth for Taotian, rolling out of full-site promotion. In 2Q24, Taotian continued to focus on improving the user experience and optimizing return and exchange policies and preferential mechanisms in response to the demands of consumers. We expect its GMV to achieve high single-digit growth, exceeding the industry average level. According to Alimama, a new advertising product was internally tested and launched in April, bringing significant traffic and transaction increments for merchants during the 18 June promotions. We expect the customer management revenue (CMR) increase 2.6% YoY. We believe the company will roll out the full-site promotion in the near term, which will become a new growth engine for Taotian’s commercial revenue and narrow the gap between CMR and GMV growth. Local life revenue continues to grow, and we expect it to increase 15%YoY in FY1Q25E. The group improves operating efficiency, with a narrower adjusted EBITA loss.
　　International business continues to grow strongly, optimises UE to enhance profit quality. In FY1Q25, the company continued to accelerate the layout of overseas business. AliExpress increased investment in markets such as Brazil and Europe, and optimised the UE performance of the choice model. The launch of the semi-managed model continuously drove up earnings. Trendyol maintained its advantages in the Turkish market, and enhanced efforts to expand in the Gulf region market, resulting in robust growth in orders and profitability. Lazada leveraged its localised operations in Southeast Asia and enhanced its commercialisation capability. We believe the group will maintain active investment in the future and focus on a balance between efficiency and scale expansion. We expect the FY1Q25E revenue to increase 35.6% YoY, and the EBITA loss to reach Rmb4.2bn. The cloud business promoted the penetration of public cloud products, increased investment in AI, strengthened computing power and infrastructure construction, and consolidated the technological competitiveness of the platform. We anticipate double-digit growth in external commercialisation revenue in the second half of the fiscal year, with stable or higher margins.
　　Convertible bond issuance to fund share buybacks. In May, Alibaba announced the issuance of Rmb4.5bn in convertible senior notes to help the group accelerate share buybacks at a lower cost of capital. By 2Q24, the company repurchased 613m common shares, with a total price of US$5.8bn, the amount of repurchase increased by US$1bn. With a remaining quota of US$26.1bn for share repurchase, we expect the company to accelerate share buybacks to improve shareholder returns.
　　Maintain BUY. We see strong growth potential for Alibaba given its efforts in boosting core business vitality through continuous investment and user experience improvement, and accelerated global expansion through innovative measures. We maintain our earnings forecast of Rmb157bn in FY25E, Rmb170.6bn in FY26E and Rmb183.8bn in FY27E. We maintain our BUY rating.
　　Risks. Intensified competition; weakening demand; slower-than-expected development of overseas business.