核心电商业务盈利能力的增长可能会持续。

Alibaba (BABA US) Positive profitabilitygrowthof core e-commerce business likely to sustain Target PriceUS$157.00(Previous TPUS$157.70)Up/Downside49.8%Current PriceUS$104.78 WeexpectAlibabatodeliverin-line-with-consensusrevenuegrowthandadjusted EBITAfor4QFY25(March year-end).For coredomestice-commercebusiness, driven by healthy GMV growth andanincrease in monetization rateaided byincremental technology service fee chargesand the increase inpenetration of Quanzhantui, Alibaba could sustain solidcustomer managementrevenue (CMR) growth and positive profitability growth of Taobao and Tmall(T&T) Groupin 4QFY25, in our view. YoY revenue growth of cloud businesscould see furtheracceleration as expected driven by solid public cloud revenuegrowth and incremental contribution from AIcloud.AIDCis on track to achievethefirst quarter of profitability in FY26, and the non-core businesses are on trackto achieve profitability in 1-2 years’ time.We believeAlibaba is one of the keybeneficiariesintheAIera,andcouldbenefitfrompotentialincrementalconsumption stimulus policy. Wefine-tuneourSOTP-based target price toUS$157.0 (was US$157.7), translating into16.9x FY25E PE (non-GAAP).MaintainBUY. China Internet Saiyi HE, CFA(852) 3916 1739hesaiyi@cmbi.com.hk Ye TAO, CFAfranktao@cmbi.com.hk Wentao LU, CFAluwentao@cmbi.com.hk JoannaMa(852) 3761 8838joannama@cmbi.com.hk 4QFY25 preview: expecting inline top-line andbottom-lineresults.Weestimate Alibaba achieved4QFY25revenue of RMB237.5bn, up7% YoYandinline withconsensus. Forgroup-level adjusted EBITA, we forecast ithas increasedby 36% YoY to RMB32.6bn, translating into a13.7% adjustedEBITA margin (4QFY24:10.8%),driven by positive EBITA growth ofT&TGroup, as well as YoY lossreductionfrom non-core businesses. Stock Data T&T Group to seeongoingincreasein monetization rate.We estimateAlibaba recorded customer management revenue (CMR) growth of10%YoY in4QFY25 on the back ofGMV growth and increase in monetizationrate driven by bothincremental technology service fee chargesandtheincrease inpenetrationof Quanzhantui.For T&T Group, although Alibabaislikelyto sustain its investment in enhancing consumer experience andplatform ecosystem, we expect the positiveprofitabilitygrowth tosustain in4QFY25, driven by solid CMR revenue growth. We are looking for 6% YoYrevenue growth (4QFY24: 4%; 3QFY25: 5%), and 2% YoY adjusted EBITAgrowth (4QFY24:-1%; 3QFY25: 2%) for T&T Group in 4QFY25. Sequential acceleration in YoY cloud revenue growth likely to sustain.For4QFY25, weare expecting: 1)18% YoY revenue growth for CloudIntelligence Group (4QFY24:3%;3QFY25:13%), driven by solid growth ofpublic cloud business, and incremental revenuecontributionfrom AI Cloud;2)26% YoY revenuegrowthfor AIDC,andwe seemanageableimpact fromthe potential rise in tariff as AIDC has a diversified source of revenuegeneration; 3) we estimatethecombined loss of Local Services Group,Digital Media and Entertainment Group, and All others(including Intime andSun Art Retail)to narrow YoY to RMB3.8bn in4QFY25 (4QFY24: loss ofRMB6.9bn).Alibaba is on track to achievethefirst quarter of profitability inFY26for AIDCbusiness, and the non-core businesses are on track toachieve profitability in 1-2 years’ time, in our view. Source: FactSet Shareholder return remains solid.For FY25, Alibaba has repurchased atotal of 1.197bn ordinary shares (c.150mn ADS) for a total consideration ofUS$11.9bn, which resulted in a net reduction of 5.1% YoY in share base.We expect Alibaba to unveil its annual dividend for FY25 in the comingannualresultsannouncementinMay(FY24:US$4.0bninaggregateincluding US$1.0 per ADS annual regular cash dividend and US$0.66 perADS one-timeextraordinarycash dividend). Revision of forecast and valuation Wenudge downour FY25-27E revenue forecast by0.4-0.5%,mainly driven by theadjustment in revenue forecast in AIDC, whileweliftnon-GAAP net profit by0.3-2.8%,taking into accountlikely better-than-our previouslyexpectedEBITA growth of core T&TGroup aided by more efficient-than-expected sales and marketing spend. Valuation: target price of US$157.0perADS Our new SOTP-based target price of US$157.0(was US$157.7) translates into 16.9x/14.6xFY25E/FY26E PE (non-GAAP). Our new target price comprises: 1)US$80.8perADS(wasUS$80.7)forTaobaoandTmallGroup,basedonanunchanged9.0x EV/adjusted EBITA;2)US$11.6per ADS for AIDC (was US$11.7), based onanunchanged 1.5xFY25EEV/revenuemultiple;3)US$6.0per ADS for Local Services Group (unchanged), based on anunchanged 1.5xFY25E EV/revenuemultiple;4)US$2.7per ADS for Cainiao (unchanged),based on the latest valuation given byAlibaba to repurchase Cainiao shares from minority shareholders, and Alibaba’scurrent 63.7% shareholding on a fully diluted basis;5)US$33.1per ADS for the Cloud Intelligence Group (was US$33.2),based onanunchanged 4.0xEV/revenuemultiple on FY26E revenue;6)US$0.9per ADS for Digital Media and Entertainment Group(unchanged)based on anunchanged0.7xFY25E EV/revenuemultiple;7)US$11