阿里巴巴（BABA）：长期投资

China (PRC) | InternetAlibaba Investments For The Long Term BABA reported Mar quarter results (link) whereby revenue came inline andCMR beat expectations, while cloud revenue came in slightly ahead ofconsensus. Mgmt highlights TTG’s take rate continues to improve in FY26on QZT and service fees. Cloud maintains fast growth driven by solid AIdemand. On instant commerce, it is expected to drive incremental GMVand user base. Investment is expected in TTG and local service to captureopportunities ahead. Maintain Buy. Mar quarter resultshighlights.Total revenue grew 7% YoY to RMB236bn, in line withconsensus and our estimates. By segment. Taobao and Tmall Group (TTG) grew by 9% YoY (vsconsensus and our estimate at 5% YoY, respectively) to RMB101.4bn, wherein CMR grew 12%YoY (vs consensus and our estimate at 8% YoY). For Alibaba International Digital CommerceGroup (AIDC), revenue grew at 22% YoY (vs consensus and our estimate at 27% and 28%YoY, respectively) to RMB33.6bn. For local services, revenue grew 10% YoY (vs consensusand our estimate at 12% YoY, respectively) to RMB16.1bn. For Cainiao, revenue declined by12% YoY (vs consensus and our estimate at 2% and flattish, respectively) to RMB21.6bn.For Cloud Intelligence Group, revenue grew 18% YoY (vs consensus and our estimate at 17%YoY, respectively) to RMB30.1bn. For DME, revenue grew 12% YoY (vs consensus at 5% andour estimate of 7% YoY growth) to RMB5.6bn. Overall adjusted EBITA grew by 36% YoYto RMB32.6bn (vs consensus and our estimate at 38% and 37% YoY growth, respectively).Adjusted EBITA margin increased by 3pp YoY to 14% (vs consensus and our estimate atabout 14%). For TTG, adjusted EBITA grew by 8% YoY (vs consensus and our estimate of2% YoY growth, respectively) to RMB41.7bn and adjusted EBITA margin declined 0.1pp YoYto 41% (vs consensus and our estimate at about 40%). For Alibaba Cloud, segment adjustedEBITA margin reached 8% (vs consensus at 9.1% and our estimate of 9%). Overall adjustedEBITDA grew by 36% YoY to RMB41.8bn (vs consensus and our estimate at RMB41bnand RMB40bn, respectively). Non-GAAP net income attributable to shareholders reachedRMB30bn, vs consensus and our estimate at RMB30.6bn and RMB30.1bn, respectively.Capital expenditure reached RMB24.6bn, vs RMB31.8bn in prior quarter Key takeaways from conference call.(A)TTG.These include (1) In FY26, take rate is expectedto improve backed by service fees and QZT. For service fees, there is a low base effectas it launched in Sep last year and it scales back the benefits this year. For QZT, it willcontinue to increase penetration with an increasing no of new merchants (e.g. SME, white labelmerchants) to adopt QZT; (2) It is important to stabilize the market share in medium to longterm. As merchants improve performance, it can launch more commercial and AI products toimprove the monetization rate; Continued overleaf... Thomas Chong * | Equity Analyst852 3743 8016 | thomas.chong@jefferies.comZoey Zong * | Equity Analyst852 3743 8163 | zoey.zong@jefferies.com The Long View: Alibaba Investment Thesis / Where We Differ •Alibaba has multiple growth drivers for the years ahead, in our view,with its core marketplace a strong cash cow that enjoys secular growthmomentum amid a consumption upgrade in China, thanks to solidexecution and technological strength in digitalizing the retail sector withenhanced efficiencies.•Its highly synergistic ecosystem enables it to ramp up in lower-tier citiesand offer local services.•In cloud computing, it has clear market leadership as the backbone ofdigitalization across different industries.•Alibaba is at the center of the consumption-driven economy and onlineshopping, supported by its strong technological strength vs. peers. Downside Scenario,$80, -40% Upside Scenario,$192, +43% Base Case,$156, +16% •Accelerationinonlineretailgrowthfrommacro recovery.•More controlled sales and marketing in lower-tier cities, with rational competition.•Monetization of newsfeeds is above marketexpectations.•Upside PT of US$192 (HK$186) based onSOTP valuation. •Tmall market share gain, backed by consumerinsightsandmarketingsolutions,isasustainablelong-termgrowthstorywithsizable monetization opportunities, driven bypaid click growth on better conversion rateand relevant content. •Monetization of recommended feeds is stillin the early stages, and we view penetrationof lower-tier cities as a top priority for userbase expansion and wallet share gain, givenits support of quality merchants with value-for-money offerings.•Base case PT of US$156 (HK$151) based onSOTP valuation. •Unexpected slowdown in consumption amidmacro headwinds.•Aggressive sales and marketing for lower-tier city penetration and food delivery due tointensifying competition.•Monetization of news feeds is below marketexpectations.•Downside PT of US$80 (HK$77) based onSOTP valuation. Sustainability Matters Catalysts Top Material Issue(s): 1) Data security and customer privacy.Privacy protection and data securi