阿里巴巴（BABA US）：云业务与电商发展态势良好；重申买入评级

Cloud and e-commerce development both ingood shape; reiterateBUY Target PriceUS$210.30(Previous TPUS$158.80)Up/Downside16.9%Current PriceUS$179.90 Wereiterate our positive view on Alibaba, backed by: 1) strong cloud revenuegrowth outlook, aided by both increase in adoption of AI-related products anddigitalization demand; 2) solid e-commerce business development outlook,driven by increase in penetration of Quanzhantui, and cross-sell effect broughtby the rapiddevelopmentof Quick Commerce(QC)business, which we believecould helpimproveuser stickiness and drive better customermanagementrevenue (CMR) outlook over the medium to long term.With strong technologicalcapability and abundant application scenario of AI, Alibaba is on track to driveits long-term revenue and earnings growth throughthetwo strategicbusinesspillars of“Consumption”and”AI + Cloud”. Alibaba remains one of the keybeneficiariesunder the AI theme,and current valuationof 17.6x non-GAAPFY27E PEbased on our estimateis stillundemandingcompared to global peers,in our view. Welift ourSOTP-basedTPby32% to US$210.3to reflect ourpositive view on the development prospect of both cloud and e-commercebusinesses, translating into 20.6x FY27E PE (non-GAAP).ReiterateBUY. China Internet Saiyi HE, CFA(852) 3916 1739hesaiyi@cmbi.com.hk Ye TAO, CFAfranktao@cmbi.com.hk Wentao LU, CFAluwentao@cmbi.com.hk Joanna Ma(852) 3761 8838joannama@cmbi.com.hk Cloudrevenue growth could further accelerate.In 1QFY26,CloudIntelligence Group(CIG)inked revenue growth of 26% YoY(1QFY25: 6%;4QFY25:18%), and AI related revenue has accounted for over 20% ofrevenue from external customers. During Apsara Conference2025(24-26Sep; see ournote), management: 1) unveiled and updated 7 new models,including the flagship Qwen3-max that has demonstrated strong capabilityin preview version, which in our view could drive more cloud consumptionand further propel acceleration in cloud revenue growth;2) highlighted itsambition to drive for success in ASI (Artificial Super Intelligence) era, notedthat thethree-yearcapex plan of RMB380bniswell on track, and guided tofurther increase thetargeted amount ofspendingin the coming years. Weareestimating 30% revenue CAGR for CIG over FY25-28E (was 23%). Stock Data Source: FactSet Solid e-commerce growth outlook.Although theearly-stageinvestment inQC washeavy, wearepositivethatthis could help improve user stickinessanddrive for incremental GMV, andwillin turndrive better CMR growthoutlook in the medium to long term.We are forecasting 10% YoYgrowthforCMR in FY26E. In addition, weare looking for 2-3% incremental CMRgrowthto be generated from the synergies between QC and Taobao, and 3-5% over the long term.However, in the near term, the ROI of investment inQC as well as the pace of ramp up in synergiesremains a focus. Changes in forecast.WeliftFY26-28E revenue forecastsby 0.2-4.6% tofactor in therisein CIG revenue growth forecast, and solid revenue growthoutlook ofCMR withinAlibaba China E-commerce Group (ACEG).For non-GAAP net income, we lower FY26E non-GAAP net profit forecast by 6.8%toaccount for greater-than-expected near-term investment in the QCbusiness, although we noted an improvement in unit economics aided by theoptimizationof user subsidies in recent weeks.However,we raiseFY27E/28E non-GAAP net income forecastsby 0.4/2.6% to factor in theincrease inrevenueforecastsofCIGandACEG. Source: FactSet Revision of forecast andvaluation WeliftFY26-28E revenue forecast by 0.2-4.6% to factor in therisein CIG revenue growthforecast, and solid revenue growth outlook ofCMR withinACEG.For non-GAAP netincome, we lower FY26E non-GAAP net profitforecastby 6.8% to account for greater-than-expected near-term investment intheQC business, although we noted an improvement inunit economics aided by the optimization of usersubsidiesin recent weeks. However,weraiseFY27E/28E non-GAAP net incomeforecastsby 0.4/2.6% to factor in the increase inforecastsof cloud and CMR revenue generation. Valuation: target price of US$210.3per ADS Our SOTP valuationwas lifted to US$210.3per ADS,which comprises: 1)US$89.7forACEG, based ona 12.0xFY28EEV/adj.EBITAanddiscountedback toFY26 at WACC of 11.0%(was US$74.7 based on 10.0x FY28E EV/adj. EBITA), the liftin valuation was due tosolidrevenue growth outlookofCMR business;2)US$14.0for AIDC (unchanged), based on an unchanged 1.5x EV/revenue multipleonFY26E revenue forecast;3)US$81.0for the Cloud Intelligence Group,based ona7.5x EV/revenue multiple onFY27E revenueand discounted back to FY26E at WACC of 11.0%(wasUS$44.6basedon 5.0x FY26E EV/revenue).We believe Alibaba has strong businessdevelopmentpotential in AI and cloud business given solid infrastructure andtechnologycapability, and is positive on the acceleration trend of cloud revenue growthover 2Q-4QFY26E;4)US$14.6for All Others, based on a1.0xFY26EEV/revenue multiple(wasUS$13.8based on 0.95x FY26E EV/revenue);5)US$11.1 per ADS (was US$11.6) for strategic investments with a 30%