中国拟议的2万亿数据中心建设担忧或属过早

Alibaba Group Holding (BABA.N) ConcernsOnChina'sProposedRmb2trnDataCenterBuildCouldProvePremature BABAsharestradedlowerinHongKongafterBloomberg(9-Jun)reported Price (09 Jun2616:00) toadvanceitsdomesticAlindustry.Weviewthesemarketconcernsaspremature.Webelievethisgovernmentinvestment shouldnotbe seenasa'zero-sum-gameforprivatehyperscalerslikeBABA,Tencentand Baidu.Webelievethegovernmentislikelystepping intoencouragebroaderAladoption,asmanypublicenterprisesandSMEsmaynotbeabletoaffordthehighcost oftoken usage.Consequently,government-fundedcapacitywill likely serve state-ownedenterprisesand smallerbusinesses.ThisallowsBABAand otherprivateplayerstoconcentrateonhigher-marginenterpriseclientsneedingdedicated supportandfrequentAl-solutionupdates.Additionally,BABAand other hyperscalers couldalsoleasethesecapacities,relievingupfrontcapexspend and reallocatingcapitaltofundinnovativedevelopment inchips,models,andsolutions.ReiterateBuyandUS$208TP US$119.70Target priceUS$208.00Expectedsharepricereturn73.8%Expected dividend yield1.7%Expectedtotal return75.4%Market CapUS$287,176M Alicia Yap, CFAAC+852-2501-2773alicia.yap@citi.com What's new?On June 9th,Bloomberg reported that China is preparing to spendaround Rmb2 trillion over the next five years on building data centers across thecountrytopropelthedomesticAlsector.BABAsharestraded lowerinHongKongasthe market was likely worried that the government's planned data centers couldaffectpricingandfutureinvestmentreturnofprivatehyperscalers like BABA,Tencentand Baidu.We believe the concerns could prove premature and should not be viewedasa"zero-sum-game". Ourview:Infact,webelievewiththegovernmentstepping intofundthebuildoutofdata centercapacity,it couldpushthebroaderAl adoptionrateaswebelievemanystate-owned enterprises and smaller businesses may not be able to afford themultipliereffectoftokenusage.Itwouldbemoreeffectiveandpositivefortheprivatedata centers if the government is raising capital to fund the proposed data centercapacity rather than relying on private hyperscalers to invest from the profitgenerated from their core business to support the intended agenda to boost Aladoption.Webelieve itcouldhurtthemargins of hyperscalers ifa largeproportionoftheir self-built data centers were to serve government customers. In contrast, webelievehyperscalers couldthenfocus onservicinghigher-marginprivate enterprisecustomers who are willing to pay for service stability,with full-stack Al capabilitycloudproviderswhoalsoprovidededicatedcustomersupport. Moreimportantly,webelieve BABAand others could also increasethemix of leasingofthedata centersfrom thesegovernment funded projects and relievetheir upfrontcapital expenditurethatrequired for self-built data centersandreallocateresourcestosupportmoreinnovativedevelopmentinchips,modelsandsolutions.Sincethegovernment is investing in and constructing high-speed computing power channels 10June2026 andbandwidth costsbetweentheirIDCsandtheirbusinessnodes,makingthe East-Westcomputing connectionsmoother. capital before they can kick start the projects and when finished, we believe the data center capacity could also benefithyperscalers as they could increase themix of leasing vs self-builtwhich could reallocate resources for overseas data centersandR&Dinnovation.WereiterateourBuyratingonBABAandTPofUS$2O8. AlibabaGroupHoldingValuation OurtargetpriceforAlibabaN-sharesof USs208isbasedon10xP/EonFY2027EEcommercegroupnetprofit,7.OxP/S FY2027ECloud IntelligenceGroup revenue,2.OxP/SonAIDCGrouprevenue,and1.OxP/Son allotherbusinesses.Ourtargetmultiplesarebenchmarkedagainstcomps.Wealsoassigna3%discounttonetcashposition,in-linewithourSoTPforotherinternetpeers.OurSOTPfairvaluecomestoUS$2O8pershare. strategy;i)investment spendandmarginspressurebecomeworsethanexpected;ili)slowdownofusertrafficandonline GMvandlosingappealtobrands&merchants;iv)integration risksfornewlyacquired entities;v)slowdownoftheChineseandglobalmerchants. US+1-210-677-3788 AppendixA-1 Theresearchanalystsprimarilyresponsibleforthepreparationand contentofthisresearchreportareeither(i)designated by"Ac"intheauthorblockor(ii)listedinboldalongsidecontentwhichis attributabletothatanalyst.IfmultipleAcanalystsaredesignatedintheauthorblock,eachanalystiscertifyingwithrespecttotheentireresearchreportotherthan(a)contentattributabletoanotherACcertifyinganalystlistedinboldalongsidethecontentand(b)viewsexpressedsolelywithrespecttoaspecificissuerwhichareattributabletoanotherACcertifyinganalystidentified inthepricechartsorratinghistorytablesforthatissuershownbelow.Eachoftheseanalysts certify,withrespecttothesectionsofthereportforwhichtheyareresponsible:(1)thattheviewsexpressedthereinaccuratelyreflecttheirpersonalviewsabouteachissuerandsecurityreferencedandwereprepared inanindependentmanner,includingwithrespecttoCitigroup GlobalMarketsInc.and itsaffiliates;and (2)nopartoftheresearchanalyst'scompensationwas,is,orwill be,directlyorindirectly,relatedtothespecificrecommendations orviewsexpressedbyth