joustvideogame| BOCOM International: Maintain Alibaba-SW "Buy" rating target price of HK$107

BOCOM International released a research report saying that maintaining the "Buy" rating of Alibaba-SW (09988), the purpose of short-term investment is to restore growth in e-commerce user experience and GMV, and gradually drive the overall recovery of advertising revenue. It believes that profit growth is a short-term impact., the company's share price fell to the bottom range, focusing on the performance of key business income indicators and shareholder feedback, with a target price of HK$107.

BOCOM International's main views are as followsjoustvideogame：

FY2024 fourth quarter (March quarter) results:

Total revenue was 221.9 billion yuan (the same below), a year-on-year increase of 7%, which was basically in line with the bank/market expectations, including Taotian +4%/International +45%/Cloud +3%/Local Life +19%/Cainiao +30%/Da Entertainment-1%. Adjusted earnings per share 10joustvideogame.14 yuan, down 5% year-on-year, basically in line with the bank's expectations/3% lower than market expectations. The adjusted EBITA profit margin was 11%, a slight decrease of 1 percentage point year-on-year, mainly due to increased investment in the e-commerce business and additional incentives given to employees after the withdrawal of the Cainiao IPO.

Review of key performance points:

1) The double-digit year-on-year growth of Taotian's GMV drove CMR to increase by 5%, and the realization rate dropped slightly. Due to the increased contribution of Taobao's GMV and the current low realization rate of the new business model, with the launch of new advertising products across the site, the growth gap between GMV and CMR will gradually narrow. 2) International business income was driven by the growth of AliExpress Choice (contributing 70% of orders) and the increase in liquidity rate. The loss expanded to 4.1 billion yuan due to increased investment in cross-border business development of AliExpress Choice and Trendyol. 3) Cloud increased by 3% year-on-year, continued to reduce low-margin projects to improve revenue quality, revenue from core public cloud products grew in double digits, and prices were lowered overseas in April to enhance competitiveness. Revenue from AI-related products increased by three digits. 4) The growth of cross-border logistics performance services under the collaboration of Cainiao and AliExpress operations drives revenue growth. 5) In fiscal year 2024, the company repurchased US$12.5 billion, reduced outstanding shares by 5.1%, and approved a dividend payment of US$4 billion. It is expected that the conversion of dual main listings in Hong Kong will be completed by the end of August 2024.

Outlook for the first quarter of fiscal year 2025:

The bank expects revenue to increase by 7% year-on-year to 251.1 billion yuan, mainly due to 1) AIDC's overseas e-commerce business is still growing rapidly, with an expected increase of 39%. 2) Local e-commerce expects GMV growth of 4%, CMR growth of 3%. The pulling effect of advertising products on revenue will begin to appear in the second half of the fiscal year. 3) Driven by public cloud and AI-related revenue, cloud business revenue will resume double-digit growth in the next two quarters. As both local and overseas e-commerce companies are still in the investment period, and AIDC has not yet started marketing investment in the same period last year, the company's overall EBITA growth rate may still be under pressure.