Bank of America Securities: Lower Alibaba-SW (09988) target price to HKD 109. FY2025Q2 performance roughly in line with market expectations.

Bank of America Securities released a research report stating that they expect Alibaba-SW (09988) earnings to hit bottom in the 2026 fiscal year, lowering the target price from $124 to $112. The target price for Hong Kong stocks was also reduced from HKD 121 to HKD 109, while maintaining a "buy" rating. They also lowered the adjusted net profit forecast for the company for the fiscal years 2025 to 2027 by 9% to 15%. The company's performance in the second quarter of the 2025 fiscal year roughly met market expectations. Total revenue was RMB 236.5 billion, a 5% year-on-year increase, consistent with the bank's forecast, but 1% lower than market consensus. Alibaba's management expects the group's Gross Merchandise Volume (GMV) and Customer Management Revenue (CMR) to steadily accelerate, especially in the December quarter. Recent government stimulus policies, especially in the home appliance sector, have led to platform sales reaching double-digit growth levels year-on-year in October. In addition, the impact of the 0.6% service fee that Taobao has been charging since September on the group's GMV has weakened, and it is expected to ease with the increasing service fee situation. Management also stated that the group's continued investment in consumer transactions and experiences may take several quarters to complete. They are optimistic about the growth potential of AE Choice and Trendyol, and have committed to increasing the budget to increase the group's share of consumers in Europe and the Gulf region.