Guosheng Securities: Reiterates "Buy" rating on BABA-W (09988) with a target price of HK$114.

Guosheng Securities released a research report stating that it reaffirmed a "buy" rating for BABA-W (09988), expecting Alibaba's revenue for the fiscal years 2025-2027 to be 1,010.9/1,113.4/1,214.4 billion yuan; non-GAAP net profit attributable to shareholders to be 160.0/183.0/206.2 billion yuan. The reasonable target price for H shares is 114 Hong Kong dollars. Alibaba's revenue for the 2025 Q2 fiscal quarter (ending in September) was 236.5 billion yuan, a 5% year-on-year increase; adjusted EBITA was approximately 40.6 billion yuan, a 5% year-on-year decrease, with an EBITA profit margin of approximately 17%. Key points from Guosheng Securities: Alibaba released its performance for the 2024 September quarter. Alibaba's revenue for the 2025 Q2 fiscal quarter (ending in September) was 236.5 billion yuan, a 5% year-on-year increase. Revenue from Taobao, international commerce, local life, Cainiao, cloud intelligence, and digital entertainment were 99.0/31.7/17.7/24.6/29.6/5.7 billion yuan respectively, with year-on-year growth rates of 1%/29%/14%/8%/7%/-1.5%. The company's adjusted EBITA for this quarter was approximately 40.6 billion yuan, a 5% year-on-year decrease, with an EBITA profit margin of about 17%. The adjusted EBITA profit margins for Taobao, international commerce, local life, Cainiao, cloud intelligence, and digital entertainment this quarter were 45%/-9%/-2%/0%/9%/-3%. The company's non-GAAP net profit for this quarter was 36.4 billion yuan, a 9% year-on-year decrease. Taobao: Accelerating monetization is yet to be promoted, and Taobao is still in the investment period. The company's Customer Management Revenue (CMR) for this quarter increased by 2% year-on-year, mainly due to the growth of e-commerce GMV. From the perspective of monetization, the penetration of the "site-wide promotion" tool and the implementation of a 0.6% technology service fee from September have positively impacted monetization; however, this was offset by some new models with lower monetization rates. The adjusted EBITA profit margin for Taobao this quarter was about 45%, a significant decrease from 48% in the same period last year, mainly due to increased investment in user experience. Taobao Group's strategic focus on user experience has begun to show results, with double-digit growth in GMV orders this quarter. As of the end of this quarter, the number of 88VIP members has reached 46 million. The bank predicts that Taobao's investment in users will continue in the near future. Cloud Intelligence: AI-driven growth, continuous improvement in profit margins. Alibaba Cloud's revenue for this quarter was 29.6 billion yuan, a 7% year-on-year increase, with growth continuing to accelerate. Public cloud revenue saw double-digit year-on-year growth, and AI-related product revenue achieved triple-digit growth for five consecutive quarters. The adjusted EBITA margin for Alibaba Cloud improved to 9.0% this quarter, with both operational efficiency and product structure improving. The company is optimistic about the demand for AI, especially in the inference side, and will continue to invest in AI-related products. The bank expects AI to continue driving significant growth in cloud business. Risk Warning: Industry policies have a greater-than-expected impact on business, progress in e-commerce and cloud computing falls short of expectations, and macroeconomic changes exceed expectations.