Bank of America Securities: Maintains Alibaba-SW (09988) "Buy" rating, target price raised to HK$114.

Bank of America Securities released a research report stating that it maintains a "buy" rating for Alibaba-SW (09988), raising its forecast for adjusted net profit for the fiscal years 2025 to 2027 by 4% to 7%. The target price has also been raised from HKD 109 to HKD 114. The bank expects that Alibaba will release its third quarter earnings for the fiscal year 2025 in mid to late February, estimating a year-on-year revenue growth of 9% to RMB 283.5 billion, which is 2% higher than market expectations. They estimate a 7% year-on-year increase in revenue for the core Taobao group. Additionally, they predict a 7% year-on-year growth in customer management revenue in the Chinese market, mainly driven by the Double 11 promotion, appliance subsidy program, and continued user engagement and experience upgrades leading to accelerated growth in Alibaba's gross merchandise volume (GMV). The increase in commission rates for Taobao and the use of AI tool Quanzhantui are expected to improve the group's monetization rate. The bank believes that the Taobao group's growth rate outperforms the industry, with adjusted EBITA forecasted to increase by 1% to RMB 60.7 billion. They also forecast a 26% year-on-year growth in revenue for Alibaba International Digital Commerce (AIDC) and a 9% growth for cloud business. The bank expects Alibaba's overall adjusted EBITA to be RMB 54.4 billion, a 3% year-on-year increase mainly due to reduced losses in non-core businesses. The forecast for adjusted net profit is RMB 47.4 billion, slightly higher than market expectations. Looking ahead to the fiscal year 2026, with the strategic investments in core e-commerce business starting to yield results, the bank estimates that the Taobao group and group's adjusted EBITA will resume growth.