CICC: Maintains Outperform rating on BABA-W(09988) with a target price of HK$172.

Zhongjin released a research report stating that currently Alibaba Group Holding Limited Sponsored ADR (09988, BABA.US) Hong Kong and US stocks are trading at 18/16 and 12/10 times FY27/FY28 non-GAAP P/E ratios. The bank basically maintains its FY27/FY28 revenue forecast, considering the improvement in the efficiency of e-commerce and flash sales operations, raising the FY27/FY28 non-GAAP attributable net profit by 9% and 2% to 99.6 billion yuan and 149.9 billion yuan. The bank uses a SOTP valuation, giving e-commerce business (excluding flash sales) a 7x P/E ratio and cloud computing business an 8x P/S ratio for FY27, maintaining a target price of 178 US dollars for US stocks and 172 Hong Kong dollars for Hong Kong stocks, maintaining an outperform industry rating, with 60% and 81% upside potential compared to the current Hong Kong and US stock prices. Main points of Zhongjin: Forecast of 1QFY27 non-GAAP net profit attributable to mothers is higher than consensus expectations The bank expects Alibaba Group Holding Limited Sponsored ADR's 1QFY27 revenue to increase by 9.4% to 270.8 billion yuan, adjusted EBITA of 25.85 billion yuan, non-GAAP net profit attributable to mothers of 25.16 billion yuan, with profits exceeding consensus expectations mainly due to overall profitability of e-commerce and flash sales exceeding expectations. Accelerated growth in cloud computing revenue surpasses expectations The bank predicts that 1QFY27 total and external cloud computing revenue will both increase by 45%, with growth exceeding expectations mainly due to the MaaS business driving revenue, product price increases, and further penetration rate improvements. The bank expects the cloud computing EBITA profit margin to increase to 11.8% in 1QFY27, and maintains a long-term profit margin target of 20%. The company plans to adjust accounting standards, enhance business synergy and transparency, with Pinduoduo expected to be included in cloud computing. E-commerce profit and flash sales losses are better than expected The bank expects 1QFY27 e-commerce customer management revenue to decrease by 7.5%, mainly due to some merchants subsidizing revenue, with customer management revenue expected to increase by 1-2% after excluding this impact. The bank expects core e-commerce (excluding flash sales) EBITA to decrease by 3.1% year-on-year, with the gap narrowing compared to the previous quarter, reflecting continued optimization of subsidy spending. The bank expects 1QFY27 flash sales EBITA losses to be 10.4 billion yuan, further narrowing losses on a maintained market share basis. The bank believes the company will continue to focus on high-value customers and non-food retail sectors, optimize subsidies, and improve the efficiency of group funds. Risk factors: Uncertainty in macroeconomics and regulation, increased competition risks, AI progress falling short of expectations.