Fangzheng Securities released a research report stating that maintaining the Alibaba-SW (09988) “recommended” rating, the company's revenue for the 2025/2026/2027 fiscal year is expected to be 1004.3/1099.8/1195.3 billion yuan, respectively, and adjusted net profit to mother of 153.9/166.8/181.4 billion yuan. The target price is HK$118 per share, maintaining the overall judgment on the company. Alibaba 24Q3 achieved revenue of 236.5 billion yuan, +5.2% yoy, slightly lower than the agency's agreed forecast of 239.4 billion yuan, adjusted EBITA40.6 billion yuan, slightly lower than the agreed forecast of 40.9 billion yuan, and non-GAAP net profit of 36.4 billion yuan, in line with market expectations.

The main views of Fangzheng Securities are as follows:

Taotian's CMR and GMV growth gaps have shrunk, and the monetization rate has stabilized.

1) Taotian Group achieved revenue of 99 billion yuan in 24Q3, yoy +1.4%, with an agreed expectation of 99.1 billion yuan. From a GMV perspective, the Q3 online GMV growth was driven by a year-on-year double-digit increase in order volume. The order growth was mainly driven by an increase in purchase frequency, partly offset by a decrease in average order amount. The bank expects GMV to achieve medium to low single-digit growth. At the same time, due to Taotian's increase in technical service rates and a steady increase in the penetration rate of promotion tool merchants across the site, the gap between GMV and CMR has been effectively narrowed. The CMR for the quarter was 70.4 billion yuan, +2.5% yoy, which is basically in line with the agreed forecast of 70.9 billion yuan. The take rate has gradually stabilized this quarter, and the bank estimates that the take rate has remained basically flat this quarter.

2) The bank emphasized in a previous report that at present, the Taotian TR increase was not achieved overnight. It is affected by both positive and negative factors. Increased service rate increases and the penetration rate of global promotion merchants can play a positive driving role, but at the same time, the expansion of sales in innovative businesses with low commercialization rates will also structurally restrain the rise in TR. The bank believes that TR will experience a process of decline, stabilization, and recovery. After many quarters of continuous decline, TR has now basically stabilized. I am optimistic that the level of commercialization will gradually begin the process of improvement in due course in the next quarter.

3) Taotian achieved an adjusted EBITA44.6 billion yuan, slightly lower than expected, yoy -3.0%, mainly due to investment in user experience and technology under GMV's share priority strategy requirements.

Other segments, such as international digital commerce, cloud intelligence, and local living, performed well in profits.

1) International digital commerce: 24Q3 achieved international retail/international wholesale revenue of 25.6/6.1 billion yuan, yoy +35.0%/9.4%, with a consistent forecast of 25.5/5.8 billion yuan. The performance was strong. Cross-border business, especially AChoice, continued to play a driving role, and the decline in growth rate from month to month under a high base was in line with expectations. The EBITA side lost 2.9 billion this quarter, better than market expectations of 3.6 billion. ChoiceUE continued to improve month-on-month, and AliExpress and Trendyol continued to invest in European and overseas markets.

2) Cloud intelligence: 24Q3 achieved revenue of 29.6 billion yuan, yoy +7.1%, in line with market expectations. Revenue from public cloud products increased by double digits year on year, and AI products increased by 3 digits year on year in a row in 5Q. The bank maintained the judgment that Cloud Intelligence Group's FY25H2 revenue achieved double digit growth. Furthermore, Cloud Intelligence Group achieved an adjusted EBITA of 2.7 billion, exceeding market expectations of 2.2 billion. Currently, Alibaba Cloud occupies a leading position in the AI field, and expects subsequent AI to drive revenue and boost profit.

3) Local life: 24Q3 achieved revenue of 17.7 billion yuan, +13.9% yoy, market expectations of 19.3 billion yuan. The EBITA loss reduction showed impressive results. The 24Q3 loss was 0.4 billion, better than the market forecast of 0.9 billion, mainly due to improved operational efficiency and expansion of business scale.

4) Cainiao: 24Q3 achieved revenue of 24.6 billion yuan, yoy +15.7%, lower than expected 27 billion yuan. Adjusted EBITA was 0.06 billion yuan, lower than expected 0.4 billion yuan.

5) Big Entertainment: 24Q3 achieved revenue of 5.7 billion yuan, -1.5% yoy, market expectations of 6 billion yuan, EBITA loss of 0.18 billion yuan, and market expectations of 0.17 billion yuan.

Taotian performed well in the Double Eleven promotion. It bought 4.1 billion US dollars in 3 times in 24Q3, and steadfastly increased shareholder returns.

In '24, Double Eleven had an outstanding performance. The turnover of 589 brands in the full cycle exceeded 100 million, +46.5% yoy, setting a new historical record.

The growth rate of beauty, 3C digital, home appliances and home appliances transactions was the highest on the entire network. The number of orders placed by 88VIP members increased by more than 50% year-on-year, and the number of members maintained double-digit growth. Taobao live streaming sold over 100 million live broadcast rooms, a record high. Of these, 49 live broadcast rooms that broke 100 million had a year-on-year growth rate of more than 100%. Taobao Live achieved significant year-on-year growth in overall transaction value and number of purchasing users. According to Yigan's analysis, Taotian's turnover for the full cycle of Double Eleven in '24 was +10.2% yoy. In addition, Ali bought back 4.1 billion US dollars of shares this quarter, and the number of shares in circulation was further reduced by 2.1% compared to 24Q2, achieving better returns for shareholders. As of the end of the third quarter, there was still a repurchase amount of $22 billion under the share repurchase plan, which is valid until March 2027.