Blue Lotus Non US Internet research, Blue Lotus Research Institute

Ying Pan

Blue Lotus Non US Internet research

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Equity Bottom-Up

Alibaba Group Holding  / Equity Bottom-Up

<ul>
<li>BABA reported CY1Q24 top line, GAAP operating profit and non-GAAP net income 0.9%, (4.6%) and (6.7%) vs. consensus, and in-line, in-line, (6.9%) vs. our estimate;</li>
<li>Results reaffirmed our positive view as increased investment is leading to significant improvement in key businesses: (1) Taobao/Tmall stabilized, (2) overseas e-commerce accelerated along with overseas AntFin and Cainiao</li>
<li>We expect pay-off from its strategy shift in 2H of the year. Spin-off, dividends,and share buy-backs provide valuation support until then.We maintain BUY and US$85 TP, implying 9.5x CY25 P/E.</li>
</ul>


BABA reported CY1Q24 top line, GAAP operating profit and non-GAAP net income 0.9%, (4.6%) and (6.7%) vs. consensus, and in-line, in-line, (6.9%) vs. our estimate;
Results reaffirmed our positive view as increased investment is leading to significant improvement in key businesses: (1) Taobao/Tmall stabilized, (2) overseas e-commerce accelerated along with overseas AntFin and Cainiao
We expect pay-off from its strategy shift in 2H of the year. Spin-off, dividends,and share buy-backs provide valuation support until then.We maintain BUY and US$85 TP, implying 9.5x CY25 P/E.


[Alibaba (BABA US, BUY, TP US$85) Review]: Positive Transformation Still Underway…BUY on Dip

Equity Analyst

Steve Zhou, CFA

<ul>
<li>On first look, <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd-d7b798e2-202d-4e01-9a1e-799e2ae8f0c7" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group Holding (9988 HK)</a> missed on margins in 4QFY24 as adjusted EBITA declined by 5% yoy.</li>
<li>We can give the company the benefit of the doubt given that the important segments of the company are heading into the right direction.  </li>
<li>Alibaba returned USD13.4bn and USD16.5bn to shareholders in FY23 and FY24, compared to the current market cap of USD197bn</li>
</ul>


On first look, Alibaba Group Holding (9988 HK) missed on margins in 4QFY24 as adjusted EBITA declined by 5% yoy.
We can give the company the benefit of the doubt given that the important segments of the company are heading into the right direction.  
Alibaba returned USD13.4bn and USD16.5bn to shareholders in FY23 and FY24, compared to the current market cap of USD197bn


Alibaba (9988 HK):  Core Segments Moving Into The Right Direction

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>Along with its fiscal 2024 results, <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd-d7b798e2-202d-4e01-9a1e-799e2ae8f0c7" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba (9988 HK)</a> announced that they were preparing for their primary listing in Hong Kong and the conversion was expected to complete by August.</li>
<li>If the conversion is completed by the end of August, <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd-d7b798e2-202d-4e01-9a1e-799e2ae8f0c7" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba (9988 HK)</a> could be added to Southbound Stock Connect in September and that could bring in significant flows.</li>
<li>We do not forecast any passive inflows due to the change with <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd-d7b798e2-202d-4e01-9a1e-799e2ae8f0c7" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group Holding (9988 HK)</a> capped at 8% of the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">HSI</a>, <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">HSCEI</a> and <a href="https://www.smartkarma.com/entities/hang-seng-tech-index" target="_blank" data-smartkarma-citation="entities:31367:1" rel="noopener">HSTECH</a> indices.</li>
</ul>


Along with its fiscal 2024 results, Alibaba (9988 HK) announced that they were preparing for their primary listing in Hong Kong and the conversion was expected to complete by August.
If the conversion is completed by the end of August, Alibaba (9988 HK) could be added to Southbound Stock Connect in September and that could bring in significant flows.
We do not forecast any passive inflows due to the change with Alibaba Group Holding (9988 HK) capped at 8% of the HSI, HSCEI and HSTECH indices.


Alibaba (9988 HK): Dual Primary Listing & Potential Southbound Flows

Greater China Equity Long/Short Analyst

Eric Chen

<ul>
<li>Alibaba reported in-line revenue but disappointed adjusted net income for 4QFY24.</li>
<li>Yet a closer look shows strong core Taobao/Tmall performance was offset by higher-than-expected losses incurred by peripheral businesses.</li>
<li>We remain convinced BABA is on track to turn around and an earnings upgrade cycle is one or two quarters away. We are buyer at this price.</li>
</ul>


Alibaba reported in-line revenue but disappointed adjusted net income for 4QFY24.
Yet a closer look shows strong core Taobao/Tmall performance was offset by higher-than-expected losses incurred by peripheral businesses.
We remain convinced BABA is on track to turn around and an earnings upgrade cycle is one or two quarters away. We are buyer at this price.


External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>Alibaba reported 4QFY24 (March year-end) results: total revenue was RMB221.9bn, up 6.6% YoY, and non-GAAP net income for the quarter was RMB25.3bn, down 9.4% YoY, owing to investment to drive user experience improvement and GMV growth of domestic business, as well as international business expansion.</li><li>For FY24, total revenue reached RMB941.2bn, up 8.3% YoY, and non-GAAP net income was RMB158.4bn, up 10% YoY.</li><li>Management highlighted solid progress regarding its investment to support market share gains of core business, with Taobao &amp; Tmall (T&amp;T) Group GMV grew double digits YoY, international commerce retail revenue grew 56% YoY, and AI-related cloud revenue grew triple digits YoY in 4QFY24.</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Alibaba reported 4QFY24 (March year-end) results: total revenue was RMB221.9bn, up 6.6% YoY, and non-GAAP net income for the quarter was RMB25.3bn, down 9.4% YoY, owing to investment to drive user experience improvement and GMV growth of domestic business, as well as international business expansion.For FY24, total revenue reached RMB941.2bn, up 8.3% YoY, and non-GAAP net income was RMB158.4bn, up 10% YoY.Management highlighted solid progress regarding its investment to support market share gains of core business, with Taobao &amp; Tmall (T&amp;T) Group GMV grew double digits YoY, international commerce retail revenue grew 56% YoY, and AI-related cloud revenue grew triple digits YoY in 4QFY24.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Alibaba (BABA US) - Business Adjustment Shows Greater Visibility in Delivering Results

China

Alibaba Group Holding Limited provides online sales services. The Company provides internet infrastructure, electronic commerce, online financial, and internet content services through its subsidiaries. Alibaba Group Holding offers its products and services worldwide.

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Alibaba Group Holding (BABA US)

[Alibaba (BABA US, BUY, TP US$85) Review]: Positive Transformation Still Underway…BUY on Dip

BABA reports mixed Q1 results but positive outlook with increased investment leading to improvement in key businesses, expecting payoff in 2H of...

Blue Lotus Research Institute

Alibaba (9988 HK): Core Segments Moving Into The Right Direction

On first look, Alibaba Group (9988 HK) missed on margins in 4QFY24 as adjusted EBITA declined by 5% yoy, though I believe important segments of the...

Steve Zhou, CFA

Alibaba (9988 HK): Dual Primary Listing & Potential Southbound Flows

Alibaba expect to convert to a Primary Listing on the HKEX by end August. That could mean inclusion in Southbound Stock Connect in September. With...

Brian Freitas

Alibaba (BABA US): Taobao/Tmall Is Back

Alibaba's 4QFY24 results show in-line revenue but lower adjusted net income due to losses in peripheral businesses, but strong core performance...

Eric Chen

Alibaba (BABA US) - Business Adjustment Shows Greater Visibility in Delivering Results

Alibaba reported 4QFY24 (March year-end) results: total revenue was RMB221.9bn, up 6.6% YoY, and non-GAAP net income for the quarter was RMB25.3bn,...

CMB International

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52-week Range

Market Cap (USDm)

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[Alibaba (BABA US, BUY, TP US$85) Review]: Positive Transformation Still Underway…BUY on Dip

​BABA reports mixed Q1 results but positive outlook with increased investment leading to improvement in key businesses, expecting payoff in 2H of...

Blue Lotus Research Institute

Alibaba (9988 HK): Core Segments Moving Into The Right Direction

On first look, Alibaba Group (9988 HK) missed on margins in 4QFY24 as adjusted EBITA declined by 5% yoy, though I believe important segments of the...

Steve Zhou, CFA

Alibaba (9988 HK): Dual Primary Listing & Potential Southbound Flows

Alibaba expect to convert to a Primary Listing on the HKEX by end August. That could mean inclusion in Southbound Stock Connect in September. With...

Brian Freitas

Alibaba (BABA US): Taobao/Tmall Is Back

​Alibaba's 4QFY24 results show in-line revenue but lower adjusted net income due to losses in peripheral businesses, but strong core performance...

Eric Chen

Alibaba (BABA US) - Business Adjustment Shows Greater Visibility in Delivering Results

Alibaba reported 4QFY24 (March year-end) results: total revenue was RMB221.9bn, up 6.6% YoY, and non-GAAP net income for the quarter was RMB25.3bn,...

CMB International

BABA reports mixed Q1 results but positive outlook with increased investment leading to improvement in key businesses, expecting payoff in 2H of...

Alibaba's 4QFY24 results show in-line revenue but lower adjusted net income due to losses in peripheral businesses, but strong core performance...