EUR 229.75 For Business Accounts Only

BABA: Favorable Policies And Restructuring Are Likely To Bring Upside Throughout 2023

While FY4Q23E is likely to continue to be weaker as China’s economy needs time to recover, we are positive on BABA’s FY2024 outlook: 1) policy environment now is favorable – as the economic recovery is now the priority of the government, the government is providing supportive policies and goodwill to show its determination to rejuvenate economic growth; 2) better outlook in FY2024 – with China’s GDP outlook at 5%, consensus for BABA’s FY2024 at 10.4% Y/Y can be conservative; and 3) BABA recently announced that it will break the company into 6 independently run business units. Each of the units can eventually seek an IPO. We believe the decentralized management structure is likely to give enough incentive to management at each BU and is likely to promote a new round of growth.