BABA will report FY4Q24 results on May 14th before the markets open with a 7:30am ET conference call. We believe BABA’s FY4Q24E performance is likely to be in line, but we are positive about the longer-term outlook. BABA is adopting a new strategy focusing on user acquisitions for each business unit, including e-commerce business, cloud business, cross-border commerce, and local services. The company started to use low prices and subsidies. As such, while we expect BABA’s business to resume grow...
GREATER CHINA Strategy Alpha Picks: May Conviction Call: Adding CR Beer, Crystal, Geely, Haier, Kuaishou, Ningbo Tuopu, Pinduoduo, Shenzhou, and Tencent to our BUY list, closing out SELL calls. INDONESIA Strategy Alpha Picks: Slight Outperformance In A Bear Market: Our picks are BSDE, TLKM, ACES, BBTN, CMRY, SIDO, JSMR and AKRA. MALAYSIA Strategy Alpha Picks: Well-Positioned For 1Q Results Season: Our April picks again beat the KLCI. May 24 picks: GENM, Inari, Mah Sing, MrDIY, MYEG, Press Meta...
Alibaba saw solid consumption momentum in Jan-Feb 24 on its platform and slight moderation in March with its continuous focus on user needs. We expect revenue to grow 6% yoy for 4QFY24, fuelled by better CMR growth. For FY25, Alibaba will continue to focus on user experience and investment in AIDC to foster revenue growth amid a highly competitive environment. Maintain BUY with a lower target price of HK$92.00 (US$92.00).
KEY HIGHLIGHTS Sector IT Hardware AI Hardware: Elevated investment to bolster investor confidence. Maintain OVERWEIGHT. Update Alibaba Group (9988 HK/BUY/HK$70.50/Target: HK$92.00) 4QFY24 preview: Solid CMR and AIDC growth; lacklustre profitability. TRADERS’ CORNER Guangzhou Automobile Group (2238 HK): Trading Buy range: HK$3.48-3.58 China Gas Holdings Limited (384 HK): Trading Buy range: HK$7.90-8.00
Given the stabilising revenue growth and abundant cash on hand, mega-cap internet companies have been focusing on offering generous shareholder returns. For 2024, we expect consumption behaviour to switch to service and experience, which will continue to benefit OTA players. We believe other China internet names will outperform with overseas expansion and SFV players will continue to gain market shares with potential for take rate increases. Maintain MARKET WEIGHT.
GREATER CHINA Strategy Alpha Picks: April Conviction Calls: Adding AIA, Midea, Hansoh Pharmaceutical, Shenzhen Inovance and Trip.com to our BUY list, with SELL calls on BYD, EVE Energy, and Li Auto. INDONESIA Strategy Alpha Picks: Outperformance In Mar 24 and 1Q24: Our picks are ACES, BBTN, CMRY, SIDO, EXCL, MAPI, JSMR, CTRA, and AKRA. MALAYSIA Strategy Alpha Picks: Expanding The Variety Of Events Bets: Our Alpha Picks trounced the KLCI in Mar 24. Apr 24 picks: GENM, Inari, Mah Sing, MrDIY, MY...
Temu achieved strong user engagement growth after sponsoring the Super Bowl in the US in February. We lift our global 2024 GMV forecast for Temu to US$38b from US$34b previously in view of the strong sales growth in Jan-Feb 24 boosted by the Super Bowl. We expect the launch of the new semi-entrusted model in March to further contribute to GMV growth in 2024. To defend against the potential US policy risks, Temu is expected to pivot its focus on Europe, Latin America, and the Middle East.
GREATER CHINA Strategy Alpha Picks: March Conviction Call: Adding CMB, COLI, CR Beer, Kuaishou and TUL to our BUY list, closing out SELL calls. INDONESIA Strategy Alpha Picks: Significant Outperformance In Feb 24: Our picks are BBTN, CMRY, SIDO, EXCL, MAPI, JSMR, CTRA, MYOR and AKRA. MALAYSIA Strategy Alpha Picks: Focusing On Earnings Momentum: Our Alpha Picks underperformed the KLCI in Feb 24 (-0.9% vs 2.5%). Mar 24 picks significantly feature companies with good earnings momentum. SINGAPORE...
BABA will report FY3Q24 results on February 7th before the markets open with a 7:30am ET conference call. We believe BABA’s FY3Q24E performance is likely to be in line, but we are positive for the 2024 outlook. While China's economy in 2023 showed unexpected slow growth, it also provided a low base for 2024. China's economy has its resilience, and it is gradually on its way to recovery. As the e-commerce sector is representative of China's economy, BABA’s performance also showed such recovery. S...
We are positive on BABA’s FY2Q24E performance. The slower than expected economic recovery has put pressure on BABA and other e-commerce companies in China. The central government’s economic stimulus did not officially come until August 2023 as a decision was made from the Politburo Meeting on Economy on July 24th. In the last 10 consecutive months, the central bank has been conducting aggressive MLF (medium-term lending facility) operations. In September alone, MLF was RMB591B. We believe the ab...
We are positive on BABA’s FY1Q24E performance. The long-awaited economic stimulus is likely to come soon. On June 25th, the State Think Tank CMF released its paper “Solidifying Foundation for Recovery, China’s Macroeconomy in 2023” (/imeeting/hyt/detail/29925). The paper not only pointed out 5 main issues but also emphasized that these issues cannot be resolved by themselves. Instead, it will take a set of stimulus measures from the State to fix the problems. We believe the paper sets up the dir...
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...
We are positive on BABA’s CY2023 outlook. After multiple ups and downs in CY2022, CY2023 can be a much better year for China e-commerce companies due to: 1) China is giving up its zero-COVID policy, and the country is fully opening; 2) resetting economic development as the nation’s top priority; and 3) the whole year of 2022 sets a low base for 2023. Specifically for BABA, it is political risk-free now, in our view. As the economic recovery post-COVID has become the priority for the Chinese gove...
We are positive on BABA’s FY2Q23 performance, which is in line with the macroeconomic improvement in China retail and logistics. Specifically, the sales growth in July and August were better. While China’s economy is still weak, after the 20th Communist Party of China (the 20th CPC), we believe the economy can be more active with more certainties and clearer economic and political directions. One direction, which is quite clear at this point, is to promote domestic demand and consumption. In suc...
In the past two years, Alibaba was considered a risky asset due to political headwind and economic slowdown. However, at this point, we are convinced that these two risks are diminishing at a faster pace. Political risks down - Among the two risks, political risk is the dominant one. From a political risk perspective, Alibaba is the first company to be regulated by Chinese regulators. It has been almost 2 years since October 2020. On April 29, 2022 after its economic meeting, the Politburo issu...
BABA will report FY3Q22 results on February 24th before the markets open with a 7:30am EST conference call. Starting from December 2021, China’s economy showed significant weakness. For e-commerce, both retail and logistic parcel volumes showed soft growth. As the weakness worsened in January 2022, we believe the government is likely to put stimulus measures in place at a faster pace than expected. Therefore, we are likely to be at the bottom of such economic weakness in China. As a company that...
We are positive on Alibaba’s FY3Q22E performance relative to the Street expectation. BABA’s issues with regulators started from Oct. 2020. Since then, the new regulations have not only impacted BABA, but the entire internet sector in China. As the first company to experience the pressure, we believe BABA is likely to come out of business contraction soon and refocus on growth. The recent internal personnel changes are likely to lead to a relatively decentralized power structure, which we believe...
We are neutral on Alibaba as it is fighting two fronts: weaker China economy and traffic competition from ByteDance. With its resources and executions, eventually we believe BABA will win the fights. In terms of the Chinese economy, all data is pointing to weaker retail sales growth. The overall social retail growth was 2.5% Y/Y, a decline from 8.5% Y/Y in July and 12.1% Y/Y in June. Express delivery volume growth was 24.3% Y/Y in August, down from 28.6% Y/Y in July and 30.4% in June. At this po...
BABA will report FY1Q22 results on August 3rd before the markets open with a 7:30am EST conference call. We are neutral on Alibaba due to uncertainties on the regulatory front. However, while dealing with the uncertainties in CY2Q21, BABA was putting in place new measures on both Tmall and Taobao aiming to acquire and retain merchants. We believe these measures are positive for BABA’s growth next year. In the near-term, these measures and BABA’s investments are likely to put pressure on its marg...
BABA will report F4Q21 earnings on May 13th before the markets open with a 7:30am EST conference call. We have turned positive on BABA. We believe that as the policy and regulation issues are getting behind BABA, the company is starting a new round of investments, which can be positive for its future growth. For FY4Q21 earnings, based on our data and model, we believe FY4Q21E revenue (Figure 1) is likely to be better than consensus on both the topline and bottom line.
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