20230816-招银国际-In-depth_analysis_into_segment_value_12页_1mb

Alibaba has undergone significant strategic adjustments following its "1+6+N" business reorganization, focusing on enhancing user engagement and driving long-term revenue growth through investments in key segments like Taobao & Tmall Group and Alibaba International Digital Commerce Group (AIDC). Despite macroeconomic uncertainties, the company has demonstrated improved operating efficiency, with revenue from AIDC growing at 40.7% YoY in Q1 FY24. Financially, forecasts show steady growth in revenue and earnings, with EBITA margins expected to improve. The valuation has been revised to a target price of US$156.1 per ADS, supporting a BUY recommendation worth over 15% potential return.

Key business updates include:

• Taobao & Tmall Group's strategy to prioritize users has initiated a flywheel effect, boosting CMR and merchant engagement, with projected revenue growth of 11.3% in FY24E.
• AIDC continues to expand internationally, achieving a 40.7% revenue increase, set for 28% CAGR by 2026E.
• Local Services Group and Cainiao have narrowed losses, while Cloud Intelligence Group maintains steady cloud computing revenue.

Financial highlights reveal:

• Revenue growth driven by domestic and international segments, with consol EBITA CAGR of 17.8% and forecasted margin improvement to 19.8% by FY26E.
• Forecast revisions lifted revenue and profit expectations due to better-than-expected performance across divisions.
• Metrics show declining P/E from 46.5x to 9.6x by FY26E, reflecting maturity and efficiency gains.

The SOTP valuation allocates value across segments:

• Taobao & Tmall Group contributes 47% via 8.0x P/E.
• AIDC and Local Services Group at 11% and 4%, respectively, under EV/S multiples.
• Overall target price is US$156.1, emphasizing long-term recovery despite short-term risks.

This analysis reinforces a positive outlook, recommending BUY based on sustainable growth and valuation support.