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<Research>CMBI Reduces Alibaba (BABA.US)'s TP to USD141.2; Greater Investment in Instant Retail Weighs Down ST Earnings
Recommend 25 Positive 51 Negative 24 |
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BABA-W (09988.HK) (BABA.US) is ramping up its investment in instant retail to establish a long-term advantage in e-commerce development, according to CMBI's research report. For 1FQF ended June 2025, CMBI expects (1) cloud business revenue to speed up QoQ; (2) Taobao & Tmall Group's monetization rate to continue increasing YoY; and (3) losses in Alibaba International Digital Commerce (AIDC) to continue narrowing YoY. The intensified investment in instant retail, however, will weigh down short-term earnings, because of which CMBI anticipates an investment of around RMB10 billion and RMB20 billion in 1QFY26 and 2QFY26, respectively, potentially leading to a YoY drop in the group's adjusted EBITA by 16% and 45%. CMBI cut its target price for Alibaba's US shares by 9% to USD141.2 from USD155.5. Believing that the company will still be a core beneficiary of the AI theme, the broker suggested that investors should look beyond short-term earnings fluctuations. The rating was kept as Buy. AAStocks Financial News |
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