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<Research>UBS: BABA-W 1FQ Results In Line; TP Added to $158
Recommend 48 Positive 62 Negative 26 |
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UBS released a research report, covering BABA-W (09988.HK)(BABA.US), which delivered in-line results for the first fiscal quarter ending June 2025, with revenue growing 2% YoY and adjusted EBITA dropping 14%. Despite elevated investment in quick commerce, management expressed confidence in CMR growth for the coming quarters, which was expected to alleviate investor concerns. UBS forecast that Alibaba's quarterly CMR for the second and third fiscal quarters ending September and December will grow by 9% and 7%, respectively. They believed that losses from quick commerce investments will peak in the second fiscal quarter at over RMB30 billion, vs approximately RMB11 billion in the first fiscal quarter, and may ease to RMB15 billion by the third fiscal quarter. Alibaba Cloud's revenue grew 26% last quarter, and UBS noted that the group remained optimistic about accelerating AI demand, with capex increasing QoQ, reflecting progress in AI investment plans. They forecast that revenue for the quarter ending September will rise by 28%. During the period, the group completed its business strategic restructuring, officially dividing its operations into the China E-commerce Group, the Alibaba International Digital Commerce (AIDC), the Cloud Intelligence Group, and all other businesses. UBS stated that execution improved post-restructuring, and they are optimistic about its long-term value growth and synergies, maintaining a Buy rating. They also lowered FY2026 EPS forecast by 3% but raised FY2027 EPS forecast by 1%, increasing the target price from HKD154 to HKD158, and also lifting the target price for Alibaba's U.S. shares (BABA.US) from USD158 to USD162. AASTOCKS Financial News Website: www.aastocks.com |
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