CICC: Upgraded Alibaba-W earnings forecast, cloud business growth accelerates, rating "Outperform Industry"
CICC maintains Alibaba-W "outperform industry" rating, with a target price of HKD 172 and USD 178. Although it has lowered the revenue forecast for the fiscal years 2027 to 2028 by 3% to 4%, it has raised the non-GAAP net profit forecast by 5% to 9%. Alibaba Cloud's business growth is accelerating, with cloud revenue increasing by 38% year-on-year, and it is expected that cloud revenue will grow by 42% year-on-year in the first fiscal quarter of 2027
According to the Zhitong Finance APP, China International Capital Corporation (CICC) released a research report stating that it maintains an "outperform industry" rating for Alibaba-W (09988), with a target price of HKD 172 for H-shares and a target price of USD 178 for Alibaba (BABA.US) in the U.S. market. For the fourth fiscal quarter ending in March, Alibaba's revenue increased by 2.9% year-on-year to RMB 243.4 billion; if the impact of disposed businesses is excluded, the comparable revenue growth reached 11%. During the period, adjusted EBITA decreased by 84.4% year-on-year to RMB 5.1 billion, below market expectations, primarily due to increased investment in large models and the promotion of the Tongyi Qianwen (Qwen) App during the Spring Festival.
The report states that Alibaba Cloud's business growth has accelerated, driven by MaaS (Model as a Service), with cloud revenue growing by 38% year-on-year in the last fiscal quarter, and external customer revenue increasing by 40%. The annual recurring revenue (ARR) of Alibaba Cloud's Bai Lian MaaS platform currently stands at RMB 8 billion, showing stable performance, and is expected to reach RMB 30 billion by the end of 2026. CICC expects that driven by agency demand and product price increases, Alibaba's cloud revenue for the first fiscal quarter of 2027 ending in June will grow by 42% year-on-year, with adjusted EBITA profit margins expected to improve to 11%.
In terms of e-commerce business, customer management revenue (CMR) grew by approximately 8% year-on-year on a comparable basis after excluding accounting standard adjustments. Although the core e-commerce business continues to face pressure from weak consumption and regulatory environment, the unit economic efficiency (UE) of the fast e-commerce business under Taotian Group is continuously optimizing, and it is expected that the monthly UE will turn positive by the end of the fiscal quarter of 2027. The firm has lowered its revenue forecast for Alibaba for the fiscal years 2027 to 2028 by 3% to 4%, but raised its forecast for non-GAAP net profit by 5% to 9%
