Positive Outlook for Alibaba: Buy Rating Based on E-commerce Recovery and Growth in International and Cloud Segments

DBS analyst Sachin Mittal has maintained their bullish stance on 9988 stock, giving a Buy rating yesterday.

Sachin Mittal has given his Buy rating due to a combination of factors influencing Alibaba Group Holding Ltd.’s performance. The company remains a leading player in China’s e-commerce market, holding a 42% market share despite facing competition from platforms like PDD and livestreaming services. Alibaba’s revenue from its core platforms, Taobao and Tmall, shows positive signs of recovery, with double-digit growth recorded in recent promotions, highlighting the effectiveness of its monetization strategies.
Additionally, Alibaba’s international commerce and cloud computing segments are anticipated to drive growth. The international platforms are expected to achieve a significant compound annual growth rate, while Alibaba Cloud maintains a strong market presence. These factors, coupled with a projected increase in customer management revenue and an expected stabilization of EBITA margins, support the positive outlook for Alibaba’s future earnings. Consequently, Mittal maintains a Buy rating with a target price based on a sum-of-the-parts valuation methodology, reflecting Alibaba’s potential for profitability and growth.

In another report released yesterday, Macquarie also maintained a Buy rating on the stock with a HK$135.50 price target.

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Alibaba Group Holding Ltd. (9988) Company Description:

Alibaba is the world’s largest online and mobile commerce company as measured by gross merchandise volume (CNY 7.5 trillion for the fiscal year ended March 2021). It operates China’s online marketplaces, including Taobao (consumer-to-consumer) and Tmall (business-to-consumer). Alibaba’s China commerce retail division accounted for 63% of revenue in the September 2021 quarter. Additional revenue sources include China commerce wholesale (2%), international retail/wholesale marketplaces (5%/2%), cloud computing (10%), digital media and entertainment platforms (4%), Cainiao logistics services (5%), and innovation initiatives/other (1%).