CITIC Construction Investment: Assigns Alibaba-W a "Buy" rating with a target price of HKD 210.76
CITIC Construction Investment has given Alibaba-W a "Buy" rating, with a target price of HKD 210.76. It is expected that the revenue growth rates for FY2026-2027 will be 3.30% and 11.11%, with Non-GAAP net profits of RMB 121.73 billion and RMB 162.61 billion, respectively. The e-commerce group expects a revenue growth rate of approximately 11.55% for FY2Q2026, while the cloud intelligence group anticipates a revenue growth rate of about 30%. Alibaba is advancing the construction of AI infrastructure worth RMB 380 billion, and it is expected that cloud computing energy consumption will increase tenfold by 2032
According to the Zhitong Finance APP, CITIC Construction Investment has released a research report giving Alibaba-W (09988) a "Buy" rating, expecting the company's revenue growth rates for FY2026 and FY2027 to be 3.30% and 11.11%, respectively. The Non-GAAP net profits are expected to be CNY 121.73 billion and CNY 162.61 billion, with year-on-year growth rates of -23.02% and 33.58%, respectively. Using a segmented valuation method, the corresponding valuations for the China e-commerce group and the cloud intelligence group are USD 145.67 and USD 71.04 per ADS, with a target price of USD 216.72 per ADS, corresponding to HKD 210.76 per share in the Hong Kong stock market.
FY2Q2026 Outlook: For the China e-commerce group, the revenue growth rate for this quarter is expected to be around 11.55%, with CMR growth at approximately 10.04%, mainly benefiting from cross-selling driven by flash sales and the optimization of advertising efficiency due to multiple factors such as AI. On the profit side, the adjusted EBITA for this quarter is expected to decline by 72.58% year-on-year to CNY 12.21 billion, mainly due to the drag from investments in flash sales, with estimated losses from flash sales around CNY 35 billion this quarter. Excluding flash sales, the e-commerce business EBITA is expected to show positive year-on-year growth. For the cloud intelligence group, the revenue growth rate for this quarter is expected to be around 30%, with an adjusted EBITA margin of about 9%, remaining basically flat year-on-year, and CapEx is expected to remain at a high level. Currently, Alibaba is actively promoting the construction of AI infrastructure worth CNY 380 billion and plans to make larger investments to prepare for the arrival of the ASI era. Compared to 2022, the year of GenAI, by 2032, the energy consumption scale of Alibaba Cloud's global data centers will increase tenfold, which means that Alibaba Cloud's computing power investment will increase exponentially
