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<Research>UBS Cuts Alibaba (BABA.US) TP a Bit to US$105; Last Quarter's CMR Recovery Under SpotlightUBS wrote in a report that it expected BABA-SW (09988.HK) to report mixed results for 4QFY24, with revenue for the quarter forecasted to grow 5% YoY to RMB219 billion.
Adjusted EBITA is meanwhile predicted to fall 6% YoY to RMB23.7 billion, compared to market consensus of RMB27.3 billion, mainly due to
higher investment in Alibaba International Digital Commerce (AIDC) and loss related to Cainiao.
By segment, UBS forecasted Taobao Tmall Group's customer management revenue (CMR) to grow by 4% YoY in the quarter, higher than the consensus estimate of 0.8%, and believed its competitive pricing strategy is starting to bear fruit, which should help it to narrow its market share loss.
Its gross merchandise value (GMV) is now forecasted to grow 8% YoY, with EBITA estimated to fall 2% YoY.
Related News: HSBC Global Research Cuts BABA-SW (09988.HK) TP to $111; Investments Boost Growth
For AIDC, the broker expected revenue to hike 40% YoY in the quarter, compared to the consensus prediction of a 38% growth.
Still, EBITA loss is forecasted to widen to RMB4.2 billion, compared to the RMB3.1 billion loss in 3Q, mainly due to the impact of BABA's
continued expansion of AliExpress Choice penetration and overseas business.
Driven by AIDC, UBS expected Cainiao's revenue to elevate 25% YoY in the quarter, beating market expectations of a 21% rise.
However, taking into account the scale of investment and the one-off employee retention bonus from the collapse of Cainiao's IPO, the subsidiary's EBITA is expected to turn from a profit to a loss of about RMB800 million, compared to a profit of RMB961 million in 3Q.
In addition, UBS expected BABA's local services revenue to grow 12% YoY in the quarter, while cloud business revenue is predicted to rise 3%.
The broker lowered its adjusted EBITA forecast on BABA by 8-9% for FY25-FY26, based on higher investments in AIDC and Cainiao, and trimmed its adjusted EPS forecast by 2-4%, given faster-than-expected share buybacks.
Related News: TF Securities: BABA-SW (09988.HK) To Promote Synergies by Cainiao Shr Buyback, Raises Shr Buyback Amt
UBS maintained a Buy rating on BABA's US Shares (BABA.US) but trimmed its target price from US$106 to US$105, while also lowering its target price on BABA H-shares from HK$104 to HK$103.
The broker cited CMR recovery in the last quarter as a bright spot.
Source: AAStocks Financial News
http://www.aastocks.com/en/stocks/news/ ... -news/AAFN
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