Haitong International Begins Coverage of BABA-W (09988.HK) with an Outperform Rating and $200 Price Target
Research Coverage Initiation: Haitong International has initiated coverage on Alibaba (BABA-W) with an Outperform rating, highlighting its position as a leading global technology and commerce platform across various sectors.
Strategic Realignment: Alibaba is streamlining its organizational structure to focus on four main categories: China E-commerce, International Digital Commerce, Cloud Intelligence, and Others, with expected revenue growth easing from 2024 but potentially reaccelerating in 2025.
Target Price and Market Outlook: The broker set a target price of HKD200 for Alibaba's shares, expressing optimism about the company's entry into an AI-led recovery phase, despite anticipated profitability challenges in 2026.
Profitability Projections: Haitong International forecasts that Alibaba's margins will recover from the second half of 2026, returning to normal levels of approximately 17% NPM and 17% EBITA margin by 2027.
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BABA-W CFO: Significant Increase in Southbound Shareholdings Following Stock Connects Inclusion
Stock Performance: BABA-W (09988.HK) experienced a decline of 1.200 (-0.706%) with significant short selling amounting to $726.96M and a ratio of 7.181%.
CFO's Statement: CFO Toby Xu announced at the Asian Financial Forum that the Group completed its dual primary listing in Hong Kong by the end of August 2024.
Increased Shareholding: The Group's inclusion in the Southbound Trading of Stock Connects in September 2024 led to a rise in southbound shareholding, now approximately 11% of the Company's issued capital.
Market Strategy: Xu emphasized the importance of the Hong Kong market as a vital channel for fundraising and connecting with global investors.
China Grants Conditional Approval for DeepSeek, ByteDance, Alibaba, and Tencent to Acquire H200 Chips: Report
China Approves Nvidia Chip Purchases: China has approved DeepSeek to purchase Nvidia's H200 AI chips, although regulatory conditions are still pending finalization.
Other Companies Involved: ByteDance, Alibaba, and Tencent have also been allowed to purchase over 400,000 H200 chips, with short selling data indicating significant market activity.
Nvidia's CEO Comments: Nvidia CEO Jensen Huang has not received confirmation regarding the approvals and believes that licensing issues will eventually be resolved.
Regulatory Oversight: The approvals from China's Ministry of Industry and Information Technology and the Ministry of Commerce will come with conditions determined by the National Development and Reform Commission.
