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Valuation & Risks ( 9988.HK ) Disclosure / Price Chart(s) / Valuation & Risk
Fundamental Equity Research
Our target price for Alibaba of HK$144 is based on 9x P/E on FY2026E New TTG Group net profit, 5x P/S on FY2026E Cloud Intelligence Group revenue, 3.5x P/S on AIDC revenue, 2.0x P/S on consolidated business segment ex Taobao Tmall & Local Services, Cloud and N+business, and values Alibaba Health based on market cap with 30% holdco discount. Our target multiples are benchmarked against comps. We also assign a 30% discount to net cash position, in-line with our SOTP for other internet peers. Our SOTP comes to HK$144.

Key downside risks that could prevent the shares from reaching our target price include: (i) failure in executing its new retail strategy; ii) investment spend and margins pressure become worse than expected; iii) slowdown of user traffic and online GMV and losing appeal to brands & merchants; iv) integration risks for newly acquired entities; v) slowdown of the Chinese and global economies and overhang of US-China or other trade disputes; and vi) regulatory risks on poor product quality and integrity of merchants.

 

 

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