East Asia Securities: Cut Alibaba-W (09988) target price by 3.8% to HK$150 rating as “buy”

The Zhitong Finance App learned that East Asia Securities released a research report stating that the target price of Alibaba (09988) (BABA.US) will be lowered by 3.8% from HK$156 to HK$150 to maintain a “buy” investment rating.

East Asia Securities said it is optimistic about Alibaba's medium- to long-term development. The company is gradually transforming from a traditional e-commerce platform leader to a technology enterprise driven by the dual engines of “e-commerce cash flow” and “full-stack AI”. As large models, self-developed chips, and cloud infrastructure advance simultaneously, the company's enterprise-level AI competitiveness is expected to continue to strengthen. Earlier, all proceeds from the allotment of shares will be invested in the full-stack AI layout. The bank believes that this is strategic financing to support future growth, rather than reflecting financial pressure. Although the short-term growth of e-commerce business is still weak, the unit economic efficiency of instant retail continues to improve, and the core business is expected to gradually stabilize.

Currently, Alibaba's projected price-earnings ratio for the next 12 months is 14.1 times, lower than the average value for the past 10 years (18.6 times), and there are still significant discounts compared to AI cloud companies listed in Europe and the US. As the national policy continues to support the development of the AI industry and the increase in AI application scenarios, the valuation of the Group's cloud and model as a service (MaaS) business is expected to increase. In addition, its Pingtouge chip business is expected to be spun off and listed, supporting the Group's upward valuation recovery. As a result, East Asia Securities gave Alibaba a target price-earnings ratio of 23 times for the 2027 fiscal year, and added an adjusted profit of 5.4 yuan per share for the group in fiscal year 2027.