We expect Alibaba to report strong 3QFY18 results in early Feb, supported bysuccessful Single Day sales and sustained strength in user traffic. Weforecast 57% yoy revenue growth in 3QFY18 to Rmb83.8bn, attributable tothe consolidation of Cainiao and a robust China Retail which we project togrow 51% yoy to Rmb61.4bn. We foresee margin contraction from theconsolidation of Cainiao and drag from new retail and international business.Our earnings forecasts remain largely unchanged. We roll-over our SOTPvaluation from FY18 to FY19, and raise our TP to US$259 from US$245.
Sustained strength in Tmall MAU and time spent. Our mobile traffic trackershows sustained strength in Alibaba’s MAU and user time spent, albeit aslow-down in overall online retail sales growth. According to NBS data, onlineretail sales growth slowed to 23% yoy in Oct-Nov 2017 from 30% yoy in3Q17. Nonetheless, we observe acceleration in both mobile MAU and timespent on Alibaba’s Tmall & Taobao – MAU/time spent growth increased from16%/17% yoy in Sep-17 to 20%/20% yoy in Nov-17, with Tmall’s metricsgrowing faster than Taobao’s.
Accelerating GMV growth on 11.11. Alibaba delivered another successfulSingles Day sales in 2017. With 140k brands participating in the Singles Dayevent, GMV on 11.11 increased 39% yoy to Rmb168bn, beating the market’sexpectation of Rmb150bn. The GMV growth also represented an accelerationfrom 32% yoy in 2016.
57% yoy revenue growth in core commerce and cloud computing. Weforecast Alibaba’s China Retail to increase 51% yoy to Rmb61.4bn, thanks tothe successful Singles Day promotion. We believe strong GMV and theconsolidation of Cainiao should support 57% yoy total revenue growth in3QFY18 to Rmb83.8bn. We expect Cloud Computing revenue to rise 95% yoyto Rmb3.4bn, with expansion in both the number of paying customers andARPU.
Margin contraction due to new business. We expect aggressivepromotions, the development of new retail including……[麦格理资本]