Alibaba Provided Positive Outlook; Investment Will Only Put Small Pressure on Margins; Shares Cheap

Although wide-moat Alibaba's December quarter revenue was roughly in line with Refinitiv consensus and our own estimates, adjusted EBITA was better than consensus and our estimates, and management provided a positive outlook. We maintain our fair value estimate at USD 177 per ADS and HKD 171 per share. The shares are trading at 17 times PE ratio for fiscal 2023 and only 10 times PE ratio for fiscal 2024. The share price is undemanding. We continue to think Alibaba will benefit from the reopening of China due to its exposure to discretionary goods and the rebound in higher-margin apparel category following Chinese New Year.