The article "Major Banks" summarizes the latest target prices and views of brokerages on Alibaba's entry into the in-store business
Alibaba-W (09988.HK) opened 5.9% higher this morning, reaching a high of 153.8 yuan during the day, a rise of 7.3%. The stock price increased by 5.9% to close at 151.8 yuan, with a trading volume of 17.337 billion yuan. The company announced approximately 3.2 billion US dollars in zero-coupon convertible senior notes with an initial conversion rate of 5.1773 American depositary shares for every 1,000 US dollars of principal amount of the notes, priced at 193.15 US dollars per American depositary share, or 188.08 Hong Kong dollars per ordinary share, representing a premium of 31.25% over yesterday's (11th) closing price. This involves the conversion of 131 million ordinary shares, or 16.4016 million American depositary shares. Alibaba's issuance of zero-coupon notes amounts to 3.168 billion US dollars, maturing on September 15, 2032. The net proceeds from the fundraising are approximately 3.13 billion US dollars, of which about 80% will be allocated to enhance cloud infrastructure, including expanding data centers, upgrading technology, and optimizing services to meet growing demand; the remainder will be used to expand international business operations.
On Wednesday (10th), Alibaba announced the launch of the "Gaode Street Ranking," based on user behavior, as part of its 26th anniversary celebration. It also initiated the "Good Store Support Program," encouraging users to shop in-store through the issuance of over 1 billion yuan in subsidies. Gaode Map covers over 7 million restaurant locations nationwide, with 120 million daily searches related to life services and navigation to 13 million life service destinations, while the "Gaode Street Ranking" will never be commercialized. According to the Securities Times, over 40 million users used the "Gaode Street Ranking" on its first day. QuestMobile data shows that by August 2025, the daily active user base of Dianping will be 32.6057 million, indicating that the "Gaode Street Ranking" surpasses Dianping in user numbers, becoming the largest food ranking in mainland China.
【Morgan Stanley: Alibaba's execution performance has exceeded expectations so far】
Citi believes that this plan supported by vouchers and promotions is likely to help Gaode Map attract natural user traffic, leading to an increase in ride-hailing transaction volume. By leveraging Gaode Map's high monthly/daily active user count and cross-promoting dining/entertainment intentions with ride destinations, along with close cooperation with Alipay's credit system, additional synergies are expected to be unlocked. The bank also anticipates that a closer integration between Gaode Map and Taobao's flash purchase users will lead to deeper cooperation between food delivery/quick commerce and in-store consumption, helping to capture a larger share of consumer wallets and merchant advertising budgets. The bank maintains a "Buy" rating on Alibaba with a target price of 183 Hong Kong dollars (equivalent to a projected price-to-earnings ratio of 12 times next year).
Morgan Stanley pointed out that Gaode is the largest navigation map in China, with nearly 200 million daily active users after recent AI upgrades, according to Quest Mobile data. It is believed that this could be Alibaba's first step in re-promoting in-store services, with more products likely to follow in the future. The bank believes that Alibaba has been actively expanding in the local services sector, starting with food delivery, moving to non-food/retail quick commerce, and now entering local services. The bank believes that Alibaba's execution performance has exceeded expectations so far, with a year-on-year increase of 25% in MAC in August Management also promised to reduce unit economic losses by half within 1 to 2 months, expecting quick commerce to bring a 2% to 3% increase in customer service revenue, with a target of generating an additional RMB 1 trillion in gross merchandise volume from instant retail within 3 years. The bank maintains its investment forecast for Alibaba's instant retail/store, estimating RMB 35 billion for the current fiscal quarter and RMB 80 billion for the current fiscal year (2026 fiscal year).
【Guosen: Instant retail drives growth in Taobao DAU】
Guosen Securities pointed out that under neutral conditions, the instant retail market is expected to exceed RMB 3 trillion by 2030, with a compound annual growth rate of 25%. The penetration rate of instant retail in online e-commerce will increase from 6% to 15.7%, and the layout of instant retail is crucial for Alibaba to ensure its market share in retail. The bank also noted that Alibaba's instant retail business saw peak daily orders surpassing 120 million, with an average daily order of 80 million in August, and monthly transaction buyers for flash sales reaching 300 million. In non-food categories, flash warehouse orders grew over 360% year-on-year, and after Hema's integration, online daily orders exceeded 2 million, up 70% year-on-year. Flash sales also drove a 20% increase in daily active users on Taobao in August, with increased traffic boosting customer service revenue and reducing user acquisition and recall costs. The bank assumes Alibaba's instant retail will incur a loss of approximately RMB 33.8 billion in the current quarter, and if the order volume remains stable, the loss situation will gradually improve, with an overall loss of RMB 71.2 billion expected for the current fiscal year. In the long term, investment in flash sales will bring Alibaba growth in e-commerce cross-selling and customer management revenue, as well as contributions to revenue and profits from food and non-food instant retail. Guosen Securities estimates that Taobao's flash sales will incur an average loss of RMB 5 per order from July to September this year (i.e., the second fiscal quarter of 2026) with a daily order volume of 73.37 million, resulting in a quarterly related loss of RMB 33.8 billion. It estimates an average loss of RMB 2.7 per order from October to December this year (i.e., the third fiscal quarter of 2026) with a daily order volume of 71.58 million, resulting in a quarterly related loss of RMB 17.5 billion, and an average loss of RMB 1.5 per order from January to March next year (i.e., the fourth fiscal quarter of 2026) with a daily order volume of 65 million, resulting in a quarterly related loss of RMB 8.9 billion. The bank estimates that Meituan's takeaway service will incur an average loss of RMB 2 per order in the third quarter of this year (with a daily order volume of 80 million), resulting in a quarterly related loss of RMB 14.8 billion.
Guosen Securities expects that the instant retail business will bring Alibaba RMB 1 trillion in GMV by 2027 (with forecasts for 2025 and 2026 at RMB 569.4 billion and RMB 896.8 billion, respectively), with related e-commerce conversion rates of 30% from 2025 to 2027. It estimates that Alibaba's average daily order volume for instant retail from 2025 to 2029 will be 52 million, 70.2 million, 74.28 million, 75.71 million, and 76.96 million, with instant retail losses for 2025 to 2028 at RMB 67.5 billion, RMB 35.7 billion, RMB 17.5 billion, and RMB 7.5 billion, respectively, and expects to turn a profit of RMB 6.1 billion in 2029 The bank indicated that its calculations suggest that Alibaba is expected to bring in over 1 trillion RMB in GMV in the future, but the profit contribution is relatively limited, with the core goal being to ensure Alibaba's market share in retail.
UBS believes that the launch of the Gaode street-sweeping ranking feature indicates that competition in local life services remains highly dynamic and has expanded beyond instant retail to in-store services. Entering the fourth quarter of this year, the bank expects the focus to shift from food delivery to non-food fast e-commerce, based on the end of the summer peak and the approach of "Double Eleven," as well as in-store services, based on the Golden Week of November. The bank believes that e-commerce stocks may still be volatile. The bank prefers Alibaba due to the peak investment in fast e-commerce, strong core Taotian performance, and the ongoing theme of artificial intelligence investment. If executed properly, Alibaba should be able to unlock significant long-term value, such as international e-commerce, internal synergies within Taotian, and artificial intelligence plans.
【Goldman Sachs indicates that Meituan's stock price has reflected market share reduction】
Goldman Sachs stated that Meituan (03690.HK) experienced a deterioration in unit economics for food delivery in the third quarter due to defending its gross merchandise volume market share, but Meituan's stock price has reflected the expectation of a long-term market share decline from 75% to 50% to 55%, as well as a reduction in long-term profit per order from 1.5 RMB to 0.8 to 1 RMB. The bank remains confident in Meituan's overall local service leadership position under the expanded total addressable market for fast e-commerce, based on the expectation that high food delivery subsidies will gradually normalize next year, the stable pattern in the in-store local service sector will continue to grow rapidly, the super high growth of instant shopping retail, as well as new growth drivers from artificial intelligence applications and Keeta, along with a strong balance sheet. Daiwa reports that Alibaba's instant retail loss per order is forecasted to be 1.58 RMB, 3.11 RMB, and 1.64 RMB for the second to fourth quarters of this year, while Meituan's takeaway loss per order is forecasted to be 1.7 RMB, 1.49 RMB, and 0.58 RMB for the same periods.
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Our website has compiled the ratings for Alibaba (09988.HK) from 6 brokerages:
Brokerage│Investment Rating│Target Price
Citi│Buy│183 HKD
Jefferies│Buy│160 HKD->172 HKD
JP Morgan│Overweight│165 HKD
Bank of America Securities│Buy│148 HKD->164 HKD
UBS│Buy│158 HKD
HSBC Global Research│Buy│156 HKD
Our website has compiled the ratings for Alibaba (BABA.US) from 7 brokerages:
Brokerage│Investment Rating│Target Price
Citi│Buy│187 USD
Jefferies│Buy│165 USD->178 USD
JP Morgan│Overweight│170 USD
Bank of America Securities│Buy│152 USD->168 USD
Morgan Stanley│Overweight│165 USD
UBS│Buy│162 USD
HSBC Global Research│Buy│160 USD
Brokerage│Viewpoint
Citi│The combination of Gaode's street-sweeping ranking with gift vouchers and promotions will help Gaode Map attract online traffic and increase ride-hailing transactions, and the synergistic payment system will release more synergies Credit Suisse | Upgraded target price based on positive cloud outlook and e-commerce synergy effects, issuing convertible bonds reflects the company's confidence in its outlook.
JP Morgan | Major adjustments in local life services in China, Alibaba challenges Meituan's market leadership.
Bank of America Securities | The company commits to capital expenditures and strong AI demand, with e-commerce focused execution and clear synergy effects.
Morgan Stanley | Restructuring of Amap's business may be the first step to reintroducing in-store services, with competition extending to in-store service risks.
UBS | The launch of Amap's street scanning rankings shows significant changes in local life service competition, extending from instant retail to in-store services.
HSBC Global Research | Continued opportunities in artificial intelligence and instant retail businesses
