Tmall creator steps down, Alibaba "goes on the offensive"

Source: Guotai Junan Overseas Technology Qin Heping/Li Qi

On September 10, 2023, Chairman of Alibaba, Cai Chongxin, announced that Zhang Yong has stepped down as Chairman of the Group and CEO of Alibaba Cloud. Cai Chongxin will take over as Chairman of the Group, while Wu Yongming will assume the roles of Group CEO and related positions at Alibaba Cloud.

Tmall Founder Retires, Alibaba E-commerce Accelerates Return to Taobao

This is one of the indicators of Alibaba's return to a low-price strategy. In the past, Zhang Yong bet on the trend of consumption upgrading and achieved annual sales of over a trillion US dollars by establishing Tmall and creating the Double 11 IP.

However, in recent years, due to the trade frictions between China and the United States and the disruptions caused by the pandemic, consumer preferences have become divided. Pinduoduo and Douyin have been catching up, and the previous strategies are no longer appropriate.

Management Iteration Aligns with the Urgent Need for Decentralization and Innovation

Zhang Yong has led the implementation of the "big middle platform, small front-end" organizational strategy, allowing various businesses to share data and technology, emphasizing unified and collaborative development.

Under the "1+6+N" decentralized structure, the company needs leaders who are familiar with the overall business, willing to explore innovation, and willing to delegate authority. Wu Yongming, who is young, energetic, and has cultivated a broad vision and years of operational experience through past investment experiences, is the suitable candidate at this stage.

Optimistic about Alibaba's Shift from Defense to Offense, Continuously Unleashing Growth Momentum in the AI Era

On September 11, 2023, Alibaba confirmed its two strategic focuses: putting users first and being AI-driven. It has made clear investments in three types of businesses:

1. Technology-driven internet platform business
2. AI-driven technology business
3. Globalized commercial network

In the AI era, Alibaba possesses rich application scenarios and diversified differentiated data. Keeping up with the changes in the AI era means that Alibaba can regain growth and establish a longer-term market advantage, ensuring sustained success.

We are optimistic that Alibaba, with an entrepreneurial mindset, will continue to grow in the AI era.

Investment Recommendation

Guotai Junan maintains a "buy" rating for Alibaba.

It is predicted that Alibaba's operating revenue for the fiscal years 2024-2026 will be 965.46/1,098.90/1,224.69 billion yuan, and the non-GAAP net profit will be 169.87/178.10/216.67 billion yuan, respectively.

The target price for Alibaba has been adjusted to 138 HKD.