20250707-招银国际-Offering_of_exchangeable_bonds_to_support_international_business_development_4页_976kb

Alibaba (BABA US) Company Update

Key Points

• Exchangeable Bond Offering: Alibaba proposed a HK$12bn zero-coupon bond due 2032 to support international business. Net proceeds will be used for cloud, digital infrastructure, and international commerce development.

• Bond Details:

  • Initial exchange ratio: ~160,513.6 AH shares per HK$1mn bond, equivalent to HK$6.23 per Ali Health share.
  • Represents a ~48% premium over Ali Health market close on July 3.
  • Can be exchanged for Ali Health AH shares, cash, or a combination by bondholders.

• Impact: The bond issuance aims to enhance capital for Alibaba's international expansion and potentially increase Ali Health's free float.

Valuation

• Target Price (TP): US$155.50 (unchanged).
• SOTP-based TP: US$155.50.
• Key Metrics (YE: Mar 31, 2025):
  • P/E (2025E): 14.4x; YoY growth: 4.5%.
  • ROE (2026E): 11.9%.

Financial Outlook

• Revenue Growth: Expected steady growth at ~5.9% YoY in 2025E-2028E.
• Adjusted Net Profit: YoY growth projected at 5.6% in 2026E-2028E.
• Cash Position: Alibaba had ~RMB597bn in cash equivalents as of Mar 31, 2025.

Analyst Recommendation

• Rating: BUY with unchanged SOTP-based TP of US$155.50.
• Justification: Facilitates overseas capital for expansion; Ali Health remains a consolidated subsidiary.