Citi: Expects instant retail investment to drag down Alibaba-W in the first fiscal quarter, downgrades rating to "Outperform"

Citi released a research report stating that it has downgraded Alibaba-W (09988, BABA. US) investment rating from "Confident - Outperform" to "Outperform." The report indicates that Alibaba's revenue growth rate for the first fiscal quarter ending June is expected to slow to 2.4% year-on-year, mainly due to the exclusion of the consolidated financial statements of Sun Art Retail and Intime Retail. Excluding these factors, revenue is expected to grow by about 10%, with Taotian CMR expected to grow steadily by about 10%, and international retail and cloud business revenues expected to grow by about 20% and 22%, respectively. The firm estimates that the group will invest about 10 billion yuan in instant retail business, which will drag down the adjusted EBITA for the first fiscal quarter by 16.3% year-on-year to 37.7 billion yuan, with profit margins expected to narrow by 3.4 percentage points to 15.1%, and the impact on the second fiscal quarter may be even greater