Daily Brief Equity Bottom-Up: Alibaba (BABA and more

• In F2Q26, pro forma revenue increased by 18% YoY excluding two disposals.
• It was successful that the company rebranded its food delivery business.
• However, the rebranding brought significant sales and marketing expenses in F2Q26.

• Nvidia’s multi-year cloud service commitments jumped from $12.6B to $26B in one quarter, but only $1B is due in cash before late FY26, raising questions about the immediacy of demand.
• Nvidia is backstopping customer infrastructure via an $860M facility lease guarantee, with only $470M escrowed; effectively transferring counterparty credit risk onto Nvidia’s balance sheet.
• Structurally, this resembles circular financing, where customers take on debt (facilitated by Nvidia) to secure future compute capacity, enabling Nvidia to book future revenue while cash conversion lags.

• CICC (3908 HK)‘s announced merger with Dongxing Securities (601198 CH) and Cinda Securities (601059 CH) will elevate it to the 3rd largest HK-listed Chinese securities company.
• Based on our assumptions, its EPS will be diluted by 7.1%, BPS enhanced by 12.2%, and ROE lowered by 1pp for FY26, before accounting for synergy.
• Its presence in Fujian (+616.7%), Liaoning (+500%), and Beijing (+100%) will be significantly enlarged. Additionally, it will open up potential benefits from optimisation.

• Nvidia is transitioning from a GPU vendor to a full-stack systems supplier for AI infrastructure, with the Data Centre segment driven more by integrated rack-scale deployments than standalone accelerators.
• Management positions Nvidia as the reference architecture for a “$3–4 trillion annual AI infrastructure build”, but finished goods inventories are up 90%+ amid “sold-out cloud capacity.”
• The rapid shift toward rack-scale systems introduces new ecosystem tensions, as Nvidia’s move into full system design increasingly overlaps with the domain of OEM partners.

• Kioxia is a leading global supplier of NAND flash memory, experiencing a strong financial recovery driven by surging demand from AI, data centers, and smart devices.
• The company’s strategic focus is on technological leadership in 3D NAND and advanced SSDs, supported by a significant joint venture with Western Digital that enhances R&D and production scale.
• While the outlook is positive, key risks include the inherent cyclicality of the memory industry, intense competition from established players, and execution risks associated with ambitious margin and technology targets.

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• Dominion Energy is accelerating into one of the most consequential growth phases in its history, with data centerdriven load growth, multibillion dollar transmission expansions, and the 2.6 gigawatt Coastal Virginia Offshore Wind (CVOW) project advancing toward first power in early 2026.
• Now, reports indicate that Dominion is exploring a potential acquisition of Northern Virginia Electric Cooperative (NOVEC), a move that would deepen its footprint in the world’s busiest data center corridor—Loudoun County’s “Data Center Alley.” The timing is notable: Dominion disclosed that contracted and in process data center demand has surged to roughly 47 gigawatts, up 17% since year end 2024, while the company simultaneously works through major regulatory, financing, and construction milestones across its portfolio.
• Dominion and NOVEC already share deeply interconnected transmission infrastructure, and NOVEC’s customer mix—where data centers account for roughly two thirds of electricity sales—aligns with Dominion’s strategy to serve rapidly rising AI related load.

• Vertically integrated Inner Mongolia smelter with second-quartile cost positioning, expanding renewables and alumina self-sufficiency, and entering overseas low-carbon production via its Saudi project.
• FY24 margins inflected sharply; mid-cycle valuation implies material upside with strong sensitivity to aluminium pricing and structural demand drivers including AI datacentres, EVs, and grid expansion.
• Base-Case Target Price HK$18.6 (24% upside); bull-case HK$22.1; bear-case HK$16.9, supported by integrated operations and medium-term EBITDA expansion potential.

• United Arrows is beginning to flex its market power by launching more new brands rather than just iterations of its eponymous name
• A key focus is a move to exploit the massive demand for Korean brands in Japan with Korean licenses for Nice Weather and Osoi.
• More licenses are expected in the near future as the select shop retailer looks to take more share of the premium market.

• Bajaj Housing Finance (BHF IN) is a priced to perfection narrative.
• The current valuation (37.3x P/E, 4.2x P/B) prices the stock for absolute perfection in an environment that is distinctly imperfect and rapidly deteriorating.
• A critical red flag highlighted in the Q2 transcript is the elevated annualized attrition rate.

• Mars Group Holdings exhibits a compelling value and dividend profile, underpinned by a robust history of financial growth and a strong net cash position, making it attractive for income-oriented investors.
• The company’s primary exposure to the Japanese pachinko industry presents a significant headwind, as the market is in a long-term structural decline due to demographic shifts, regulatory pressures, and competition from other entertainment forms.
• A recent downturn in quarterly performance (FY1Q26) following years of strong growth introduces uncertainty, making near-term earnings and regulatory developments critical catalysts to monitor.

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