Alibaba Group - 12-May-2015 - US - CF PDF

Regional Company Focus
Alibaba Group Holding Ltd.

Bloomberg: BABA US Equity
Refer to important disclosures at the end of this report
Reuters: BABA.N
DBS Group Research . Equity
12 May 2015
Open sesame the online treasure
BUY US$86.72 NASDAQ : 4,994

(Initiate Coverage)
Price Target: 12-Month US$116
Reason for Report: Initiation of coverage
Potential Catalyst: Improving mobile monetization rate;
development of B2C online platforms and cross-border e-commerce
Where we differ: Our FY16F core profit is 2% above Bloomberg
consensus
Analyst
Mark LI CFA, +852 2971 1935
mark_li@hk.dbsvickers.com
Relative Index
209
121.2
189
111.2
101.2
169
91.2
149
81.2
129
71.2
109
61.2
Sep-14
89
Dec-14
Alibaba Group (LHS)
Mar-15
Relative CCMP INDEX (RHS)
Forecasts and Valuation

FY Mar (RMB m)
2014A
Turnover
52,504
EBITDA
32,768
Pre-tax Profit
26,599
Net Profit
23,076
Core Profit
27,044
(non-GAAP)
EPS (RMB)
10.61
EPS (US$)
1.71
Core EPS (US$)
2.00
Core EPS (RMB)
12.43
Core EPS Gth (%)
111.3
Diluted EPS (US$)
1.59
BV Per Share (US$)
2.03
Core PE (X)
43.3
P/Cash Flow (X)
44.4
P/Free CF (X)
56.1
EV/EBITDA (X)
36.0
Net Div Yield (%)
0.0
P/Book Value (X)
42.8
Net Debt/Equity (X)
CASH
ROAE (%)
157.4
Earnings Rev (%):
Consensus core EPS
(US$)
Other Broker Recs:
2015A
76,204
36,121
30,736
24,149
2016F
102,976
56,261
32,945
25,840
2017F
133,086
73,606
43,457
33,869
34,698
46,426
60,645
9.69
1.56
2.24
13.92
12.0
1.52
9.16
38.7
32.5
44.9
34.1
0.0
9.5
CASH
27.6
10.37
1.67
3.00
18.63
33.8
1.63
10.86
28.9
25.0
32.5
21.4
0.0
8.0
CASH
16.3
13.59
2.19
3.92
24.34
30.6
2.13
13.01
22.1
20.3
25.5
15.9
0.0
6.7
CASH
17.9
New
New
2.82
3.77
S: 0
H: 3
B: 34
ICB Industry: Consumer Services

ICB Sector: General Retailers
Principal Business: A leading online marketplace operator in China
Source of all data: Company, DBSV, Thomson Reuters, HKEX
www.dbsvickers.com
ed-TH / sa- MH
Alibaba enjoys e-commerce leadership thanks to its multiple

online platforms and strengths in logistics / e-payment
A key beneficiary of B2C e-commerce, with great potentials

from mobile development and rural expansion
Strategic investments to lift medium-term growth prospects.

Initiate coverage with BUY and SOTP-based TP of US$116
Best-positioned for Chinas e-commerce boom. Alibaba is

the leading e-commerce player in China, with >70% domestic
market share. Riding on its multiple online platforms including
Taobao Marketplace, Tmall, Juhuasuan, AliExpress, Alibaba.com
and 1688.com, as well as developments in logistics and epayment, the company is well-poised to be the long-term winner
in Chinas burgeoning e-commerce market.
Price Relative
US$
Multiple growth drivers ahead. Chinas e-commerce market

is expected to register a 27% CAGR for 2014-2018F, and B2C ecommerce could achieve a 37% CAGR thanks to its better
product quality and service standards. As such, Alibabas
transformation towards B2C e-commerce could enhance its
business outlook and monetization capability. Besides, thanks to
its first-mover advantage and strategic M&As, the company
could benefit from robust growth of mobile and rural ecommerce in China.
Better outlook on improving ecosystem. Seeing the
importance of logistics, entertainment, mobile internet and O2O
(online-to-offline) to the e-commerce ecosystem, Alibaba has
been acquiring quality players in these areas to strengthen its
positioning. Overall, we expect the company to achieve a 32%
non-GAAP core profit CAGR for FY15-FY17F. Based on 1x core
PEG or 32x 12-month rolling core PE, inclusive of its net cash on
hand and Ant Financials potential value, our SOTP-based TP for
Alibaba is US$116. At 25% discount to our TP, we initiate
coverage on Alibaba with a BUY recommendation.
At A Glance
Issued Capital (m shrs)
Mkt. Cap (US$m)
Major Shareholders
SoftBank (%)
Yahoo (%)
Jack Yun MA (%)
Joseph C. TSAI (%)
Silver Lake (%)
Free Float (%)
Avg. Daily Vol.(000)
2,487
215,700
32.1
15.4
7.8
3.2
2.2
39.3
17,405

Alibaba
INVESTMENT THESIS
Profile
Alibaba stands as the dominant e-commerce leader in China,
enjoying >70% market share. Operating multiple platforms
such as Taobao Marketplace, Tmall, Juhuasuan, AliExpress,
Alibaba.com and 1688.com, the company has created an
e-commerce ecosystem with improving exposure in key sections
including logistics and e-payment (via Ant Financial).
Rationale
Mobile leadership
Launching the Mobile Taobao App in 2010, Alibaba has

led the mobile e-commerce market with >80% market
share
Improving monetization capability
The transformation towards to Tmall could help to lift

Alibabas monetization rate, thanks to rising commission
income contributions and Tmall merchants extensive use
of online marketing initiatives
M&A enhances business outlook
Valuation
Our TP for Alibaba is based on sum-of-the-parts (SOTP)
valuation, with 1x core PEG (or 32x 12-month rolling core PE)
for the companys e-commerce operations, plus its net cash on
hand and the potential value of Ant Financial.
Risks
Intensifying competition
Page 2
Competition with other B2C e-commerce players
Potential government control
Source: DBS Vickers
Aimed to improve its e-commerce ecosystem, Alibaba

has been acquiring quality players in logistics,
entertainment, mobile and O2O. We expect more M&As
in these areas ahead to complete the closed loops.
Governments possible tax reinforcement on merchants

of the Taobao Marketplace

Alibaba
Table of Contents
Investment summary
SWOT analysis
Company overview
Growth prospects
15
Valuation & recommendation
20
Appendix
30
Page 3

Alibaba
Investment summary
Dominating Chinas e-commerce space. Alibaba has been the
leading e-commerce player in China, with >90% C2C ecommerce market share for its Taobao Marketplace (),
and >60% B2C e-commerce market share for Tmall (). As
of Mar 2015, Alibabas active buyers had reached 350m (or
>90% of Chinas online shopper population), and these
customers have generated RMB2.4tn GMV / over 6bn parcels
for the company in FY15.
strengths in downstream network and delivery of large-sized

items. With the development of the smart logistics IT system,
we expect Alibaba to improve the delivery efficiency of its ecommerce ecosystem, especially during the peak season of
Singles Day online promotion on Nov 11th.
Online payment is the key. In our view, e-payment is one of the

most important sections in the e-commerce value chain, given
its direct connections with cash flows and customer transactions.
Ant Financial (, a related entity of Alibaba) offers
Drivers from multiple online platforms. Alibaba launched
Alipay online payment services, as well as other internet
Alibaba.com and 1688.com in 1999, Taobao Marketplace in
financing services to online shoppers and SMEs. According to
2003, Tmall in 2008, and Juhuasuan () / AliExpress in
iResearch, Alipay acquired half of the online payment market
2010. Synergies between these platforms have risen, such as
share in China last year, and its mobile payment market share
Taobaos user traffic support to Tmall, Juhuasuans group
could reach c.80%. Alibaba has established the Zhejiang
buying promotions for Taobao and Tmall, as well as supplier
Internet Commerce Bank (), to provide internetsupport from the B2B e-commerce platforms. In addition, Alipay
based consumer financing / SME financing services. We believe
() has provided e-payment services to Alibabas online
Alibaba could benefit from these internet finance initiatives over
platforms, and logistics / cloud computing infrastructure could
the longer-term.
lay good foundation for its e-commerce ecosystem.
Successful monetization initiatives. Online marketing service is
the main income source for Alibaba, taking up c.63% of its
China retail revenue in FY15. Using Alimama () online
marketing technology platform, merchants can bid for
keywords for search results, as well as online ad slots. Building
on the development of B2C e-commerce, Alibaba has
generated commission incomes from Tmall and Juhuasuan,
helping to enhance its monetization capability.
A mobile leader. Alibaba has been a pioneer in mobile
commerce, launching its Mobile Taobao App in 2010. The
companys mobile active buyers amounted to 289m as of
Mar15, and its mobile market share reached 86% last year.
51% of Alibabas China retail GMV in 4QFY15 was generated
from its mobile platforms, and mobile revenue surged 352% yo-y to RMB5.2bn for the quarter. Management expects mobile
orders on Taobao Marketplace could reach c.70% of total
orders by the end of 2015, and rising mobile monetization rate
could be the future revenue driver for Alibaba.
Development of the smart logistics IT system. Online shoppers
place great emphasis on the accuracy and timely delivery of the
products they purchase. Alibaba launched China Smart Logistics
in 2013, to develop a smart logistics IT system that could
coordinate its delivery partners such as S.F. Express, STO Express
and YTO Express. Alibaba also made a strategic investment in
Haier Electronics (1169 HK) in Dec 2013, to ride on Haiers
Page 4
Efforts to enhance the ecosystem. Chinas e-commerce market

size could register a 27% CAGR for 2014-2018F to
RMB7,300bn (source: iResearch), driven by rising online
spending per capita as well as developments of B2C ecommerce, mobile shopping and rural e-commerce. Alibaba has
made strategic investments in logistics, sales category expansion,
entertainment, mobile internet and O2O to improve its ecommerce ecosystem, and we expect more M&As in these areas
to lift its business outlook.
Initiate coverage with BUY and TP of US$116. Alibaba is trading
at c.27x 12-month rolling core PE (or 0.8x core PEG), at the lowend of its valuation range since IPO (i.e. 26-44x rolling core PE).
Given its e-commerce leadership, rising monetization capability,
mobile development, as well as e-payment support from Ant
Financial, we believe it is fair to value Alibabas e-commerce
operations at 1x core PEG (or 32x rolling core PE). Adding its net
cash on hand as well as the potential value of Ant Financial, our
SOTP valuation suggests a TP of US$116 for the company,
offering 34% upside.
Key risks and concerns. In our view, downside for Alibaba could
likely come from temporary fluctuation of its monetization rate,
sales of counterfeit products by its online merchants, potential
product delivery delays, and taxation issues for merchants on
the Taobao Marketplace.

Alibaba
SWOT analysis
Strengths
Weakness
Leading position in Chinas booming e-commerce market
Product quality control could be difficult given its large

number of online merchants
Multiple platforms that span across online retailing and

wholesaling in China and other countries
Delays in product deliveries to online shoppers
Established online marketing operations riding on

merchants advertising demand
Its newer B2C e-commerce arm benefits from user traffic

support from the Taobao Marketplace
Strength in online payment leveraging on the dominant

position of Alipay (a related entity to Alibaba)
Solid management track record in Chinas e-commerce

market
Opportunities
Threats
Sound e-commerce market growth driven by growing online

shopper population and rising average spending
Intensifying competition from B2C e-commerce

operators
Upside in monetization capability, building on higher

commission contributions from its B2C e-commerce division
Governments potential tax reinforcement on

merchants of the Taobao Marketplace
Additional user demand driven by mobile commerce
Rural e-commerce could be the long-term growth driver
Development of smart logistics IT system to enhance its

order coordination capability
Cloud computing initiatives could be crucial to its long-term

technological leadership
Future M&As to improve its e-commerce ecosystem
Source: DBS Vickers
Page 5

Alibaba
Thanks to its solid track record, wide product offerings and

established ecosystem (especially in logistics and e-payment),
Alibaba has attracted a large number of e-commerce customers
A dominant e-commerce leader. Operating multiple online
platforms including Taobao Marketplace (), Tmall () to its online platforms. As of Mar 2015, active buyers on
Alibabas platforms had reached 350m (+37% y-o-y),
and Juhuasuan (), Alibaba stands as the largest eaccounting for >90% of online shopper population in China.
commerce player in China. According to market research firm
Combined GMV (gross merchandise value) of Taobao and Tmall
iResearch, Alibaba has >70% market share in Chinas ecommerce sector, thanks to Taobao Marketplaces >90% share reached RMB2.4tn for FY15, up 46%. Over 1bn products and
in the C2C e-commerce market and Tmalls >60% share in the services have been offered on Taobao, Tmall and Juhuasuan,
and sales of these products have turned into >6bn parcels in
B2C e-commerce market. The company also runs online
FY15, equivalent to >40% of the annual parcel delivery in China.
marketplaces in the wholesale / international spaces, namely
Alibaba.com, 1688.com and AliExpress.
GMV of Taobao Marketplace & Tmall
Company overview
B2C e-commerce market share in China (2014)

RMB bn
1,800
Suning.com
3.2%
VIPShop
2.9%
JD.com*
19.7%
Tmall
61.4%
Others
6.4%
GOME
Online
1.7%
Yihaodian
1.4%
Dangdang
1.3%
Amazon
China
1.3%
Jumei
0.7%
* JD.coms market share included e-commerce sales of Tencent, to be
gradually absorbed by JD.com following their strategic cooperation in

Mar 2014.
Note: C2C refers to consumer-to-consumer; B2C refers to
business-to-consumer.
Source: iResearch
Page 6
1,597
1,600
37%
1,400
1,173
1,200
1,000
824
42%
800
71%
847
600
100%
400
200
0
505
253
FY13
FY14
Taobao Marketplace
Note: FY Mar. GMV Gross merchandise value.

Source: Company, DBS Vickers
FY15
Tmall

Alibaba
Long road to success. Founded in 1999, Alibaba launched the

B2B e-commerce platforms, Alibaba.com (global wholesale
marketplace) and 1688.com (China wholesale marketplace)
during the same year. These online platforms leveraged on
Chinas production boom and burgeoning exports at that time,
and laid a solid financial foundation for Alibaba.
company pioneered the Singles Day on 11 Nov 2009, which

later became the most popular annual online promotion in
China.
In 2010, Alibaba moved into mobile commerce and launched

the Mobile Taobao App. Juhuasuan Group Buying Marketplace
and AliExpress (global retail marketplace) were established in
the same year, strengthening Alibabas market position. The
Alibaba expanded into online retailing in 2003, launching
company expanded into logistics smart IT system in 2013 and
Taobao Marketplace which soon became the leading C2C
set up China Smart Logistics (or Cai Niao, ), and it
online marketplace in China. During the next year, Alipay (
launched Tmall Global () in 2014 to compete in cross) was developed to establish mutual trust between online
border e-commerce (). Looking ahead, we believe
buyers and merchants. Monetization of Taobao Marketplace
Alibabas initiatives in e-payment (via Ant Financial), smart
began in 2007, with the implementation of Alimama ()
logistics and cross-border e-commerce could enhance its future
online marketing technology platform. To ride on booming
performance.
demand for quality products and better services, Alibaba
launched Tmall, its B2C online marketplace in 2008. The
Major events of Alibaba
D at e
1999
2000
2003
2004
2005
2007
Ev en t
A libaba was founded; B2B online marketplaces, A libaba.com and A libaba.com.cn (predecessor of 1688.com) were launched
Receiv ed inv estments led by SoftBank Corp. (9984 J P)
Taobao Marketplace was launched
A lipay was launched; A liwangwang ( ) instant messenger was introduced
Yahoo inv ested c.US$1bn and contributed Yahoo China to A libaba, in return for c.40% stake in A libaba
A limama, the online marketing technology platform was launched; monetization of Taobao Marketplace began; A libaba.com
Limited was listed on HKSE (1688 HK)
2008
2009
2010
2011
2012
Tmall was launched

Established A libaba Cloud Computing; initiated the "Singles' Day " annual online promotion
Launched Mobile Taobao A pp, J uhuasuan ( ) Group Buy ing Marketplace, and A liExpress Marketplace
Div ested A lipay from A libaba; Wuliubao ( ) and TA NX (Taobao A d Network & Exchange) were launched
Priv atized A libaba.com Limited from HKSE; repurchased 523m ordinary shares (c.21% stake) of A libaba from Yahoo for US$7.1bn
2013
Launched China Smart Logistics (or Cai Niao); inv ested in Weibo ( ; NA SDA Q:WB) and A utoNav i ( ;
NA SDA Q:A MA P)
2014
Listed on NYSE by issuing c.123m A DS (A merican Depositary Shares), or 5% of the enlarged share capital at US$68ps in Sep 2014;
launched Tmall Global Marketplace; inv ested in Haier Electronics (1169 HK), CITIC 21CN (241 HK), ChinaV ision (1060 HK), Intime
Department Store (1833 HK), Youku Tudou (NYSE:YOKU) and Singapore Post (SGX:SPOST); acquired UCWeb and OneTouch (
); priv atized A utoNav i
2015
Inv ested in digital marketing platform operator A dChina ( ), and smart phone manufacturer Meizu ( ); finished
restructuring with A nt F inancial ( ), the parent of A lipay ; injected pharmacies e-commerce platform to A libaba Health
Info Tech (241 HK)
Note: CITIC 21 CN (241 HK) was renamed to Alibaba Health Info Tech; ChinaVision (1060 HK) was renamed to Alibaba Pictures Group.
Source: Company
Page 7

Alibaba
Benefitting from cross-platform synergies. China retail
marketplaces (i.e. Taobao Marketplace, Tmall and Juhuasuan)
form the core operations of Alibaba, making 78% revenue
contribution in FY15. Particularly, rising synergies have emerged
between the online platforms. For instance, Taobao
Marketplace has been providing user traffic support to Tmall,
especially during the Singles Day online promotions. Besides,
being one of the leading group buying operators in China,
Juhuasuan serves important promotional functions for
merchants on Taobao and Tmall.
Alibabas China retail marketplaces also enjoy decent support
from its B2B e-commerce platforms. For example, c.9m
merchants on Taobao and Tmall could source their products
from >700,000 paying members on 1688.com, the domestic
wholesale marketplace for Alibaba.
Alibabas multiple platforms
* Through contractual arrangements.

** Alibabas 48%-owned affiliate.
Source: Company
Page 8
Operations of Alibabas online marketplaces have been

bolstered by its infrastructure in e-payment, logistics, marketing
services and cloud computing. c.80% of GMV for Alibabas
China retail marketplaces have been settled through Alipay
(under Ant Financial Services Group, a related entity to Alibaba),
and China Smart Logistics has been coordinating the order
flows handled by Alibabas delivery partners (e.g. S.F. Express,
STO Express and YTO Express). In addition, merchants could bid
for online ad slots on Alimama, the companys online marketing
platform. Finally, Alibaba Cloud Computing lays solid
foundation for Alibabas operations, and the company could
utilize its Big data () capability to forecast customer
preferences and logistics order flows.

Alibaba
Dual monetization engines. The mainstreams of Alibabas

China retail revenue are online marketing service income paid
by its merchants, as well as commission income from Tmall and
Juhuasuan. Online marketing service income mainly comprises
P4P (pay-for-performance) marketing fees which merchants bid
for keywords in product search results, and display marketing
fees for the displayed ads on Alibabas websites. Online
marketing service income accounted for c.63% of Alibabas

China retail revenue for FY15, versus c.69% for FY14.
Using Alimama online marketing technology platform,
merchants can bid for ad resources on Alibabas websites, as
well as 3rd-party websites via TANX (Taobao Ad Network &
Exchange). On Alimama, merchants can also obtain useful
feedback regarding effectiveness of their online promotions.
Monetization model for Alibabas China retail marketplaces
Taobao
Marketplace
merchants
Tmall merchants
T ao b ao M ark et p lac e
- P4P marketing fees
- Display marketing fees
- Taobaoke ( ) commissions
- Storefront fees ( )
- P4P marketing fees
- Display marketing fees
O n lin e mark et p lac e

T mall
n.a.
Commissions
P4P marketing fees
Display marketing fees
Taobaoke ( ) commissions
J u h u asu an
- Commissions
- Placement fees ( )
- Commissions
- Placement fees ( )
Note: P4P stands for pay-for-performance. Alibaba.com, 1688.com and AliExpress mainly monetize via online ads and membership fees.
Source: Company
Keyword search results on Taobao Marketplace
Example: When users search for

sportswear flagship store on
Taobao, names of merchants that pay
marketing fees would pop up. In this
case, they include Decathlon and
Xtep.
Page 9

Alibaba
Note: Commission rate Commission income as percentage of GMV.

Source: Company
Page 10
Trend of monetization rates

4%
3%
3.5%
2.8%
3.2%
3.0%
2.6%
2.6%
2.6%
2.5%
2%
1.5%
1.9% 2.0% 1.7%
Mobile monetization rate

PC monetization rate
Note: Monetization rate Revenue as percentage of GMV.

Management expects mobile monetization rate to trend up.
4QFY15
3QFY15
1.1% 1.0%
2QFY15
0%
0.6% 0.6%
1QFY15
1%
4QFY14
Co mmissio n rat e
5%
5%
5%
5%
4%
5%
2%
0.5%
3%
2%
5%
2%
3%
2%
2%
0.5%
2%
3QFY14
Cat eg o ry
A pparels & footw ear
Sportsw ear & accessories
Baggage
J ew elleries & w atches
Cosmetics
F urniture & household products
Books & musical instruments
Catering, entertainment & serv ices
A utomobile
A uto parts & accessories
Milk pow der & baby products
Toy s
F ood
Healthcare products
3C & digital products
Home appliances
Top-up of mobile & online games
Trav el & ticketing
2QFY14
Tmalls commission rates
Alibabas monetization rate has been largely stable over the

past year. Particularly, P4P marketing fees on PCs have come
under some pressure, as ad pricing has been dragged by
inclusion of more long-tail keywords (i.e. keywords that are less
frequently used, and being offered at lower prices). This is
partially offset by rising commission income contribution from
Tmall and Juhuasuan, as well as better mobile monetization
rate thanks to the launch of more mobile ads and improving
search ranking algorithm.
1QFY14
Riding on the B2C e-commerce model, Tmall and Juhuasuan

have generated commission incomes from their merchants. We
believe average commission rate is c.2.5% of GMV, which is
quite competitive versus offline retailers. Commission income
contributed to 36% of Alibabas China retail revenue in FY15
(vs. 28% for FY14), and we expect it to register a 56% CAGR
for FY15-FY17F to reach c.RMB51bn.

Alibaba
GMV per active buyer (mobile vs PC)

RMB
2,500
2,000
2,356
2,290
1,851
1,686
1,796 1,811
1,500
1,000
1,050
Mobile
2QFY15
Overall
20%
12%
15%
Note: Based on quarterly GMV. Alibaba started to report mobile GMV

figures in 2QFY14.
9%
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
2QFY14
Source: Company
1QFY14
0%
875
1QFY15
27%
27%
18%
36%
4QFY14
33%
36%
724
917
500
0
42%
45%
602
768
3QFY14
51%
54%
1,234
2QFY14
Mobile GMV contribution
1,714
4QFY15
Aided by swift development of its mobile platforms, mobile

GMV made 51% contribution to Alibaba in 4QFY15, and
mobile revenue surged 352% y-o-y to reach RMB5.2bn for the
quarter. According to interviews with Mr. Jianfeng Zhang,
Head of China commerce retail platforms, mobile orders on
Taobao have surpassed PCs in Apr 2015, and mobile orders
could likely reach c.70% of total orders by the end of this year.
Hence, we expect Alibaba to become a mobile-driven player in
the near future.
Mobile customers tend to buy small ticket items compared to

their counterparts on PCs, as it is more difficult to study
product details on the mobile devices. Alibabas mobile GMV
per active buyer was RMB1,050 in 4QFY15 (on a quarterly
basis), 39% lower than overall GMV per active buyer. That
being said, mobile GMV per active buyer had posted 45% y-oy growth aided by wider product offerings on mobile (vs.
overall: +2%), and we expect mobile consumption to further
improve thanks to better mobile shopping experiences.
3QFY15
Rising mobile presence. Mobile commerce has registered

burgeoning growth thanks to its convenience and O2O (onlineto-offline) advantage. Alibaba has been a pioneer in mobile
commerce, launching its Mobile Taobao App in 2010. The
company achieved a dominant mobile commerce market share
of 86% last year, and its active mobile users had reached
289m in Mar15 (+77% y-o-y).
Note: Mobile GMV as percentage of Alibabas China retail GMV.

Source: Company
Page 11

Alibaba
Logistics efforts to enhance customer experience. Online
shoppers focus on the accuracy and timeliness of product
deliveries, and logistics has become one of the key sections of
the e-commerce ecosystem. As such, Alibaba launched China
Smart Logistics (or Cai Niao, ), a 48%-held affiliate in
2013 to develop a smart logistics IT system. Building on this
system, Alibaba is able to share customer transaction data on
its platforms with delivery partners including S.F. Express (
), STO Express () and YTO Express (), etc.
In this way, Alibaba could coordinate its delivery partners to
utilize their logistics capabilities efficiently. Besides, Alibabas
merchants could select delivery companies on the Wuliubao (
) system to place their shipment orders, and online
shoppers are able to track real-time updates of the packages.
Alibabas package tracking function on mobile app
Source: Company
Alibaba invested in Haier Electronics (1169 HK) in Dec 2013, to

ride on Haiers extensive downstream network and logistics
capability in large-sized items such as home appliances and
furniture. Following the strategic partnership, Haier Logistics
has become the preferred logistics service provider for largesized items on Tmall, and Haier delivered >4m orders for Tmall
last year. Tmall has teamed up with Haier to promote largesized items delivery during its online marketing events in 1Q15,
and we believe Haier could record >100% order growth from
Alibaba for the full year of 2015.
Alibabas logistics model
Source: Company
Page 12

Alibaba
Riding on Alipays e-payment strength. Online payment is one

of the most important functions within the e-commerce value
chain, given its direct connections with cash flows and customer
transactions. Ant Financial Services Group ()
provides internet finance services to SMEs and consumers, and
is a related entity of Alibaba. According to the contractual
agreements, Alibaba could earn c.37.5% of Ant Financials net
profit. Besides, if Ant Financial gets listed in the future, Alibaba
could receive a one-off payment equal to 37.5% of its equity
value (note: the payment is subject to certain conditions, such
as Alibabas stake in Ant Financial at the time of IPO must be
less than 33%).
Using Alibabas Big data system and cloud computing

capability, Ant Financial has developed a comprehensive credit
system for both online shoppers and merchants, and it could
launch consumer financing / supplier financing products
targeting these individuals / SMEs. So far, Ant Financial has
launched products like Yue Bao () online funds, Zhao Cai
Bao () online loan platform, Ant Micro Loan ()
and Sesame Credit () individual credit system.
According to market sources, Ant Financial could be aiming to

sell c.10% stake for RMB20-25bn in 1H15, valuing the entire
company at RMB200-250bn (or US$35-40bn). Ant Financials
revenue could likely amount to c.RMB10.2bn in 2014 (+92%),
Ant Financials main operation is Alipay (), the leading
and core net margin could reach c.26%. Ant Financial is likely
online payment tool in China. According to market sources, the to aim for an IPO in Mainland China as early as 2017, and
number of Alipay users has exceeded 300m, and users of Alipay Alibaba could be entitled to a one-off payment equal to 37.5%
Wallet (, the mobile payment tool) could reach
of Ant Financials equity value by then.
c.200m. iResearch estimates that online payment transaction
value could amount to c.RMB8.1tn last year (+50%), and Alipay Alibaba has expanded into internet banking by setting up the
Zhejiang Internet Commerce Bank (). Being an
acquired half of the market share. In the mobile payment
associate of Alibaba (30% stake), the banks other strategic
segment, Alipay Wallets market share could reach c.80%.
investors include Fosun Group (, 25% stake),
Wanxiang Group (, 18% stake) and Intime Group
Online payment market share (2014)
(16% stake). The bank has received the approval from China
Banking Regulatory Commission (CBRC) in Sep 2014, and is
China
expected to launch its operations as early as June 2015. Riding
UnionPay
on Alibabas comprehensive transaction data of c.350m online
Merchant
buyers and c.9m online merchants, we believe the bank stands
Tenpay *
Services
20%
()
to be a competitive provider of consumer financing / SME
11%
financing services in China.
99Bill (
)
7%
Alipay
ChinaPnR
50%
()
Others
5%
8%
* Tenpay includes Tencent's other payment solutions such as

Weixin Payment and Mobile QQ Wallet.
Source: iResearch
Page 13

Alibaba
Solid management track record. Alibabas senior management
has sound experience in Chinas e-commerce market, and many
of its directors and partners, such as Executive Chairman Mr.
Jack Ma and Vice Executive Chairman Mr. Joseph Tsai, have
been with the company since its founding in 1999. Its new CEO,
Mr. Daniel Zhang, has been with Alibaba for 8 years and has
taken up positions like COO, President of Tmall and CFO of
Taobao. Currently, management including Mr. Ma and Mr. Tsai
has a combined c.14% stake in Alibaba, and they have
established relationship with major shareholders including
SoftBank (32% stake) and Yahoo (15% stake). In addition,
management is able to ensure good control of the company via
the Alibaba Partnership scheme.
Shareholding structure of Alibaba
Sh areh o ld er
O rd in ary sh are
n u mb er ( m)
SoftBank
798
Yahoo
384
J ack Yun MA
193
J oseph C. TSA I
79
Silv er Lake
55
CIC
52
Yunfeng Capital ( )
28
CITIC Capital
21
Boy u Capital ( )
11
China Dev elopment Bank
5.5
A sia A lternativ e Management
1.6
Temasek
1.3
Certain current employ ees as a group
67
Others
795
2,487
St ak e
32.1%
15.4%
7.8%
3.2%
2.2%
2.1%
1.1%
0.8%
0.5%
0.2%
0.1%
0.1%
2.7%
31.8%
100%
Note: Mr. Jack Ma has an indirect 40% interest in the general partners
of Yunfeng Capital.
Source: Company
Page 14
Alibaba has been operating under the partnership scheme since

2010, with advantages including better cooperation within
senior management and less influence from bureaucracy and
hierarchy. Currently, The Alibaba Partnership has 30 members
comprising 23 members from Alibabas management, six
members from Ant Financials management, and one member
from China Smart Logistics management. Partner candidates
are nominated annually, and they need to obtain the approval
of at least 75% of all the partners.
According to the prospectus, the Alibaba Partnership has the
exclusive right to elect the majority of Alibabas board of
directors. Currently there are four directors nominated by the
Alibaba Partnership, namely Mr. Jack Ma, Mr. Joseph Tsai, Mr.
Jonathan Lu and Mr. Daniel Zhang, and the Alibaba Partnership
could nominate two more directors at its discretion (please refer
to P.37 of the report for the details of Alibabas partners).

Alibaba
Growth prospects
Large upside for e-commerce in China. Thanks to its
Breakdown of China e-commerce market
convenience, transparency, wide product offerings and price
advantage, Chinese consumers have increasingly embraced e100%
commerce in recent years. According to the National Bureau of
90%
Statistics, online sales reached RMB2,790bn in 2014, and online
80%
sales accounted for 10.7% of retail sales in China (2013: 7.7%).
44% 40% 38%
54% 49%
70%
60%
Building on the rising affluence of e-commerce customers in
65%
60% 75%
China as well as burgeoning rural e-commerce growth,
50%
iResearch expects online sales to register a 27% CAGR for
40%
2014-2018F to reach RMB7,300bn. Hence, we expect bright
30%
medium-term outlook for leaders like Alibaba.
56% 60% 62%
B2C
2018F
2017F
2016F
2015F
2014
2013
2012
2011
6,295
E-commerce market size (LHS)

Growth y-o-y (RHS)
Source: iResearch, National Bureau of Statistics
B2C e-commerce drives growth. B2C e-commerce made 46%

contribution to overall online sales in China last year. We expect
B2C e-commerce to outpace C2C e-commerce, leveraging on
its advantages such as better product quality, higher service
standards, stronger online merchants, as well as less taxation
problems compared to C2C players. More importantly, online
platform operators like Alibaba could generate commission
income on B2C marketplaces (vs. pure online ad income for the
C2C model), helping to improve their monetization capability.
2018F
2017F
2016F
2014
2015F
7,300 80%
70%
57%
51%
60%
50% 42% 5,160
50%
3,955 30%
40%
2,790
22%
30%
1,864
16%
20%
1,187
785
10%
0%
70%
2013
RMB bn
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
25%
2011
E-commerce market size in China
46% 51%
35% 40%
2012
20%
10%
0%
C2C
Note: B2C refers to business-to-consumer; C2C refers to

consumer-to-consumer.
Source: iResearch
Average online spending to drive future growth. Data from

CNNIC and iResearch show that the number of online shoppers
in China reached 361m last year, and average online spending
by these shoppers was RMB7,728. According to Alibaba, firstyear online shoppers on its platforms spend an average of
c.RMB1,000 per annum, while 5th-year shoppers on average
spend c.RMB15,000 each year. By the 10th year, online shoppers
on average spend as much as c.RMB30,000 annually. Hence,
online shoppers would over time increase their spending
significantly.
According to iResearch, B2C e-commerce could take up 62%

share of overall e-commerce by 2018F, implying a 37% CAGR
for 2014-2018F. We believe Alibaba would promote B2C online
marketplaces like Tmall and Juhuasuan, and they could ride on
user traffic support from Taobao as well as online promotions
including the Singles Day on Nov 11th. Based on our
estimates, Tmalls GMV could sustain 58% CAGR for FY15FY17F, and its contribution to Alibabas China retail GMV could
reach 48% (FY15: 35%).
Page 15

Alibaba
E-commerce spending per online shopper in China

RMB
%
41%
24,000
45%
20,000
CAGR = 16%
16,000
26%
8,000
2,872
4,045 4,905
6,173
36%
27%
21%
12,000
4,000
19,304
25%
7,728
18%
9%
Category expansion offers greater opportunities. Currently,

major product categories for Alibabas China retail marketplaces
include apparel, accessories, electronics and digital products,
home furnishings, pre-paid phone cards and game cards.
Alibaba aims to expand to under-penetrated categories such as
food and beverage, health goods, medical services, automobile
and entertainment. According to iResearch, online penetration
for home appliances, furniture and baby products have
remained relatively low, implying good growth potential for
Alibaba.
Online penetration by product category in China (2014)
Spending per capita (LHS)
2020F
2014
2013
2012
2011
2010
0%
3C products
50%
Growth y-o-y (RHS)

Beauty
28%
Source: iResearch, CNNIC, Aliresearch, DBS Vickers

Apparel
Based on iResearch data, c.200m customers have started to

shop online since 2011, accounting for c.55% of total online
shopper population in China. Our analysis shows that by now,
online shoppers in China have an average c.3.7 years of online
shopping experience. As these shoppers become more mature
and affluent over time, their online spending per capita could
continue to sustain robust growth. Aliresearch expects online
spending per capita to sustain c.16% CAGR over 2014-2020F,
helping to drive future growth of e-commerce in China.
Study on new online shoppers in China
Y ear
2008 & before

2009
2010
2011
2012
2013
2014
A v erag e
N u mb er o f n ew
O n lin e s h o p p in g
o n lin e s h o p p ers ex p erien c e b y n o w
( n o . o f y ears )
74
7.5
34
5.5
53
4.5
33
3.5
48
2.5
c.200m
60
1.5
59
0.5
3.7
Source: iResearch, DBS Vickers
Page 16
Home appliance
Furniture
Baby & maternity
25%
10%
8%
6%
Note: Online penetration Online sales as percentage of total retail

sales. 3C stands for computer, communication and consumer
electronics.
Source: iResearch

Alibaba
Rural e-commerce to take off. Despite the decent growth in

Chinas e-commerce sector, online players have mainly
penetrated the urban markets thus far, with limited exposure to
the rural markets, given less-developed infrastructure and lower
user awareness there. According to Aliresearch, >35% of the
urban population in China purchased goods online last year,
while only c.10% of the rural population did so.
Based on our estimates, rural customers on average spent
c.RMB2,600 on e-commerce last year, or merely c.30% of the
amount spent by their urban counterparts. Given improving
infrastructure in the rural areas especially in logistics and wifi
facilities, as well as the rising affluence of rural customers, we
believe the spending gap could narrow over time. Aliresearch
expects that rural e-commerce sales could register a c.60%
CAGR for 2014-2016F to reach RMB460bn, accounting for
c.9% of total online sales in China by then (2014: c.6%).
Large potential in rural e-commerce, given low spending
per capita
2014
O nline shopper populat ion:
m
Urban
Population
293
Rural
69
T ot al
361
Spending per online shopper:

RMB
Urban
Spending
8,922
Rural
2,628
A v erage
7,728
Greater synergies to emerge from the ecosystem. Thanks to its

focus on the e-commerce value chain, Alibaba is well-equipped
in key sections of the ecosystem, including online platforms, epayment (via Ant Financial) and logistics. Besides, it has
developed sound monetization capability in online ads and
commission income. In this way, closed loops () have been
formed within Alibabas e-commerce ecosystem, powered by
the companys cloud computing infrastructure and locationbased services (LBS).
In addition, Alibaba has made strategic investments in key
players to further improve the ecosystem: investments in Haier
Electronics and Singapore Post could enhance its logistics
presence; acquisition of Alibaba Health Info Tech could help the
company expand into the healthcare segment; investments in
Weibo, Youku Tudou, Alibaba Pictures and Guangzhou
Evergrande Football Club could improve its entertainment
exposure; investments in UCWeb and Meizu could facilitate
Alibabas mobile expansion; and investments in AutoNavi as
well as Intime could accelerate its O2O development.
We believe these segments (i.e. logistics, sales category
expansion, entertainment, mobile internet and O2O) could
continue to be Alibabas M&A focus, and synergies arising from
this comprehensive e-commerce ecosystem could drive longterm growth of the company.
K ey assumpt ions:
1) Rural e-commerce sales made c.6% contribution
2) c.10% of rural population shops online
Source: CEIC, CNNIC, iResearch, Aliresearch, DBS Vickers
Page 17

Alibaba
Alibabas ecosystem
Source: iResearch, companies, DBS Vickers
Page 18
Company Focus
Alibaba
Cloud computing and mobile system development to lift

business outlook. Alibaba established the cloud computing unit
in 2009, to handle burgeoning data demand arising from
development of its e-commerce platforms. Alibaba Cloud
Computing offers a wide spectrum of cloud services, including
elastic computing (), data storage and database
services. The number of cloud customers has exceeded 1.4m,
including Alibaba, Ant Financial, players in Alibabas ecommerce ecosystem, and 3rd-party companies that require
cloud computing services. Riding on the reliability and
scalability of cloud computing services, Alibaba was able to
process 254m orders during the Singles Day online

promotion on 11 Nov 2013.
With the aim of developing the mobile ecosystem, Alibaba has
leveraged on its cloud computing capability to launch YunOS, a
smart operating system for smart phones, set-top boxes and
smart TVs. User data on YunOS can be stored at Alibabas
servers, enabling users to update data on a real-time basis. We
believe Alibaba wishes to ride on YunOS to penetrate the
mobile commerce market, and its strategic cooperation with
Meizu () could ensure seamless integration between smart
hardware and cloud systems down the road.
Cloud computing services offered by Alibaba

Cu s t o mer c at eg o ry
Mobile app dev elopers
D es c rip t io n
Users include leading mobile camera apps, photo and v ideo sharing apps and
real-time new s sharing platforms
Mainly utilizes elastic computing serv ers (ECS) to host mobile applications and
content deliv ery netw ork (CDN) serv ices for mass content sharing
Internet gaming & online platforms
Users include Internet game dev elopers, blogging site operators

Mainly utilizes ECS to host gaming platforms, softw are load balancers (SLB) to
optimize throughput w hile av oiding sy stem ov erload, and CDN serv ices to
accelerate processing speed of media deliv ery
E-commerce & Internet finance
A libaba prov ides a back-end hosting sy stem for sellers on our China retail
marketplaces utilizing features including ECS and relational database serv ices
(RDS)
Our SME loan business utilizes open data processing serv ices (ODPS) to perform
credit assessment and risk management of small and micro loan borrowers using
transaction data on our retail marketplaces
Sy stem integrators
Users include local gov ernments, softw are integrators and digital entertainment
platforms
Sy stem integrators utilize ECS, data storage and data processing serv ices for a
range of needs including sy stem stability enhancement and sy stem architecture
streamlining
Source: Company
Page 19

Alibaba
Valuation & recommendation
FY15 results review. Alibaba reported RMB76.2bn of revenue
for FY15 (+45%), as its core China retail commerce operations
achieved 39% revenue growth. Such strong topline growth was
partially offset by higher operating expenses in product
development and marketing (especially for UCWeb and
AutoNavi acquired last year). Excluding one-off items such as
share-based compensation, amortization and impairment
expenses, as well as revaluation of investments, non-GAAP core
profit reached RMB34.7bn (+28%).
Particularly, Alibaba registered RMB17.4bn of revenue for
4QFY15 (+45% y-o-y), on 39% growth of China retail
commerce revenue. GMV on China retail marketplaces

amounted to RMB600bn (+40%) for the quarter, aided by 62%
GMV growth for Tmall. Mobile GMV surged 158% to
RMB304bn, already accounting for 51% of total GMV (4QFY14:
27%). Overall monetization rate remained stable at 2.17%,
with mobile monetization rate improving to 1.73% (4QFY14:
0.98%). PC monetization rate was 2.63%, as rising commission
revenue from Tmall offset the weakness in P4P marketing
service income. Despite the high base, non-GAAP core profit
reached RMB7.8bn for 4QFY15 (+20%), above expectations.
FY15 results review

F Y M ar (RM B m)
1Q F Y 15 2Q F Y 15 3Q F Y 15 4QF Y 15
China commerce
FY15
Remark
13,348
13,559
22,135
13,895
62,937 Operations of China retail marketplaces (Taobao Marketplace, Tmall
1,469
1,617
1,763
1,637
6,486
Operations of global retail marketplace (AliExpress), and global

wholesale marketplace (Alibaba.com)
236
285
362
388
1,271
718
1,368
1,919
1,505
5,510
Mainly included serv ices such as elastic computing, database

serv ices, data storage, large-scale computing serv ices, web-hosting
and domain name registration
Mainly included micro-finance serv ices
and J uhuasuan), and China wholesale marketplace (1688.com)
International commerce
Cloud computing & Internet
infrastructure
Others
Rev enue
Cost of rev enue
15,771 16,829 26,179 17,425 76,204

(4,585) (5,596) (7,520) (6,133) (23,834)
Gross prof it
Product dev elopment
expenses
Sales & marketing expenses
General & admin expenses
Amortization of intangible
assets
Impairment of goodwill &
intangible assets
Interest & inv estment
income, net
Interest expenses
Other income, net
11,186 11,233 18,659 11,292 52,370

(1,952) (2,581) (3,083) (3,042) (10,658)
Share of results of equity

inv estees
Prof it bef ore t ax
Income tax expenses
Noncontrolling interests
Accretion of conv ertible
preference shares
Div idends accrued on
conv ertible preference shares
Net prof it
One-off items
Core prof it (non- G A A P)
Page 20
(1,212)
(944)
(234)
(1,749)
(1,960)
(598)
6,828
468
(410)
711
(3,021)
(2,419)
(614)
(8,513)
(7,800)
(2,089)
(175)
313
1,846
9,455
(521)
378
(1,344)
901
(475)
496
(90)
(301)
(805)
(394)
13,883
(1,445)
(34)
(8)
4,369
(1,339)
(2)
(7)
8,412
(2,429)
(47)
-
(52)
(45)
12,344
(5,181)
2,976
3,726
7,163
(175)
(2,531)
(2,477)
(643)
5,936
7,132
6,702 13,068
(2,750)
2,486 Mainly included roy alty fees and software technology serv ice fees
from Ant F inancial, as well as gov ernment grants
(1,590)
4,072 30,736
(1,203) (6,416)
24
(59)
(15)
-
Mainly included pay ment processing fees, traffic acquisition costs,

bandwidth and co-location fees, depreciation and maintenance
expenses
Conv ertible preference shares issued to the partners
(97)
2,893 24,149
4,872 10,549 Included share-based compensation, depreciation and amortization
expenses, impairment costs, rev aluation of inv estments and equity settled donation expenses
7,765 34,698

Alibaba
FY15 results review (continued)

G ro w t h ( y - o - y ) :
- China commerce
- International commerce
- Cloud computing &
Internet infrastructure
- Others
Rev enue
Profit before tax
Net profit
Core profit (non-GA A P)
M arg in s:
Gross margin
Profit before tax margin
Net margin
Core net margin (non-GA A P)
1Q F Y 15 2Q F Y 15 3QF Y 15 4Q F Y 15
45%
47%
32%
39%
32%
38%
39%
27%
36%
50%
85%
82%
FY15
39%
34%
64%
144%
46%
176%
182%
61%
269%
54%
-22%
-39%
16%
266%
40%
-8%
-28%
27%
169%
45%
-41%
-48%
20%
215%
45%
16%
5%
28%
71%
88%
78%
45%
67%
26%
18%
40%
71%
32%
23%
50%
65%
23%
17%
45%
69%
40%
32%
46%
SOTP valuation to account for values in multiple segments.

SOTP valuation for Alibaba
Since its IPO on the New York Stock Exchange in Sep 2014,
shares of Alibaba have traded at 26-44x 12-month rolling core
12-month rolling core EPS (non-GAAP)
PE (based on non-GAAP core profit that mainly excludes shareTarget PE
based compensation, amortization and impairment expenses, as RMB/USD
well as revaluation of investments). Alibaba is currently trading
T arget Pric e (e- c ommerc e business)
at c.27x 12-month rolling core PE, or 0.8x core PEG. Given its ecommerce leadership, rising B2C exposure that helps to lift its
Net cash per share
monetization capability, swift transition to mobile commerce,
Present v alue per share for Ant F inancial
and e-payment support from Ant Financial, we believe it is fair
T arget Pric e
to value Alibabas e-commerce operations at 1x core PEG (or
32x core PE). Such PEG valuation is also in line with our target
A ssumpt ions:
multiples for Tencent, another internet leader in China.
Ant F inancial's IPO time
As a cross-check, global internet leaders including Google,
Facebook and eBay on average trade at c.1.5x PEG, given their
diverse exposure and technological advantages. Hence, we
believe Alibabas target multiple of 1x core PEG is reasonable.
In addition, Alibabas net cash on hand is expected to exceed
RMB71bn by the end of FY16, or c.US$5 per share. Should Ant
Financial be listed, Alibaba could receive a one-off payment
equal to 37.5% of Ant Financials equity value. According to
market sources, Ant Financial could be valued at US$35-40bn in
its recent fundraising, and we believe its IPO (possibly in 2017)
could imply present value of c.US$5 per share for Alibaba.
Market cap of Ant F inancial at IPO

Alibaba's share of Ant F inancial
Discount rate
20.1
32x
0.17
US$106
US$5
US$5
US$116
2017
c.US$35bn
37.5%
3%
Source: DBS Vickers
Key risks and concerns. In our view, Alibaba could see downside
risk from short-term volatility in monetization rates, sales of
counterfeit products that could affect consumer confidence,
delays in product deliveries especially during the peak seasons,
and potential taxation issues for Taobao merchants.
All-in-all, our sum-of-the-parts (SOTP) valuation has derived a

TP of US$116 for Alibaba, offering 34% upside to its share
price. We initiate coverage with a BUY.
Page 21

Alibaba
Core PE band chart
PB band chart
Share Price (US$)

140
90
26x
80
Source: Thomson Reuters, DBS Vickers
Page 22
Apr-15
Mar-15
Feb-15
Jan-15
Dec-14
60
Nov-14
60
Oct-14
70
Sep-14
70
8.3x
7.2x
Source: Thomson Reuters, DBS Vickers
Apr-15
80
30x
Mar-15
90
9.4x
100
Feb-15
35x
100
10.6x
110
Jan-15
110
11.7x
120
Dec-14
39x
120
130
Nov-14
130
Oct-14
44x
140
Sep-14
Share Price (US$)

150

Alibaba
Peers valuation
Company Name
HK /China- list ed peers
Tencent Holdings*^
HC International
Cogobuy Group
Boy aa Interactiv e Intl.
F orgame Holdings
Netdragon Websoft
IGG
Kingsoft
Haier Electronics*
Gome*
A v erage
Currenc y
Code
Pric e
L oc al$
Mkt
Cap F isc al
US$m
Yr
PE
15F
x
PE
16F
x
PEG
15F
x
PEG
16F
x
P/Sales
15F
x
P/Sales
16F
x
RO E
15F
%
RO E
16F
%
31.5
26.2
42.0
22.8
6.9
6.5
32.9
19.7
21.8
8.2
20.8
700 HK
2280 HK
400 HK
434 HK
484 HK
777 HK
8002 HK
3888 HK
1169 HK
493 HK
HKD
HKD
HKD
HKD
HKD
HKD
HKD
HKD
HKD
HKD
158.6 191,797
11.92
1,027
10.9
1,896
7.99
787
17.8
292
27.75
1,770
6.2
1,113
28.9
4,460
22.75
8,198
2.3
5,032
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
35.3
22.0
37.3
13.1
28.3
46.0
14.5
35.5
15.0
23.0
22.3
27.5
15.6
26.4
11.0
13.8
32.8
12.1
21.6
12.7
20.9
17.0
0.9
0.4
n.a.
0.9
n.a.
1.2
1.1
n.a.
0.8
3.8
1.1
0.8
0.4
0.6
0.6
0.1
0.8
0.6
0.3
0.7
2.1
0.8
12.0
4.8
1.2
4.3
2.1
9.9
4.2
5.4
0.7
0.5
3.1
9.6
3.8
1.0
3.4
1.7
7.9
3.5
3.5
0.6
0.4
2.5
31.8
24.6
46.5
22.6
3.2
4.5
34.6
13.9
22.7
7.8
20.5
US- list ed peers

Alibaba*#^
J D.Com*^
Baidu
V IPShop
Dangdang
J umei Int'l
Qihoo 360
A v erage
BABA US
J D US
BIDU US
V IPS US
DANG US
J MEI US
QIHU US
USD
USD
USD
USD
USD
USD
USD
86.72 215,700
34.46 47,620
190.84 66,908
27.32 15,646
9.37
756
26.21
3,793
58.76
7,577
Mar
Dec
Dec
Dec
Dec
Dec
Dec
28.9
799.9
27.8
51.0
49.1
55.9
17.1
38.3
22.1
144.5
20.4
32.3
18.1
31.0
12.4
22.7
0.9
n.a.
0.7
0.4
n.a.
n.a.
0.2
0.5
0.7
0.3
0.6
0.6
0.1
0.4
0.3
0.4
13.0
1.7
6.1
2.4
0.5
3.8
3.9
4.5
10.1
1.1
4.6
1.6
0.4
2.9
2.9
3.4
16.3
17.9
n.a.
n.a.
25.6
27.5
51.5
47.7
10.7
32.2
13.1
18.7
34.1
33.3
25.2 29.5
G lobal play ers

Amazon.Com
EBay
F acebook
Google 'A'
A v erage
AMZN US
EBAY US
F B US
GOOGL US
USD
USD
USD
USD
432.85 201,570
58.34 70,873
78.01 219,331
545.78 374,764
Dec 1169.9
Dec
18.7
Dec
39.1
Dec
19.3
25.7
169.0
17.1
29.6
16.7
21.1
n.a.
1.6
n.a.
1.3
1.5
0.3
1.4
0.9
1.1
1.1
2.0
3.8
12.9
5.0
5.9
1.7
3.4
9.7
4.4
4.8
12.7
15.9
23.6
16.0
17.0
17.9
15.5
29.7
15.8
19.7
Note: We exclude JD.com and Amazon in calculating average PE / PEG ratios, as they mainly operate the direct sales model with low earnings
# FY15: FY16; FY16: FY17
^ Core EPS
Source: Thomson Reuters, *DBS Vickers
Page 23

Alibaba
Key Assumptions
FY Mar
2012A
2013A
2014A
2015A
2016F
2017F
Mobile GMV (RMB bn)
N/A
79.5
318.5
994.0
1,837.2
2,772.3
PC GMV (RMB bn)
N/A
997.5
1,359.5
1,450.0
1,536.9
1,619.8
32.7
1,077.0
1,678.0
2,444.0
3,374.1
4,392.1
Mobile active buyers (m)
N/A
N/A
163.0
289.0
389.5
470.8
Annual active buyers (m)
N/A
N/A
255.0
350.0
421.7
482.2
GMV (RMB bn)
Segmental Breakdown (RMB m)

FY Mar
Revenues (RMB m)
China commerce
International commerce
Cloud computing &
Internet infrastructure
Others
Total
Page 24
2013A
2014A
2015A
2016F
2017F
29,167
4,160
45,132
4,851
62,937
6,486
86,781
7,930
113,623
9,545
650
773
1,271
1,652
1,983
540
34,517
1,748
52,504
5,510
76,204
6,612
102,976
7,934
133,086

Alibaba
Margins Trend
Income Statement (RMB m)

FY Mar
Revenue
Cost of Goods Sold
Gross Profit
Other Opng (Exp)/Inc
Operating Profit
Other Non Opg (Exp)/Inc
Associates & JV Inc
Net Interest (Exp)/Inc
Dividend Income
Exceptional Gain/(Loss)
Pre-tax Profit
Tax
Minority Interest
Preference Dividend
Net Profit
Core Profit (non-GAAP)
EBITDA
2012A
20,025
(6,554)
13,471
(6,669)
6,802
327
(25)
190
0
2013A
34,517
(9,719)
24,798
(8,955)
15,843
894
(6)
(1,533)
0
2014A
52,504
(13,369)
39,135
(10,247)
28,888
2,429
(203)
(547)
0
2015A
76,204
(23,834)
52,370
(18,686)
33,684
2,486
(1,590)
6,705
0
2016F
102,976
(32,207)
70,769
(19,301)
51,468
2,983
(795)
(125)
0
2017F
133,086
(41,492)
91,594
(25,572)
66,022
3,580
398
234
0
(1,787)
5,507
(842)
(437)
0
4,228
6,015
7,974
(5,092)
10,106
(1,457)
(117)
(128)
8,404
13,496
17,666
(3,968)
26,599
(3,196)
(88)
(239)
23,076
27,044
32,768
(10,549)
30,736
(6,416)
(59)
(112)
24,149
34,698
36,121
(20,586)
32,945
(7,042)
(63)
0
25,840
46,426
56,261
(26,776)
43,457
(9,506)
(82)
0
33,869
60,645
73,606
N/A
N/A
N/A
N/A
72.4
121.5
132.9
98.8
52.1
85.5
82.3
174.6
45.1
10.2
16.6
4.6
35.1
55.8
52.8
7.0
29.2
30.8
28.3
31.1
67.3
34.0
21.1
26.9
17.9
31.4
0.0
NM
71.8
45.9
24.3
53.4
15.1
33.1
0.0
10.3
74.5
55.0
44.0
157.4
26.3
39.2
0.0
52.8
68.7
44.2
31.7
27.6
13.2
17.6
0.0
NM
68.7
50.0
25.1
16.3
9.3
17.0
0.0
412.4
68.8
49.6
25.4
17.9
10.3
18.2
0.0
NM
Growth
Revenue Gth (%)
EBITDA Gth (%)
Opg Profit Gth (%)
Net Profit Gth (%)
Margins & Ratio
Gross Margin (%)
Opg Profit Margin (%)
Net Profit Margin (%)
ROAE (%)
ROA (%)
ROCE (%)
Div Payout Ratio (%)
Net Interest Cover (x)
58.0%
53.0%
48.0%
43.0%
38.0%
33.0%
28.0%
23.0%
2013A
2014A
Operating Margin %
2015A
2016F
2017F
Net Income Margin %
Page 25

Alibaba
Margins Trend
Interim Income Statement (RMB m)

FY Mar
1H2014
2H2014
1H2015
2H2015
Revenue
Cost of Goods Sold
Gross Profit
Other Oper. (Exp)/Inc
Operating Profit
Associates & JV Inc
21,728
(5,728)
16,000
(4,361)
11,639
630
(14)
30,776
(7,641)
23,135
(5,886)
17,249
1,799
(189)
32,600
(10,181)
22,419
(12,685)
9,734
1,089
(391)
43,604
(13,653)
29,951
(6,001)
23,950
1,397
(1,199)

Pre-tax Profit
Tax
Minority Interest
Net Profit
(671)
(971)
10,613
(1,228)
2
9,267
10,238
124
(2,997)
15,986
(1,968)
(90)
13,809
16,806
6,365
1,455
18,252
(2,784)
(36)
15,320
13,865
340
(12,004)
12,484
(3,632)
(23)
8,829
20,833
N/A
N/A
N/A
N/A
N/A
N/A
50.0
(16.4)
65.3
41.7
38.8
(36.1)
73.6
53.6
42.7
75.2
56.0
44.9
68.8
29.9
47.0
68.7
54.9
20.2
70%
60%
Growth
Revenue Gth (%)
Opg Profit Gth (%)
Net Profit Gth (%)
Margins
Gross Margin (%)
Page 26
50%
40%
30%
20%
10%
Net Income Margin %
2H15
Operating Margin %
1H15
2H14
1H14
0%

Alibaba
Margins Trend
Quarterly Income Statement (RMB m)

FY Mar
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
4Q2015
Revenue
Cost of Goods Sold
Gross Profit
Other Oper. (Exp)/Inc
Operating Profit
Associates & JV Inc
18,745
(4,171)
14,574
(3,727)
10,847
548
(160)
12,031
(3,470)
8,561
(2,159)
6,402
1,251
(29)
15,771
(4,585)
11,186
(9,523)
1,663
711
(90)
16,829
(5,596)
11,233
(3,162)
8,071
378
(301)
26,179
(7,520)
18,659
(2,180)
16,479
901
(805)
17,425
(6,133)
11,292
(3,821)
7,471
496
(394)

Pre-tax Profit
Tax
Minority Interest
Net Profit
(91)
(2,046)
9,098
(741)
(31)
8,266
10,312
215
(951)
6,888
(1,227)
(59)
5,543
6,494
6,418
5,181
13,883
(1,445)
(34)
12,344
7,163
(53)
(3,726)
4,369
(1,339)
(2)
2,976
6,702
(1,031)
(7,132)
8,412
(2,429)
(47)
5,936
13,068
1,371
(4,872)
4,072
(1,203)
24
2,893
7,765
N/A
N/A
N/A
N/A
N/A
N/A
46.3
(69.7)
181.6
53.7
31.4
(39.1)
39.7
51.9
(28.2)
44.8
16.7
(47.8)
77.7
57.9
44.1
71.2
53.2
46.1
70.9
10.5
78.3
66.7
48.0
17.7
71.3
62.9
22.7
64.8
42.9
16.6
90%
80%
Growth
Revenue Gth (%)
Opg Profit Gth (%)
Net Profit Gth (%)
Margins
Gross Margin (%)
70%
60%
50%
40%
30%
20%
10%
Operating Margin %
4Q2015
3Q2015
2Q2015
1Q2015
4Q2014
3Q2014
2Q2014
1Q2014
0%
Net Income Margin %
Page 27

Alibaba
Asset Breakdown
Balance Sheet (RMB m)

FY Mar
2012A
2013A
2014A
2015A
2016F
2017F
Debtors 2.0%
Net Fixed Assets

Invts in Associates & JVs
Other LT Assets
Cash & ST Invts
Inventory
Debtors
Other Current Assets
2,463
1,642
15,206
22,337
0
3,893
1,669
3,808
1,555
15,261
33,315
0
8,113
1,734
5,581
17,666
20,469
45,074
0
18,080
4,679
9,139
33,877
70,309
125,999
0
3,132
12,978
12,652
40,652
74,194
157,098
0
3,758
12,246
16,236
46,750
79,169
196,427
0
4,372
15,826
Total Assets
47,210
63,786
111,549
255,434
300,600
358,780
ST Debt
Creditors
Other Current Liab
LT Debt
Other LT Liabilities
Shareholders Equity
Minority Interests
Total Cap. & Liab.
1,283
4,659
5,809
0
1,046
31,488
2,925
47,210
5,448
8,961
9,586
22,462
6,283
10,423
623
63,786
10,364
11,887
15,133
30,711
2,636
39,622
1,196
111,549
1,990
19,834
17,848
1,609
56,082
145,439
12,632
255,434
2,388
21,433
20,353
1,931
66,824
172,514
15,158
300,600
2,746
27,611
22,820
2,220
79,440
206,511
17,432
358,780
Non-Cash Wkg. Capital

Debtors Turn (avg days)
Creditors Turn (avg days)
Inventory Turn (avg days)
Asset Turnover (x)
Current Ratio (x)
Quick Ratio (x)
Net Debt/Equity (X)
Net Debt/Equity ex MI (X)
Capex to Debt (%)
Z-Score (X)
(4,906)
35.5
149.6
N/A
0.8
2.4
2.2
CASH
(0.7)
183.8
NA
(8,700)
63.5
283.0
N/A
0.6
1.8
1.7
CASH
(0.5)
8.1
NA
(4,261)
91.0
324.8
N/A
0.6
1.8
1.7
CASH
(0.1)
13.4
NA
(21,572)
50.8
259.7
N/A
0.4
3.6
3.3
CASH
(0.8)
315.4
NA
(25,781)
12.2
254.4
N/A
0.4
3.9
3.6
CASH
(0.9)
285.4
NA
(30,232)
11.1
236.3
N/A
0.4
4.1
3.8
CASH
(0.9)
273.1
NA
Page 28
Net Fixed
Assets 5.9%
Assocs'/JVs 21.9%
Inventory 0.0%
Bank, Cash
and Liquid
Assets 70.1%

Alibaba
Capital Expenditure (RMB m)
Cash Flow Statement (RMB m)

FY Mar
2012A
2013A
2014A
2015A
2016F
2017F
Pre-Tax Profit
Dep. & Amort.
Tax Paid
Assoc. & JV Inc/(loss)
(Pft)/ Loss on disposal of FAs
Chg in Wkg.Cap.
Other Operating CF
Net Operating CF
Capital Exp.(net)
Other Invts.(net)
Invts in Assoc. & JV
Div from Assoc & JV
Other Investing CF
Net Investing CF
Div Paid
Chg in Gross Debt
Capital Issues
Other Financing CF
Net Financing CF
Currency Adjustments
Chg in Cash
Opg CFPS (RMB)
Free CFPS (RMB)
5,507
870
(842)
25
(21)
1,788
1,948
9,275
(2,358)
5,353
(687)
0
(2,433)
(125)
0
121
616
(262)
475
(54)
9,571
3.02
2.79
10,106
935
(1,457)
6
(76)
3,136
1,826
14,476
(2,254)
2,543
(285)
0
541
545
0
26,932
(23,319)
(5,019)
(1,406)
(76)
13,539
4.94
5.33
26,599
1,654
(3,196)
203
(384)
(4,493)
5,996
26,379
(5,508)
(11,051)
(16,379)
0
(59)
(32,997)
0
12,789
1,923
(5,348)
9,364
(97)
2,649
14.19
9.60
30,736
1,541
(6,416)
1,590
0
15,313
(1,547)
41,217
(11,351)
(3,561)
(16,211)
0
(22,331)
(53,454)
0
(37,476)
51,899
73,074
87,497
(112)
75,148
10.39
11.98
32,945
2,605
(7,042)
795
0
4,440
19,874
53,618
(12,324)
(4,244)
(6,775)
0
(41)
(23,385)
0
720
0
(4,830)
(4,110)
0
26,123
19.73
16.57
43,457
3,607
(9,506)
(398)
0
3,324
25,661
66,146
(13,562)
(3,678)
(6,098)
0
(37)
(23,375)
0
648
0
(8,426)
(7,778)
0
34,993
25.21
21.10
16000
14000
12000
10000
8000
6000
4000
2000
0
2013A
2014A
2015A
2016F
2017F
Capital Expenditure (-)
Page 29

Alibaba
Appendix
47%
871
1,000
500
259
592
392
600
50%
500
49%
400
48%
300
47%
200
46%
45%
44%
0
2011
2012
2013
Market size (LHS)
2014
457
513
384
303
298
649
618
557
500
420
356
233
118
100
0
2018F
Netizen
Growth y-o-y (RHS)
2014
1,500
51%
564
2013
2,000
m
700
2012
2,020
%
52%
2011
51%
2010
CAGR= 23%
51%
2,500
2008
RMB bn
Netizen population in China
2009
China internet sector Total revenue size
Mobile netizen
Source: iResearch
Source: China Internet Network Information Centre (CNNIC)
Breakdown of China internet revenue (2014)
China internet sector: Mobile penetration rate
Online ads
18%
Online
payment
4%
30%
25.6%
25%
Online
games
13%
18.3%
20%
Others
11%
15.1%
15%
11.8%
10%
E-commerce
54%
5%
0%
2011
2012
2013
2014
Note: Mobile penetration rate Mobile revenue as percentage of

overall revenue.
Source: iResearch
Page 30
Source: iResearch

Alibaba
E-commerce market size in China
Number of online shoppers in China
RMB bn
7,300 80%
70%
57%
51%
60%
50% 42% 5,160
50%
3,955 30%
40%
2,790
22%
30%
1,864
16%
20%
1,187
785
10%
0%
70%
2018F
2017F
2016F
2015F
2014
2013
2012
6,295
2011
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
56%
49%
400
350
300
250
200
43%
35%
38%
361
50%
302
242
40%
194
30%
161
150
20%
100
10%
50
0%
0
2010
E-commerce market size (LHS)

Growth y-o-y (RHS)
60%
2011
2012
2013
2014
Number of customers (LHS)

As % of total netizen (RHS)
Note: Refers to e-commerce GMV (general merchandise value).

Source: iResearch, National Bureau of Statistics
Source: CNNIC
B2C e-commerce market size in China
B2C e-commerce market share in China (2014)
RMB bn
5,000
214%
3,752
4,000
107%
70%
100%
42%
30% 21%
50%
Tmall
61.4%
2018F
2017F
2016F
0%
2015F
2014
753
2013
198
411
2012
1,278 59%
2011
1,000
150%
2,033
83%
2,000
JD.com*
19.7%
200%
2,895
3,000
Suning.com
3.2%
4,533 250%
VIPShop
2.9%
GOME
Online
1.7%
Yihaodian
1.4%
Dangdang
1.3%
Amazon
China
1.3%
Jumei
0.7%
Note: B2C refers to business-to-consumer.
Others
6.4%
* JD.coms market share included e-commerce sales of Tencent, to be
gradually absorbed by JD.com following their strategic cooperation in
Mar 2014.
Source: iResearch
Source: iResearch
Market size (LHS)
Growth y-o-y (RHS)
Page 31

Alibaba
B2B market size in China
RMB bn
60,000 34%
B2B market size (LHS)
Mysteel.com
(
)
20%
Alibaba
35%
Others
33%
2018F
2017F
2011
2016F
10,000
2015F
20,000
2014
30,000
2013
40,000
53,720 40%
35%
43,850
30%
23%
24%35,770
23%
21%
25%
29,040
20%
23,450
23%
17,760
15%
15,790
13,040
10%
12%
5%
0%
32%
2012
50,000
B2B e-commerce market share in China (2014)

Global
Sources
()
5%
HC360.com
()
4%
DHGate.com
()
3%
Growth y-o-y (RHS)
Note: B2B refers to business-to-business.

Source: iResearch
Source: iResearch
Mobile commerce market size in China
Mobile commerce market share in China (2014)
2018F
2017F
2016F
2015F
2014
2013
2012
2011
RMB bn
490%
5,000 426%
4,504
4,500
3,728
4,000
297%
3,500
2,835
3,000
239%
2,500
1,809
2,000
95%
1,500
57%
930
1,000
32% 21%
274
500
12 69
0
%
500%
400%
300%
200%
100%
0%
Alibaba
(Taobao+T
mall)
86%
Mobile commerce GMV (LHS)

Growth y-o-y (RHS)
Source: iResearch
Page 32
Source: iResearch
JD.com
4% VIPShop
2%
Suning
1%
Jumei
1%
Yihaodian
Others
1%
5%
GOME
Online
0%

Alibaba
RMB
%
41%
24,000
45%
20,000
CAGR = 16%
16,000
26%
8,000
4,000
19,304
2,872
4,045 4,905
6,173
36%
27%
21%
12,000
25%
7,728
18%
9%
Spending per capita (LHS)
2020F
2014
0%
2013
0
2010
2008 & before

2009
2010
2011
2012
2013
2014
A v erage
Number of new
O nline shopping
online shoppers ex perienc e by now
(no. of y ears)
74
7.5
34
5.5
53
4.5
33
3.5
48
2.5
c.200m
60
1.5
59
0.5
3.7
2012
Y ear
E-commerce spending per online shopper in China
2011
Study on new online shoppers in China
Growth y-o-y (RHS)
Source: CNNIC, DBS Vickers
Source: iResearch, CNNIC, Aliresearch, DBS Vickers
Study of rural e-commerce in China
Development of online sales lifts total consumption
2014
For every 1 spent online
O nline shopper populat ion:

m
Urban
Population
293
Rural
69
T ot al
361
Spending per online shopper:

RMB
Urban
Spending
8,922
Rural
2,628
A v erage
7,728
K ey assumpt ions:
1) Rural e-commerce sales made c.6% contribution
2) c.10% of rural population shops online
1.00
= Replacing offline sales
Overall market
3rd & 4th- tier

cities
0.61
0.43
+
0.39
0.57
Note: E-commerce is more effective in stimulating retail sales in 3rd & 4th
tier markets, as e-commerce offers greater convenience, promotion
and social networking effects to rural users.
Source: CEIC, CNNIC, iResearch, Aliresearch, DBS Vickers
Source: McKinsey research (2013)
Page 33

Alibaba
Online payment market size in China
Online payment market share in China (2014)
Rmb bn
28,000
118%
22,886
24,000
19,271
20,000
16,000
12,000
8,000
4,000
China
UnionPay
Merchant
Services
()
11%
%
140%
100%
15,610
66%
80%
50%11,755
47% 8,077
60%
33%
5,373
23% 19% 40%
3,659
2,204
46%
20%
99Bill (
)
7%
Alipay
50%
2018F
2017F
2016F
2015F
2014
2013
2012
2011
0%
Transaction size (LHS)
Tenpay *
20%
120%
Others
8%
ChinaPnR
()
5%
Growth y-o-y (RHS)
* Tenpay includes Tencent's other payment solutions such as Weixin

Payment and Mobile QQ Wallet.
Source: iResearch
Source: iResearch
Comparison of logistics areas (2014)
Alibabas package tracking function on mobile app
12
10
Strategic partners of Alibaba
Amazon (US operations)
YTO Express ()
Best Express ()
China Dangdang
0.8 0.7 0.5 0.5 0.4
VIPshop
1.6
S.F.Express ()
JD.com
EMS
GLP China
Goodman China
4
2.3
Haier Logistics
Note: Alibaba rides on logistics capability of its strategic delivery

partners.
Source: Companies, DBS Vickers
Page 34
Source: Company

Alibaba
Major M&As for Alibaba

Dat e
Inv est ee
F eb 2015
Meizu ( )
Det ails
Alibaba inv ested US$590m for a minority stake in Meizu, one of the leading smart phone
manufacturers in China.
J an 2015 AdChina ( )
Strategic inv estment in AdChina, one of the leading digital marketing platform operators in
China.
Sep 2014 Shiji Information ( ,
Inv ested RMB2.8bn for 15% stake of Shiji Information, one of the leading hotel IT sy stem
002153 CH)
prov iders in China.
J ul 2014
Intime (1833 HK)
Inv ested HK$5.4bn for 10% stake of Intime, as well as conv ertible bonds that could increase
stakes to 26%. Established a J V with Intime to dev elop O2O businesses relating to shopping
malls, department stores and supermarkets.
J ul 2014
Singapore Post (SGX: SPOST)
Inv ested S$313m for 10% stake of Singapore Post, the leading prov ider of logsitics solutions in
Southeast Asia.
J un 2014 Alibaba Pictures (1060 HK,
Alibaba inv ested HK$6.2bn to subscribe new shares that equal to 60% stake of the company ,
formerly ChinaV ision)
which is mainly engaged in production and distribution of films and TV programmes.
J un 2014 UCWeb (UC )
Alibaba participated in sev eral rounds of fundraising by UCWeb, and it exchanged all the
outstanding shares of UCWeb with US$458m of cash and 12.3m of restricted shares in J un14.
J un 2014 Guangzhou Ev ergrade F ootball Inv ested c.RMB1.2bn for 50% ownerhip interest in Guangzhou Ev ergrande F ootball Club, one
Club
of the most popular soccer teams in China.
May 2014 Meituan ( )
Alibaba participated in sev eral rounds of fundraising of Meituan, the leading group-buy ing
serv ice prov ider in China.
May 2014 Youku Tudou ( ;
Inv ested US$1.1bn for c.17% stake in Youku Tudou, one of the leading online v ideo operators
NYSE:YOKU)
in China.
May 2014 OneTouch ( Alibaba prev iously held 65% stake of Shenzhen OneTouch Business Serv ice, one of the leading
SME exports supply chain management serv ice prov iders in China. In May 14, Alibaba inv ested
)
RMB790m to acquire the remaining shares of OneTouch.
Apr 2014 Weibo ( ; NASDAQ:WB)
Alibaba inv ested US$586m for c.18% stake of Weibo in Apr 2013, one of the leading social
media platforms in China; upon Weibo's IPO on NASDAQ in Apr14, it inv ested US$449m to
raise its stake to c.30%.
Apr 2014 Alibaba Health Information
Inv ested HK$932m for c.38% stake in Alibaba Health Info Tech, which is primarily engaged in
Technology ( ; 241
dev eloping product identification, authentication and tracking sy stem for pharmaceutical and
HK, formerly CITIC 21CN)
medical products in China.
Apr 2014 Wasu Meida ( ;
Alibaba lent RMB6.5bn to Mr. Simon Xie ( , co-founder of Alibaba), to fund his
000156 CH)
inv estment of c.20% stake in Wasu Media, which is primarily engaged in digital media
broadcasting and distribution businesses in China.
Apr 2014 AutoNav i ( )
Priv atized AutoNav i (NASDAQ: AMAP) for c.US$1bn in J uly 14. AutoNav i is one of the leading
digital map content, nav igation and location serv ices prov iders in China.
Apr 2014 Ddmap.com ( )
Alibaba participated in sev eral rounds of fundraising of Ddmap.com, an online discount coupon
serv ice prov ider in China.
Apr 2014 TangoMe
Alibaba inv ested c.US$217m for preferred shares that equals to c.20% stake in TangoMe, one
of the leading mobile instant messenger serv ice operators in US.
Mar 2014 Baicheng.com ( )
Baicheng.com is one of the leading outbound tourism websites in China.
Dec 2013 Haier Electronics (1169 HK)
Inv ested HK$2.8bn to purchase 2% stake of Haier Electronics, and 10% stake in Haier
Logistics. It also subscribed a conv ertible & exchangeable bonds that could acquire another 3%
of Haier Electronics, or 24% of Haier Logistics.
Nov 2013 Kuaidadi.com ( )
Alibaba participated in sev eral rounds of fundraising of Kuaidadi.com, one of the leading online
taxi booking serv ice prov iders in China.
Page 35

Alibaba
Profile of directors
Direc t ors &
Ex ec ut iv e
O f f ic ers
A ge
Posit ion / T it le
Remark
J ack Yun MA
( )
49
Lead founder &

Executiv e Chairman
J oseph C. TSAI
( )
50
Executiv e V ice
Chairman
Masay oshi SON

( )
57
Director
J onathan Zhaoxi LU
( )
44
Director
Daniel Yong ZHANG

( )
42
Director
Chee Hwa TUNG

( )
77
Independent Director
Walter Teh Ming

KWAUK
( )
61
J . Michael EV ANS
57
J erry YANG
( )
45
Chairman and CEO during 1999-2013; Mr. Ma is a director of SoftBank Corp,

Huay i Brothers Media Corp, The Nature Conserv ancy , and Breakthrough Prize in
Life Sciences F oundation. Mr. Ma graduated from Hangzhou Teacher's Institute
with a major in English language education.
J oined in 1999 as a member of the founding team; Mr. TSAI prev iously serv ed as
CF O and director. He is qualified to practice law in the State of New York. Mr. TSAI
graduated from Yale College with a bachelor's degree in Economics & East Asian
Studies, and graduated from Yale Law School with a juris doctor degree.
Mr. Son is the founder, Chairman and CEO of SoftBank Corp. He also serv es as
Chairman and CEO of SoftBank BB Corp, SoftBank Telecom Corp and SoftBank
Mobile Corp, as well as Chairman of Yahoo J apan Corporation and Sprint
Corporation. He graduated from the Univ ersity of California, Berkeley with a
bachelor's degree in Economics.
J oined in 2000, Mr. Lu became CEO in 2013, and became V ice Chairman in May
2015. He prev iously serv ed as Chief Data Officer, CEO of Alibaba.com and Taobao
Marketplace, and President of Alipay . He is a director of Youku Tudou. Mr. Lu
graduated from Guangzhou Univ erisity with a graduate certificate in Hotel
Management, and he graduated from China Europe International Business School
with an MBA degree.
J oined in 2007, Mr. Zhang became CEO in May 2015. He prev iously serv ed as
COO of Alibaba, President / General Manager of Tmall, and CF O of Taobao
Marketplace. Mr. Zhang is a director of Alibaba Health Info Tech, Haier Electronics
and Weibo Corp. He graduated from Shanghai Univ ersity of F inance & Economics
with a bachelor's degree in F inance, and he is a member of the Chinese Institute of
Certified Public Accountants.
Mr. Tung is V ice Chairman of the Twelfth National Committee of the Chinese
People's Political Consultativ e Conference of the PRC. He is the F ounding Chairman
of China-US Exchange F oundation, a member of the J .P.Morgan International
Council, the China Dev elopment Bank International Adv isory Committee and the
Adv isory Board of the Schwarzman Scholars Program at Tsinghua Univ ersity . He
was prev iously the F irst Chief Executiv e of HKSAR, and Chairman / CEO of Orient
Ov erseas (International) Ltd. Mr. Tung graduated from the Univ ersity of Liv erpool
with a bachelor's degree in Science.
Mr. Kwauk is a senior consultant of Motorola Solutions (China) Co, and he
prev iously serv ed as an independent non-executiv e director of Alibaba.com Ltd. He
graduated from the Univ ersity of British Columbia with a bachelor's degree in
Science and a licentiate's degree in Accounting. He is a member of the Hong Kong
Institute of Certified Public Accountants.
Mr. Ev ans is Chairman of Right To Play USA, a board member of City Harv est, a
trustee of the Asia Society and a member of the Adv isory Council for the Bendheim
Center for F inance at Princeton Univ ersity . He was prev iously the V ice Chairman of
The Goldman Sachs Group. He graduated from Princeton Univ ersity with a
bachelor's degree in Politics.
Mr. Yang is the founding partner of AME Cloud V entures, and he is the cofounder of Yahoo! Inc, and prev iously serv ed as CEO. He was Alibaba's director in
2005-2012. He is now a director of Workday Inc, and serv es on Stanford
Univ ersity 's board of trustees. Mr. Yang graduated from Stanford Univ ersity with a
bachelor's degree and master's degree in Electrical Engineering.
Source: Company
Page 36

Alibaba
Profile of Alibabas partners

Part n er
A ge
Y ear jo in ed
A lib ab a
Cu rren t p o sit io n w it h A lib ab a o r relat ed / af f iliat ed c o .
J ingxian CAI ( )
Li CHENG ( )
Trudy Shan DAI ( )
Luy uan F AN ( )
Yongxin F ANG ( )
Simon Xiaoming HU ( )
F ang J IANG ( )
Peng J IANG ( )
37
39
38
41
40
44
40
41
2000
2005
1999
2007
2000
2005
1999
2000
Principal Engineer
Chief Architect, Ant F inancial
Chief Customer Officer
President, China Business, Ant F inancial
Director, Human Resources
Risk Manager, SME Loan Business; Chief Risk Officer, Ant F inancial
V ice President, Corporate Integrity & Human Resources
President, Alibaba Cloud Computing, YunOS & Digital Entertainment;
Deputy Chief Technology Officer
J ianhang J IN ( )
Eric Xiandong J ING ( )
Zhenfei LIU ( )
J onathan Zhaoxi LU ( )
J ack Yun MA ( )
Xingjun NI ( )
Lucy Lei PENG ( )
Sabrina Yijie PENG ( )
Xiaofeng SHAO ( )
Timothy A. STEINERT
J udy Wenhong TONG ( )
J oseph C. TSAI ( )
J ian WANG ( )
Shuai WANG ( )
Sophie Minzhi WU ( )
Maggie Wei WU ( )
Eddie Yongming WU ( )
Sara Siy ing YU ( )
Ming Zeng ( )
J eff J ianfeng ZHANG ( )
Daniel Yong ZHANG ( )
Yu ZHANG ( )
44
41
42
44
49
37
40
36
48
54
43
50
51
40
38
46
39
40
44
41
42
44
1999
2007
2006
2000
1999
2003
1999
2000
2005
2007
2000
1999
2008
2003
2000
2007
1999
2005
2006
2004
2007
2004
President
CF O, Ant F inancial
V ice President, Infrastructure Operations
V ice Chairman
Executiv e Chairman
Principal Engineer, Ant F inancial
Chief People Officer, Alibaba; CEO, Ant F inancial
V ice President, International, Ant F inancial
Chief Risk Officer
General Counsel & Corporate Secretary
COO, China Smart Logistics
Executiv e V ice Chairman
Chief Technology Officer
Senior V ice President, China Corporate Communications & Marketing
President, Alibaba.com & 1688.com
CF O
Senior V ice President, Corporate Dev elopment
Associate General Counsel, China
Senior V ice President, Corporate Strategy
Head of China commerce retail platforms
CEO
V ice President, Corporate Dev elopment
Source: Company
Page 37

Alibaba
Corporate structure
(1) Includes approximately 70 subsidiaries and consolidated entities incorporated in China and approximately 120 subsidiaries incorporated in
other jurisdictions that are not illustrated in this chart. In addition, the entities pictured in this chart hold, directly and indirectly, an aggregate of
approximately 40 additional subsidiaries and consolidated entities incorporated in China and approximately 40 additional subsidiaries incorporated
outside of China not pictured in the chart.
(2) Primarily involved in the operation of Taobao Marketplace.
(3) Primarily involved in the operation of Tmall and Juhuasuan.
(4) Primarily involved in the operation of Alimama.
(5) Primarily involved in the operation of Alibaba.com, 1688.com and AliExpress.
(6) Primarily involved in the operation of cloud computing services.
(7) Each of these variable interest entities is 80%-owned by Jack Ma and 20%-owned by Simon Xie, other than Zhejiang Taobao Network Co.,
Ltd., which is 90%-owned by Jack Ma and 10%-owned by Simon Xie.
Source: Company
Page 38

Alibaba
PC homepage of Taobao Marketplace
Source: Company
Page 39

Alibaba
Mobile app of Taobao Marketplace
Source: Company
Page 40

Alibaba
PC home page of Tmall
Source: Company
Page 41

Alibaba
Mobile app of Tmall
Source: Company
Page 42

Alibaba
PC home page of Tmall Global
Source: Company
Page 43

Alibaba
PC home page of Juhuasuan Group Buying Marketplace
Source: Company
Page 44

Alibaba
Mobile app of Juhuasuan Group Buying Marketplace
Source: Company
Page 45

Alibaba
PC home page of AliExpress
Note: Local language website in Brazil.

Source: Company
Page 46

Alibaba
PC home page of Alibaba.com
Source: Company
Page 47

Alibaba
DBSV recommendations are based an Absolute Total Return* Rating system, defined as follows:
STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame)
BUY (>15% total return over the next 12 months for small caps, >10% for large caps)
HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)
FULLY VALUED (negative total return i.e. > -10% over the next 12 months)
SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)
Share price appreciation + dividends

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Page 48

Alibaba
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Regional Company Focus

Alibaba Group Holding Ltd.

Refer to important disclosures at the end of this report

DBS Group Research . Equity

Open sesame the online treasure

BUY US$86.72 NASDAQ : 4,994

Alibaba Group (LHS)

Relative CCMP INDEX (RHS)

Forecasts and Valuation

ICB Industry: Consumer Services

Source of all data: Company, DBSV, Thomson Reuters, HKEX

Alibaba enjoys e-commerce leadership thanks to its multiple

A key beneficiary of B2C e-commerce, with great potentials

Strategic investments to lift medium-term growth prospects.

Best-positioned for Chinas e-commerce boom. Alibaba is

Multiple growth drivers ahead. Chinas e-commerce market

Regional Company Focus

Launching the Mobile Taobao App in 2010, Alibaba has

Improving monetization capability

The transformation towards to Tmall could help to lift

M&A enhances business outlook

Competition with other B2C e-commerce players

Potential government control

Source: DBS Vickers

Aimed to improve its e-commerce ecosystem, Alibaba

Governments possible tax reinforcement on merchants

Regional Company Focus

Valuation & recommendation

Regional Company Focus

strengths in downstream network and delivery of large-sized

Online payment is the key. In our view, e-payment is one of the

Efforts to enhance the ecosystem. Chinas e-commerce market

Regional Company Focus

Leading position in Chinas booming e-commerce market

Product quality control could be difficult given its large

Multiple platforms that span across online retailing and

Delays in product deliveries to online shoppers

Established online marketing operations riding on

Its newer B2C e-commerce arm benefits from user traffic

Strength in online payment leveraging on the dominant

Solid management track record in Chinas e-commerce

Sound e-commerce market growth driven by growing online

Intensifying competition from B2C e-commerce

Upside in monetization capability, building on higher

Governments potential tax reinforcement on

Additional user demand driven by mobile commerce

Rural e-commerce could be the long-term growth driver

Development of smart logistics IT system to enhance its

Cloud computing initiatives could be crucial to its long-term

Future M&As to improve its e-commerce ecosystem

Source: DBS Vickers

Regional Company Focus

Thanks to its solid track record, wide product offerings and

B2C e-commerce market share in China (2014)

* JD.coms market share included e-commerce sales of Tencent, to be

gradually absorbed by JD.com following their strategic cooperation in

Note: FY Mar. GMV Gross merchandise value.

Regional Company Focus

Long road to success. Founded in 1999, Alibaba launched the

company pioneered the Singles Day on 11 Nov 2009, which

In 2010, Alibaba moved into mobile commerce and launched

Tmall was launched