CRT Alibaba Initiation - 9.18.2014

CRT Research | Internet
Neil Doshi
(415) 762-4880 ndoshi@crtllc.com
Managing Director
Robert Coolbrith
(415) 762-4890 rcoolbrith@crtllc.com
Vice President
Alibaba Group, Inc.
(BABA, Buy, PT: $95.00, Close: NA)
Buy - PT: $95.00
BABA-Bing! Initiating Coverage of Alibaba with a Buy rating &

$95 PT
Initiating Coverage on BABA with a Buy Rating and a $95
PT If AMZN, EBAY and GOOG were to have a baby, it
would be Alibaba. Alibaba has the worlds largest GMV of
any Internet retail service provider and 80%+ market share
of Chinas eCommerce market. Unlike other U.S. and Chinese
Internet companies that have gone public recently, BABA has
a proven track record of strong revenue growth (30%+) with
high EBITDA margin (50%+). While shares of BABA have not
started trading yet, we believe that the current pricing range
of $66-$68 significantly undervalues the long-term growth
potential of the Company. While the IPO midpoint price
range was raised about 6% from $63 to $67, we believe that
global investor demand for BABA will be very strong.
Initiation
Why We Are Buyers Of BABA: 1) Large scale drives

network effects BABAs large and growing 279M base of
active buyers drives strong demand from ~8.5M merchants
to market and sell goods on the Alibaba platform. This
networks effect creates a flywheel of continued strong
GMV growth, which we expect will grow 34% from FY14FY17. 2) Large & Growing Mobile business We expect
Mobile revenue to be ~$2.7B in F15, up 193% and account
for 27% of total BABAs China Commerce revenue. While
mobile take rates are below PC take rates, they have been
improving; 3) Impressive revenue growth & profitability
track record We are modeling for revenue of $12.0B in
F15 (+43% YoY) to grow to $20.6B (+27%) in F17. BABA has
profitable for at least the past 13 quarters, with 46% net
income margin the Jun-14 quarter.
Valuation Not Excessive Our $95 target price is based on
EV/EBITDA and P/E valuation methodologies - we apply a
26x multiple to our C2016 EBITDA estimate of $8.2B and a
32x multiple to our C2016 EPS of $3.04. For context, BABA
should generate 35%+ revenue CAGR from F2014-2017,
and EBITDA should grow at 36% over the same period
solid growth vs. competitors like FB, EBAY, AMZN, and
GOOG. We reserve the right to revisit our PT after the stock
starts trading, recognizing that it often takes new issues
some time to settle into a normalized trading range.
Please find important disclosures including common stock risks beginning on page 50.
September
September
17,17,
2014
2014
Key Data
Rating
Price Target
Price (09/16/2014 Close)
52 Week High-Low
Shares Out (mm)
90-day Average Daily Vol
Buy
$95.00
NA
NA - NA
2,491.0
NA
CRT Estimates
FY December
Total Revenue
EPS Non-GAAP
Total Revenue
2014
2015
2016
EPS Non-GAAP
2015
2016
2014A
$8,401
$1.84
2015E
$12,020
$2.43
2016E 2017E
$16,189 $20,569
$3.27
$4.16
Q1
Q2
Q3
Q4
$1,724A $1,752A $2,999A $1,925A
$2,523A $2,508E $4,069E $2,920E
$3,404E $3,439E $5,365E $3,980E
$0.49A
$0.68E
$0.51E
$0.70E
$0.82E
$1.07E
$0.60E
$0.82E
CRT vs. Street Consensus

Consensus
Source: Company Financials, CRT & Bloomberg LLP
CRT Estimate

Alibaba Group, Inc.
September 17, 2014
Alibaba Group, Inc. (BABA, Buy, PT:$95.00)
Model Summary
Rating Rationale
Financials
F2013A
F2014A
F2015E
F2016E
F2017E
'F14-'F17 CAGR
Revenue ($M)
YoY Change
EBITDA ($M)
YoY Change
Margin
GAAP EPS
YoY Change
Non-GAAP EPS
YoY Change
$5,523
72%
$2,657
128%
48%
$0.57
114%
$0.93
137%
$8,401
52%
$4,714
77%
56%
$1.60
180%
$1.84
98%
$12,020
43%
$6,427
36%
53%
$2.46
54%
$2.43
31%
$16,189
35%
$9,004
40%
56%
$2.87
17%
$3.27
35%
$20,569
27%
$11,943
33%
58%
$3.72
30%
$4.16
27%
35%
36%
32%
31%
Valuation Methodology
Our $95 Target Price is based the average of our 2016 EV/EBITDA and C2016
Adjusted P/E Valuation methodologies.
Using an EV/EBITDA analysis, if we apply a 26x multiple to our 2016 Adjusted
EBITDA estimate of $8.3B, adjusting for $35.9B in calendar year-end 2015
cash and $9.9B in calendar year-end 2015 debt, we derive a valuation of $91
per share. Our target multiple is derived from historical and future growth
assumptions, comparable public company multiples, and various intangibles
like management, product pipeline, defensible business model, etc.
Using a P/E analysis, if we apply a 32x multiple to our 2016 Adjusted P/E
estimate of $3.04, this would imply a $97 target price.
The average of these two methodologies yields a target price of $94.30, which
we round to $95 for convenience
Valuation Summary
Valuation
P/Sales
EV/EBITDA
GAAP P/E
Non-GAAP P/E
F2013A
30.7x
59.4x
119.0x
73.0x
F2014A
20.2x
33.5x
42.5x
36.9x
F2015E
14.1x
24.5x
27.6x
28.0x
F2016E
10.5x
17.5x
23.7x
20.8x
F2017E
7.7x
13.2x
18.3x
16.4x
1) Large scale drives network effects

BABAs large and growing 279M base of
active buyers drives strong demand from
~8.5M merchants to market and sell goods
on the Alibaba platform.
2) Large & Growing Mobile business We
expect Mobile revenue to be ~$2.7B in F15,
up 193% and accounting for 27% of total
BABAs China Commerce revenue;
3) Revenue Growth fueled by continued
improvement in Take Rate we expect
blended China Retail Take Rate to improve a
modest 28 bps from 2.55% in F14 to 2.83% in
2017.
4) Option value - in Cloud Computing,
International and Alipay are all future
potential large opportunities.
Risk Summary
Risks include
1) We expect EBITDA margins to contract
~300 bps to 53% in F15 and are unsure
what managements philosophy is margins
vs. growth;
2) Intense global competition from PRC
Internet companies, and western companies
like Amazon, Walmart & others moving into
China;
3) Acquisition strategy seems scattered;
4) International expansion into the U.S. and
Europe could be costly and has high risk;
Chart Data Not Available
5) BABA Partnership & VIE structure will

control board and likely give a limited say to
investors; and
6) Counterfeit and objectional material sold
on the site which could lead to trust issues &
lawsuits.
Page 2

Alibaba Group, Inc.
September 17, 2014
Company Overview
Alibaba Group Holding Limited is a group of e-commerce businesses; an online and
mobile commerce company that offers a platform for retail and wholesale trade, among
other services. A group of 18 members, headed by Jack Ma, founded the Company in
1999 by launching Alibaba.com and Alibaba.com.cn (now 1688.com), allowing small
Chinese manufacturers and exporters to reach local and global wholesalers. While the
Company offers a platform to facilitate internet based trade, it does not hold inventory,
place direct sales, or compete with sellers. For the 12 months ended June 30, 2014,
Alibabas three primary consumer China retail sites generated $296B in GMVlarger
than the GMV of AMZN and EBAY combined. Alibaba had 279M active buyers and 8.5M
active sellers on its platform in the twelve months ending June 30, 2014. Today, Alibaba
Group is the largest online and mobile commerce company in the world in terms of
gross merchandise volume (GMV). It also provides other services through its subsidiaries
and affiliates such as Cloud Computing, Marketing, Logistics, and transaction
settlement. The exhibit below shows the Companys history as it has evolved since its
founding in 1999.
Exhibit 1. BABA Corporate Timeline
Year
Company Milestone
1999
Alibaba founded in Jack Mas apartment in Hangzhou

Alibaba.com launched
1688.com (formerly known as Alibaba.com.cn) launched
2003
Taobao Marketplace launched
2004
Aliwangwang instant messenger launched on Taobao Marketplace

Alipay launched
2007
Alimama monetization platform launched

Taobao Marketplace started to monetize
2008
Tmall launched
2009
Alibaba Cloud Computing founded
2010
Juhuasuan launched
Ali Express launched
Mobile Taobao App launched
2011
Alipay separated from the company
Source: Company reports
Total revenue increased by 52% from $5.5B in FY13 to $8.4B in FY14, and net income
increased by ~174% from ~$1.3B in FY13 to $3.7B in FY14. The Companys GMV
generated from China retail marketplaces (Taobao, Tmall, and Juhuasuan) increased by
~56% in FY14 to $270B. The Companys major sources of revenue include: 1) China
Commerce (including Taobao, Tmall, Juhuasuan and 1688.com) which accounted for
86% of total Company revenue in FY14, 2) International Commerce (including
Alibaba.com and AliExpress) which accounted for 9% of FY14 revenue, 3) Cloud
computing and Internet infrastructure services which accounted for ~2% of total FY14
revenue, and Other, which primarily consists of interest income from the Companys
micro-loan portfolio, accounted for 3% of total FY14 revenue.
Page 3

Alibaba Group, Inc.
September 17, 2014
Historically, buyers and sellers used the Alibaba platform primarily on personal
computers. However, the Company has seen significant growth in the utilization of
mobile devices among consumers who use the Alibaba platform. Mobile GMV
accounted for ~33% of GMV as of June 2014, up from 12% in June 2013. The number of
mobile MAUs increased from 136M in December 2013 to 188M in June 2014.
The Companys key retail businesses include:
1. Taobao Marketplace an online shopping destination that connects Chinese
buyers to individual and small business merchants. In 2013, it was ranked #1 in
C2C marketplace in terms of GMV in China.
2. Tmall.com a retail platform for Chinese consumers to be able to purchase
branded products online from retailers. It was the largest brands and retail
platform in China in terms of GMV in 2013.
3. Juhuasuan a group buying platform where merchants from Taobao or Tmall
offer quality products at discounted prices, mainly through flash sales, for a
limited period of time.
4. AliExpress a platform that allows consumers around the world to be able to
buy directly from Chinese manufacturers and wholesalers.
The Companys wholesale trading platform includes:
1. Alibaba.com launched in 1999, as the Companys first e-commerce platform.
It is a global, wholesale marketplace that allows Chinese and International
manufacturers to sell products to wholesale buyers around the globe; and
2. 1688.com also a wholesale marketplace, it connects Chinese wholesale buyers
and sellers. Retail merchants on the Alibaba platform may also source their
products from 1688.com to do business with consumers. As of June 30 th, 2014,
the wholesale platforms had 857,000 paying members.
The Company has progressed beyond its core e-commerce business to also provide
other revenue generating services through its subsidiaries and affiliates. For instance, it
offers marketing services to sellers for both personal computers and mobile devices
through its online marketing technology platform Alimama. The Company also offers
Cloud Computing services through Alibaba Cloud Computing, Logistics through 48%owned China Smart Logistics, and transaction settlement services through its affiliate
Alipay, to name a few.
The Company is headquartered in Hangzhou, China.
Page 4

Alibaba Group, Inc.
September 17, 2014
The BABA IPO

The original price range on BABAs filing was $60-$66 per share. On September 15, the
company filed an amended S-1 with a new price range of $66-$68. Including Green Shoe
shares at the midpoint of this range, this would equate to a total offering of
approximately $24.6B, of which ~$10B would go to the Company and the rest would go
to selling shareholders.
The Company plans on using the proceeds for general corporate purposes, including
working capital, operating expenses, and capital expenditures. The Company has also
been highly acquisitive this year, and we believe that the proceeds could go to fund the
acquisition of more U.S. and Chinese mobile and Internet companies.
Finally, we anticipate that BABA could use proceeds for building out logistics and
technology platforms as it ramps its international operations in the U.S. and Europe.
Exhibit 1. BABA Offering Analysis
Fully-Diluted Share Analysis
[a] Shares outstanding, pre-IPO
Shares
2,341.9
% of Total
--
123.1
26.1
5%
1%
197.0
18.3
2.7
0.9
128.4
8%
1%
0%
0%
5%
Shares Outstanding, Post Offering [a+b]

Shares Outstanding, Post Offering & Over Allotment [a+b+c]
2,465.0
2,491.1
---
Proceeds to the company at $67 per share ($M)

Proceeds to selling shareholders at $67 per share ($M)
Total Offering ($M)
$9,998
$14,666
$24,664
Implied Market Capitalization at $66 ($M)

$164,416
$166,907
$169,398
New shares issued from this offering

[b] ADS offered in IPO by Company
[c] Options to purchase ADS from the Company
Shares sold in this offering (not new shares)
ADS offered by selling shareholders
Option to purchase additional ADS from Yahoo
Option to purchase additional ADS from Jack Ma
Option to purchase additional ADS from Joe Tsai
Outstanding shares freely convertible to ADS post offering
Source: Company reports and CRT Capital Group LLC estimates
Page 5

Alibaba Group, Inc.
September 17, 2014
Key Investment Positives

1. Leader in Very Large and Attractive China e-Commerce Market Opportunity
Alibaba is the clear leader in the China e-Commerce market, with iResearch and
Company reports estimating the Companys share of total China ecommerce at 81% in
2013 and its share of China mobile commerce at 86% in F1Q15. We believe that BABAs
target China e-commerce market opportunity is highly attractive, given:
Strong China Market Fundamentals. We believe consensus expectations are for

China GDP to grow at a 7% CAGR from 2013 to 2016. Consumption remains
relatively low at approximately 36% of GDP in 2013 (versus approximately 67%
of GDP in the U.S.) and we expect consumption to outgrow GDP for the
foreseeable futurewe currently expect consumption to grow at an 8% CAGR
from 2013 to 2016.
Exhibit 2. 2013 GDP Growth Rate By Country

China
12.28%
Korea
6.56%
5.97%
Germany
France
4.79%
3.80%
Russian Federation
United States
United Kingdom
India
3.45%
2.53%
0.90%
-0.18% Brazil
-17.51%
Japan
Source: iResearch
Strong China e-Commerce Potential. China had approximately 618M Internet

users at end of 2013, per iResearch. While China represents the worlds largest
Internet user base, Internet penetration remains relatively low at 46% of the
population versus 82% in the U.S. We believe that the online shopping
opportunity also remains significantly underpenetrated in China, with just 49%
of Chinas Internet population shopping online in 2013 vs. 64% in the U.S.
Page 6

Alibaba Group, Inc.
September 17, 2014
Exhibit 3. China Internet Metrics vs. Other Countries

Internet Penetration
(Internet users as a % of total population, 2013)
Online shopper penetration (Online shopper as a %

of total Internet user population, 2013)
100.0%
88.0%
90.0%
82.0%
80.0%
80.0%
85.0%
63.8%
70.0%
68.0%
64.2%
52.1%
48.9%
60.0%
50.0%
45.8%
40.0%
30.0%
20.0%
10.0%
0.0%
China
US
UK
Japan
Germany
China
US
UK
Japan
Germany
Source: iResearch
China has an underdeveloped offline retail sector. There are 0.6 square meters
of per capita retail space in China versus the U.S. with 2.6 square meters of
retail space per capital. We believe that the retail infrastructure in China is
particularly underdeveloped outside Tier 1 and 2 cities, despite 60% of retail
sales being attributable to regions outside Tier 1 and 2 cities.
Exhibit 4. Retail space per capital in square meters, 2013

3.0
2.6
2.5
2.0
1.5
1.5
1.3
1.3
U.K.
Japan
1.0
0.6
0.5
0.0
China
US
Germany
Source: Euromonitor International
Mobile Driving Incremental Internet & eCommerce Adoption. China is seeing a

massive boom in mobile, and we believe this rapid mobile adoption should
increase overall Internet and online commerce penetration. There were 500M
mobile users at end of 2013, which is 1.6x bigger than the entire population of
the U.S. China represents the worlds largest base of mobile users despite
mobile penetration in China now standing at just 36%, versus 80% in the U.S.
2. Unique Platform/Ecosystem and Strong Network Effects

We believe BABA has constructed a unique end-to-end online commerce and marketing
services platform that boasts strong network effects, competitive moats, and achieved
massive scale and impressive margins despite (and likely reinforced by) modest value
capture from ecosystem participants and transactional activity.
Page 7

Alibaba Group, Inc.
September 17, 2014
As illustrated in Exhibit 5, BABA operates four principle retail marketplaces (Taobao,

Tmall, Juhuasuan and AliExpress) and two principle wholesale marketplaces (1688.com
and Alibaba.com). The activity within BABAs wholesale marketplaces helps to feed
inventory to the Companys retail marketplaces, and BABAs key C2C Taobao
marketplace serves as a key driver of traffic to Tmall (branded B2C e-commerce
marketplace) and Juhuasuan (group buying platform).
Exhibit 5. BABA Marketplaces and Ecosystem
We believe BABA provides an extraordinary value proposition to marketplace sellers and

buyers, particularly on Taobaowhile Taobao marketplace sellers may purchase payfor-performance or display advertising from BABA to drive traffic to their product
listings or storefronts, we believe that many marketplace sellers run their businesses on
Taobao without generating significant revenue for BABA (an even more impressive value
proposition given that Alipays payment processing services are included free-ofcharge). We believe that BABAs conservative monetization strategy, first mover
advantage and the fact that BABA does not allow its sites to be indexed by search
engines such as Baidu, have driven its massive ecosystem (279M active buyers and 8.5M
active sellers in the twelve months ending June 30, 2014) and GMV scale ($296B in the
twelve months ending June 30, 2014). We view BABA as the key consumer starting
point for online commerce in Chinain our view, BABAs footprint in China ecommerce is comparable to the U.S. footprint of GOOGL, EBAY and AMZN combined.
Underlying BABAs marketplace is an impressive platform stack including payment and
escrow services (provided via Alipay), online marketing services (provided by BABAs
Alimama marketing platform; marketing services have been the primary historical driver
of BABAs revenue, though we note that GMV-based commissions are increasingly
important to BABAs business model as Tmall grows its share of BABAs China retail
GMV), logistics (provided by BABAs 48%-owned China Smart Logistics partnership with
major logistics and delivery service providers and real estate developers in China), and
cloud computing. We believe that BABAs platform stack provides an effective end-toPage 8

Alibaba Group, Inc.
September 17, 2014
end solution for e-commerce that would be difficult to replicate and that allows BABA to
operate its business very efficiently and profitably despite modest value capture from its
marketplaces.
Exhibit 6. BABA e-Commerce Platform Stack
We highlight the following key platform components:
Alipay. Founded in 2004 and divested by BABA in early 2011 due to changes in
PRC regulation, Alipay provides payment and escrow services to BABA
marketplace participants free of charge. We believe Alipays services have been
key to establishing trust between buyers and sellers within BABAs marketplaces
and that Alipays provision of payment and escrow services on preferential
terms to BABA serve as a key cost advantage versus competitors.
Alimama. Launched in 2007, Alimama is the key historical monetization engine

of BABAs Taobao marketplace and of BABAs China retail commerce business as
a whole (Online Marketing Services accounted for 69% of BABAs China
Commerce Retail revenue in F2014). Alimama offers BABAs marketplace sellers:
Page 9

Alibaba Group, Inc.
September 17, 2014
Pay-for-performance (P4P) P4P marketing services are sold on a costper-click basis via an online auction which facilitates price discovery
and, like GOOGLs AdWords, incorporates measures of marketer quality
into its ad ranking algorithms.
Display marketing Display advertising on select areas of the Taobao

Marketplace and Tmall, is sold either at fixed prices or via real-time
bidding on a cost-per-thousand-impressions (CPM) basis, and syndicates
advertising to the Taobao Affiliate Network, which BABA believes is the
largest online marketing affiliate network in China in terms of revenue
shared with third-party affiliates.
Taobao Affiliate Network BABA also operates the Taobaoke affiliate

marketing program, which charges marketplace sellers a GMV-based
commission for transactions from users sourced from third-party
marketing affiliates.
Taobao Ad Network and Exchange This is one of Chinas largest realtime online advertising exchanges as well as a proprietary Data
Management Platform for online advertising. To provide context for
U.S. investors, we believe BABAs scale in Chinas Online Marketing
ecosystem is analogous to a combination of GOOGLs AdWords business
in the retail category combined with a large and primarily retailoriented O&O display ad business, a large multi-vertical display ad
network, a large display ad exchange and related DMP technology
offering, and a large commission-based affiliate marketing network.
Exhibit 7. Sample Taobao Search Results Page with P4P Marketing

P4P Advertisements
Source: Taobao.com
China Smart Logistics. BABAs 48%-owned affiliate China Smart Logistics,

founded in May 2013, is a joint venture formed between BABA, five major
Chinese express delivery companies, and firms specializing in real estate
development. China Smart Logistics connects BABAs marketplaces and
marketplace participants to BABAs 14 strategic delivery partners (who
Page 10

Alibaba Group, Inc.
September 17, 2014
collectively operate more than 1,800 distribution centers and more than 97,000
delivery stations and employ more than 1.1M delivery personnel in 600 cities
and 31 provinces of China), allowing marketplace participants to easily navigate
Chinas fragmented logistics landscape.
In the 12 months ended June 30, 2014, China Smart Logistics facilitated the
delivery of 6.1B packages from transactions on BABAs China retail marketplaces
(representing 54% of all package deliveries tracked by the PRC State Post
Bureau over that timeframe and more than the 4.4B packages handled by UPS
globally over the same timeframe) with an average delivery time of three days.
We believe this infrastructure is highly scalablewhile China Smart Logistics
processed 16.6M daily average packages in the twelve months ended June 30,
2014, it was also able to successfully handle 156M packages generated during
BABAs 2013 Singles Day promotion.
Additionally, we believe that BABAs logistics partnership has allowed the
Company to successfully scale its logistics network without onerous capital
requirements. While competitors such as JD and AMZN are investing heavily in
owned logistics capabilities in China, BABAs share of China Smart Logistics
registered capital is approximately $800M, of which BABA has already
contributed approximately $270M. While China Smart Logistics plans to build a
network of logistics hubs and other infrastructure with the aim of supporting
the delivery of over 100M packages per day within 24 hours of an order being
placed, we expect that this infrastructure will primarily be financed via leverage
and that BABAs incremental capital contributions to the JV should be limited.
3. Rare Combination of Massive Scale, Strong Growth and High Margins
We believe that BABA has all the makings of a core large-cap Internet holding, given its
relatively unique combination of high growth (the Company grew revenue 46% YoY in
F1Q15), very high profit margins (58% TTM Adjusted EBITDA margin not including
royalty and services fee income from Alipay), and massive scale (TTM revenue of
approximately $9.9B). Among large cap Internet peers, we believe only FB offers a
similarly attractive combination of growth, profitability and scale. And BABA has one
thing FB doesntexposure to China Internet growth.
Page 11

Alibaba Group, Inc.
September 17, 2014
Exhibit 8. Large Cap Internet Peer Revenue Growth vs. EBITDA Margin
80%
70%
JD
FB
60%
2Q14 Revenue Growth
BIDU
50%
BABA
40%
700-HK
30%
PCLN
AMZN
GOOGL
20%
EBAY
10%
0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
TTM EBITDA Margin
Source: Company reports, FactSet and CRT Capital Group LLC estimates. Bubbles scaled by TTM revenue.
Among comparable large-cap Internet peers, only three companies grew revenue faster
than BABA in 2Q14FB, BIDU, and JDand only oneFBdemonstrated higher TTM
EBITDA margin. However, we note that in recent quarters BABA has demonstrated
decelerating/uneven revenue growth and, over the past two quarters, declining EBITDA
marginthis stands in contrast to FBs record of generally accelerating revenue growth
and generally expanding EBITDA margin over the past eight quarters. We believe that
much of the volatility in BABAs revenue growth is attributable to the rapid consumer
shift to mobile, a trend to which many Internet companies have been forced to adapt,
particularly over the past two to three years. While FB adjusted its business model for
mobile in 2012-2013 (and GOOGL began investing in mobile well before that), we
believe BABA is still in the process of adapting its monetization model to mobile.
Page 12

Alibaba Group, Inc.
September 17, 2014
Exhibit 9. Large Cap Internet Peer Revenue Growth, Trailing Eight Quarters
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
3Q12
4Q12
1Q13
GOOGL
FB
EBAY
2Q13
JD
3Q13
700-HK
BIDU
4Q13
BABA
1Q14
AMZN
2Q14
PCLN
Source: Company reports, FactSet and CRT Capital Group LLC estimates.
While BABA ranks second to FB in terms of EBITDA margin, we expect margins to come
down over the next 12-18 months, as BABA invests in growing the business expanding
further into Tier 2 and Tier 3 cities in China, and expanding operations in the U.S. and
Europe.
Exhibit 10. Large Cap Internet Peer EBITDA Margin, Trailing Eight Quarters
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
-10.0%
GOOGL
FB
EBAY
JD
700-HK
BIDU
BABA
Source: Company reports and CRT Capital Group LLC estimates.
4. Strong Mobile Positioning/Footprint With Stronger Monetization On the Way

We believe BABA offers a unique play on growth in mobile Internet usage in China,
given its strong leadership position in China m-commerce, rapidly growing mobile user
base and strong collection of mobile assets and applications. We expect BABAs strong
early-mover advantage and strong mobile positioning will take on increasing importance
going forward, as we expect mobile to become the primary Internet access conduit for
much of the Chinese population. We note that:
Page 13

Alibaba Group, Inc.
September 17, 2014
BABA is the clear leader in mobile commerce in China, with 86.1% share of total
China mobile commerce in F1Q15, per iResearch, even higher than its
commanding 81% share of the China e-commerce market as a whole.
The Companys Taobao Marketplace mobile application has been the most
popular mobile commerce app in China (in terms of mobile MAU) since August
2012.
BABAs mobile user base continues to grow rapidly. In June 2014, the Company
had 188M mobile monthly active users, up from 163M in March 2014 and 136M
in December 2013.
The acquisition of UCWeb (the Company initially invested in UCWeb in May

2013, increased its equity interest in December 2013, and acquired the
remaining equity interest in June 2014) makes BABA the leader in the China
mobile web browser market. Per iResearch, UCWeb had 264M active users in
June 2014. We believe BABA can effectively leverage its ownership of UCWeb to
feed shoppers to its marketplace applications, and can drive incremental
marketing revenue as merchants try to reach mobile users.
With Taobao Marketplace, UCWeb and Alipay, BABA operates or maintains

close ties with three of the five most popular mobile applications in China,
based on mobile MAUs.
Beyond its core marketplace applications, BABA is investing in a number of

O2O (online to offline and offline to online) services and mobile applications,
including Taobao Diandian (restaurant pre-order and takeaway), Taobao Movie
(real-time movie listings and ticketing), Taobao Travel (online and mobile travel
bookings) and AutoNavi (navigation and location-based services).
As we noted above, mobile is a double-edged sword for BABA (as it has been for many
Internet companies): a source of explosive incremental usage growth, but also a nearterm monetization headwind. As illustrated in Exhibit 11 and Exhibit 12, BABAs mobile
China retail GMV has been growing very quickly and mobile share of BABAs total China
retail GMV has been expanding rapidly as well, accounting for nearly 33% of the
Companys total China retail GMV in F1Q15.
Page 14

Alibaba Group, Inc.
September 17, 2014
Exhibit 11. BABA Mobile China Retail GMV Trend

$30.0 B
500%
423%
$25.0 B
450%
430%
382%
400%
366%
$20.0 B
331%
350%
332%
307%
275%
$15.0 B
300%
298%
250%
200%
$10.0 B
150%
100%
$5.0 B
50%
$0.3 B
$0.4 B
$0.9 B
$1.1 B
$1.5 B
$2.0 B
$4.1 B
$5.0 B
$6.6 B
$8.8 B
$16.7 B
$18.9 B
$26.3 B
6/11A
F1Q12A
9/11A
F2Q12A
12/11A
F3Q12A
3/12A
F4Q12A
6/12A
F1Q13A
9/12A
F2Q13A
12/12A
F3Q13A
3/13A
F4Q13A
6/13A
F1Q14A
9/13A
F2Q14A
12/13A
F3Q14A
3/14A
F4Q14A
6/14A
F1Q15A
$0.0 B
0%
Mobile China Retail GMV ($B)
YoY Growth
Exhibit 12. BABA Mobile vs. PC China Retail GMV Mix

100%
90%
80%
70%
60%
50%
98.6%
98.3%
96.2%
94.4%
92.6%
89.3%
88.0%
85.3%
95.4%
2.5%
3.8%
5.6%
7.4%
10.7%
12.0%
14.7%
4.6%
12/11A
F3Q12A
3/12A
F4Q12A
6/12A
F1Q13A
9/12A
F2Q13A
12/12A
F3Q13A
3/13A
F4Q13A
6/13A
F1Q14A
9/13A
F2Q14A
97.5%
80.3%
72.6%
67.2%
40%
30%
20%
10%
0%
1.4%
6/11A
F1Q12A
1.7%
9/11A
F2Q12A
Mobile Share of BABA China Retail GMV
19.7%
12/13A
F3Q14A
27.4%
3/14A
F4Q14A
32.8%
6/14A
F1Q15A
PC Share of BABA China Retail GMV
5. Room For Additional Monetization Growth Over Time

Versus comparable third-party marketplaces such as EBAY, AMZN, JD, and even GOOGL
(in a broad sense of the word marketplace), we believe that the Taobao and Tmall
marketplaces remain relatively undermonetized by BABA. In F2014, BABA generated
$4.8B in Online Marketing Services revenue in its China Commerce Retail segment but
generated nearly $270B of GMV for its merchants, representing a 56x return on
advertising spend for marketplace merchants. Even if we were to include the additional
commissions and storefront fees paid by marketplace merchants, BABA still produced a
39x return on total platform spend by merchants.
We believe that BABAs return on merchant spending (including advertising,
commissions and storefront fees) is far more attractive versus competing China ecommerce platforms such as JD and global e-commerce enablers such as AMZN, EBAY
and GOOGL. We believe that Chinese e-commerce competitor JD charges third-party
sellers a commission averaging approximately 7% of GMV, AMZN charges a referral fee
(not including fulfillment) to third-party merchants which averages approximately 15%
(category-specific fees vary from 8-20% for most categories), EBAY charges merchants
final value fees which we believe average approximately 8.5% and PayPal payment
processing fees vary by merchant type and location but have averaged approximately
3.5% of transaction value in recent quarters, and we believe that GOOGL offers an
average return on advertising spend of approximately 7-10x in the retail category
Page 15

Alibaba Group, Inc.
September 17, 2014
(though, in the case of GOOGL, the merchant owns the customer relationship and may
drive incremental revenue after initial customer acquisition).
We find BABAs value proposition versus comparable e-commerce platforms even more
remarkable given that payment processing and escrow services from Alipay are offered
essentially free of charge to BABA marketplace merchants. Given our analysis, we
believe that BABA 1) should have the ability to raise GMV-based commission rates
and/or alter elements of its ad products or ad auction to drive take rate higher and
merchant ROI lower while still offering a superior value proposition versus competitors
and market precedents, and 2) as sophistication and competition among third-party
sellers increases, we expect that marketplace merchants will naturally drive BABAs
auction-driven ad pricing up and merchant ROI down over time.
6. Potential Alipay Optionality
BABAs relationship with Alipay is undoubtedly complex, but we believe could offer
additional upside opportunity for BABA shareholders over the longer term. BABA
originally established Alipay in December 2004 to operate the Companys payment
services business and facilitate trust within BABAs marketplaces via the provision of
third-party payment processing and escrow services. In June 2010, the Peoples Bank of
China (PBOC) issued new regulations requiring that non-bank payment companies such
as Alipay obtain a license in order to operate in China, and further stipulated that such
payment companies with foreign ownership would be subject to additional future
regulation and guidelineshowever, such guidelines were never issued by the PBOC.
Given the uncertainties of the regulatory situation, BABA divested its interest in and
control over Alipay in early 2011. Alipays parent company, Small and Micro Financial
Services Company, is now owned by two equity investment vehicles which are owned by
BABAs Executive Chairman Jack Ma, other employees of BABA and Small and Micro
Financial Services Company, and members of the Alibaba Partnership. These equity
investment vehicles are in turn controlled by an entity which is 100% owned by Jack Ma,
essentially providing him with full voting control over Small and Micro Financial Services
Company. After BABAs divestment of its equity interest in Alipay, BABA entered into a
series of agreements which govern the relationship between BABA and Small and Micro
Financial Services Company. We highlight the following key features of the relationship,
as restructured in August 2014:
Commercial Agreement. Alipay provides payment processing and escrow

services to BABA on preferential terms which allow BABA to make Alipays
services available to BABA marketplace buyers and sellers free of charge. In
F2014, BABA paid approximately $379M (XX% of BABAs F2014 revenue) to
Alipay for these services. Fee rates are determined by Alipays costs, but going
forward the rate schedule will require annual approval by a special committee
formed by BABAs independent directors and the director designated by
Softbank. The commercial agreement has an initial term of 50 years and is
automatically renewable for further periods of 50 years (BABA may terminate
Page 16

Alibaba Group, Inc.
September 17, 2014
with one years notice). If the commercial agreement is modified by regulatory

requirement, BABA will be entitled to an unspecified compensatory payment.
Intellectual Property License and Software Technology Services Agreement

(ILPA). Subject to the agreement as amended in August 2014, Small and Micro
Financial Services Company will pay BABA the sum of an expense
reimbursement and 37.5% of the consolidated pre-tax income of Small and
Micro Financial Services Company. In F2014, Small and Micro Financial Services
Company paid BABA $284M, recognized net of expenses as other income. The
ILPA will terminate upon a qualified IPO of Small and Micro Financial Services
Company or Alipay and under circumstances in which BABA has acquired a 33%
equity stake in Small and Micro Financial Services Company.
Liquidity Event Payment. In the case of a liquidity event, such as a qualified IPO
of Alipay or Small and Micro Financial Services Company, BABA will be entitled
to receive a payment equal to 37.5% of the equity value of Small and Micro
Financial Services Company.
Potential Equity Interest. BABA is entitled to acquire (and maintain, in the case
of incremental equity issuance to third parties prior to a qualified IPO) up to a
33% equity interest in Small and Micro Financial Services Company if it receives
applicable PRC regulatory approvals. However, ILPA payments would terminate
upon BABA acquiring the 33% stake and would be reduced proportionately for
equity interests acquired below that amount. We believe that the purchase
price of such equity interest would be funded by payments from Small and
Micro Financial Services Company.
Sale of BABAs Micro Loan Business. In August 2014, BABA agreed to transfer
its SME micro loan business and the bulk of its loan portfolio to Small and Micro
Financial Services Company in exchange for cash consideration of $519M. BABA
will also be paid 2.5% of the average daily balance of the micro loan portfolio of
Small and Micro Financial Services Company from 2015-2017 and the 2017 fee
amount from 2018 to 2021. We expect the transfer of the micro loan business
to significantly reduce revenue in BABAs fast-growing Other revenue segment
but to modestly increase Other Income.
In summary, Alipay and its parent company 1) contribute to the value proposition of
BABAs marketplace business by providing payment processing services at preferential
rates, 2) will pay BABA 37.5% of pre-tax income until a liquidity event occurs or BABA is
able to take an equity stake, and 3) could provide investors with additional upside in the
case of an IPO or sale of Alipay or Small and Micro Financial Services Company or a
change in PRC law allowing BABA to take an ownership stake in the company.
In our valuation analysis, we are not assigning explicit value to the potential equity stake
or liquidity event payment at this timeindeed, even if a liquidity event or equity
Page 17

Alibaba Group, Inc.
September 17, 2014
ownership stake by BABA were possible under PRC regulation, it is unclear how the
market might value Alipay or its parent, particularly given the nature of the commercial
agreement with BABA, the fact that BABA accounts for a significant percentage of
Alipays total payment volume (for the twelve months ended June 30, 2014, BABAs
China retail marketplaces accounted for 29.7% of Alipays $778B in total payment
volume) and the fact that the close relationship between BABA and Small and Micro
Financial Services Company has likely fueled much of Alipays growth off of BABAs
marketplaces as well. Alternately, if Alipay were released from its commercial
agreement with BABA, it is unclear how that could impact BABAs payment processing
costs and gross margins, and thus the valuation of the core BABA marketplace business.
However, as Alipay continues to develop its payment business both on and off BABAs
marketplaces and expands into adjacent financial services opportunities (e.g., micro
loans, online banking, remittances, etc.), we feel confident that Small and Micro
Financial Services Company should offer attractive optionality in addition to the value of
BABAs core business.
7. The Opportunity in Tier 3 & Tier 4 Chinese Cities
We believe that there is a big opportunity within China, where BABA can go deeper into
Tier 3+ (cities in more rural parts of China). Tier 1 cities refer to Beijing, Shanghai,
Shenzen, and Guongzhou. Tier 2 cities refer to 32 major cities not including the Tier 1
cities. Outside of the Tier 1 & 2 cities that have populations greater than 1M people,
there are 92 additional cities in China with populations greater than 1M, compared to
the U.S., which only has only 9 cities with populations greater than 1M. We believe that
this is a big opportunity for Alibaba. As of 2012, Tier 1 &2 cities accounted for 255M
people in China (19% of the population) and accounted for about 40% of total retail
sales in China. The rest of China (Tier 3+ cities) had 1.1B people (81% of the population),
and accounted for almost 60% of total China retail sales.
Furthermore, Chinese citizens have been migrating from rural areas to more urban
areas in search of work and better jobs. As a result, Chinas urban population was
greater than its rural population for the first time in 2011 (~690M vs. ~660M). Based on
a McKinsey study from 2012, the exhibit below shows the expected growth of towns
and cities from 2005 to 2025. We believe that the influx of people into the cities and
hence, the increase in the number of urban towns and cities will lead to an increase in
growth and consumption in China. We view this as a positive for BABA for two reasons:
1) As BABA moves to offer its services in more Tier 3 and Tier 4 cities in China, BABA can
monetize Chinas large population that lives outside of Tier 1/2 cities; 2) As those
people move to urban areas over time, we believe that BABA will be in a strong position
to provide eCommerce services to those individuals; and 3) Given that proprietorship
and small businesses are common in China, BABA may be in a strong position to help
those retailers reach Chinas population.
Page 18

Alibaba Group, Inc.
September 17, 2014
Exhibit 13. China Population by City Size And Potential Migration Pattern (Ms)
CAGR, %
100% =
572
6
15
926
52
68
13
2.4%
6.9%
51
11
1.1%
207
34
3.4%
25
2.2%
53
28
109
26
128
101
25
2005
130
4
17
0.3%
23
New Cities
Big Town (<0.5M)
Small (0.5-1.5M)
Big (5-10M)
Mega (10M+)
2025
Midsized (1.5-5M)
Source: Company McKinsey Global Institute China All City Model, McKinsey Global Institute analysis
Furthermore, Tier 2 cities in China have grown significantly and have strong potential to
develop further. One of the key drivers to this growth is the involvement of the Chinese
government through its investment in central China where there is a concentration of
tier 2 cities, to build and develop its infrastructure and transport. And with a better
infrastructure being built out for Tier 3 and Tier 4 cities, we believe that this will create a
large opportunity for Alibaba to penetrate those markets over time.
Page 19

Alibaba Group, Inc.
September 17, 2014
Exhibit 14. Tier 1, Tier 2 and Tier 3 cities in China
Source: Company McKinsey Global Institute China All City Model, McKinsey Global Institute analysis
8. International Expansion Opportunities

While we believe that BABAs focus remains on its core China retail operation, we
believe investors should take note of two key opportunities related to international
markets. First, we highlight the Companys International retail business, AliExpress, in
which international consumers buy goods directly from Chinese retailers. This business
is small today at 2% of BABAs total revenue but grew 100% YoY in F1Q15. In a related
development, BABA recently launched 11 Main, a U.S. based C2C marketplace. While we
view this business as being at an experimental stage of development, we note that it
could be an early indication of BABAs ambitions to port its unique marketplace business
model to markets outside China over time. Second, we note that BABA appears focused
on bringing international brands and retailers to China via Tmall Global, which eases
international sellers entry into the Chinese market, providing smaller international
sellers with assistance with trademark registration, payment settlement and logistics.
We believe Tmall Global could be a big opportunity for BABA, easing barriers to market
entry for smaller international brands while meeting Chinas increasing consumer
demand for quality foreign-made goods. Over time, we also believe that wider
availability of international brands via Tmall Global could gradually ease consumer and
investor concerns regarding counterfeit products within BABAs marketplaces.
Page 20

Alibaba Group, Inc.
September 17, 2014
9. Strong Management Team

While we have never met BABAs management team and do have some salient concerns
regarding corporate governance and BABAs investments in non-core businesses which
we outline elsewhere in this report, we have enormous respect for what BABAs
leadership has accomplished since 1999. While BABA has arguably emulated certain key
innovations from Western Internet companies, we believe the Company has crafted a
business strategy which is uniquely suited to the Chinese market, ably and creatively
responded to key challenges (e.g., PRC regulations on foreign ownership of payment
companies, creating a network partnership of logistics companies, etc.) to grow the
business in a profitable manner.
Page 21

Alibaba Group, Inc.
September 17, 2014
Key Investment Concerns

1. Mobile Monetization Remains A Headwind For BABA
Given lower monetization of mobile GMV than PC GMV (particularly within the Taobao
marketplace, where revenue is driven primarily by pay-for-performance marketing,
while Tmall revenue is driven primarily by commissions which do not vary between PC
and mobile), mobile take rate has significantly trailed BABAs PC-based GMV take rate,
as illustrated in Exhibit 15. However, as can be seen in the exhibit, we expect that
mobile take rate should expand going forward, as the trend has been moving up and to
the right.
Exhibit 15. BABA Quarterly and Annual Historical and Projected China Retail Take Rate
4.00%
3.53%
3.53%
3.43%
3.50%
3.03%
2.95%
3.00%
2.50%
2.57%
2.40%
2.46%
2.50%
2.00%
2.77%
2.52%
2.61%
3.05%
3.08%
2.67%
2.57%
3.13%
2.96%
2.94%
2.52%
2.51%
2.31%
3.13%
2.63%
2.77%
2.30%
3.03%
2.88%
2.18%
2.59%
2.34%
2.09%
2.04%
12/14E
F3Q15E
3/15E
F4Q15E
2.14%
2.77%
2.49%
2.44%
12/15E
F3Q16E
3/16E
F4Q16E
2.04%
1.50%
1.00%
1.12%
0.50%
0.00%
0.44%
0.47%
0.55%
0.47%
6/12A
F1Q13A
9/12A
F2Q13A
12/12A
F3Q13A
3/13A
F4Q13A
0.58%
0.61%
6/13A
F1Q14A
9/13A
F2Q14A
PC Take Rate
3.50%
3.00%
12/13A
F3Q14A
1.49%
1.44%
6/14A
F1Q15A
9/14E
F2Q15E
0.98%
3/14A
F4Q14A
Mobile Take Rate
3.15%
6/15E
F1Q16E
9/15E
F2Q16E
Blended Take Rate

3.21%
3.26%
2.76%
2.84%
2.94%
2.66%
2.50%
2.50%
2.55%
2.63%
2.51%
2.31%
2.00%
1.84%
1.50%
1.00%
0.91%
0.50%
0.49%
0.00%
F2013A
F2014A
PC Take Rate
F2015E
Mobile Take Rate
F2016E
F2017E
Blended Take Rate
To date, we believe BABA has taken a relatively conservative approach to mobile

monetization and that Taobao marketplace sellers have underallocated their marketing
budgets relative to mobile GMV. We believe that BABA should be able to narrow the
mobile monetization gap over the next several quarters (and potentially close or reverse
the gap over the longer term), for three key reasons: 1) With mobile accounting for
nearly 33% of BABAs total China retail GMV in F1Q15, we believe that BABAs
marketplace sellers are likely to face increasing economic pressure to either shift
marketing budget to mobile or lose share to sellers who do; 2) We believe that BABA
could essentially force seller adoption of mobile campaigns within the Alimama
marketing platform, much as GOOGL forced its CPC ad auction participants to adopt
mobile via the Enhanced Campaigns transition; and 3) Simultaneous with mix shift to
mobile, we note that BABAs mix of China retail GMV is shifting to Tmall irrespective of
the mobile transition. We believe that Tmall captures a higher take rate than the Taobao
Page 22

Alibaba Group, Inc.
September 17, 2014
marketplace in general (Tmall charges GMV-based percentage commissions, which

range between 0.3% and 5%, and also offers marketing services products) and that the
monetization gap between mobile and PC is considerably smaller on Tmall than Taobao
(Tmall commissions do not vary between PC and mobile).
2. Pressure On Margins To Be Expected
We believe that BABA plans to expand aggressively into Tier 3 cities in China, as well as
expanding in the U.S. and in Europe. As such, we are modeling for EBITDA margins to
contract by about 300 bps to 53% in FY15. While we expect EBITDA margins to rise over
time, it is unclear what the Companys appetite for investing will be, and what the
Companys investment principals are. Will BABA behave more like a Facebook and
spend more cautiously? Or will it be more like an AMZN or GOOG and keep investing in
existing and new business opportunities that may or may not generate return in the
long-run?
Exhibit 16. BABA Quarterly Historical and Projected EBITDA & EBITDA Margin
16.0B
70%
14.0B
57%
12.0B
10.0B
57%
59%
54%
50%
42%
60%
60%
53%
53%
53%
50%
47%
41%
40%
8.0B
30%
6.0B
20%
4.0B
10%
2.0B
5.8
4.9
6.1
6.5
11.2
5.6
8.6
8.4
13.5
9.7
11.5
11.9
6/12A
9/12A
12/12A
3/13A
6/13A
9/13A
12/13A
3/14A
6/14A
9/14E
12/14E
3/15E
0.0B
0%
EBITDA
EBITDA Margin
3. Limited Ability to Nominate/Elect Directors

BABA has created rules to significantly limit the influence of outside investors on the
election of its Board. In fact, the rules have been designed such that the Alibaba
Partnership will be entitled to nominate a member of the board to ensure that the
Partnership comprises a simple majority of our board of directors. Also, SoftBank,
Yahoo, Jack Ma and Joe Tsai will agree to vote their shares in favor of the Alibaba
Partnership director nominees at each annual shareholders meeting, so long as
SoftBank maintains at least 15% ownership. Softbank will be able to have one member
on the board, until its ownership falls below 15%. And Yahoo, Jack Ma and Joe Tsai will
agree to vote their shares in favor of the election of the SoftBank director nominee at
each annual general shareholders meeting in which the SoftBank nominee stands for
election. We believe that this is a negative for investors, and it goes to show that even
existing large holders like Softbank and Yahoo! will have limited say/input on the
Alibaba Board.
Page 23

Alibaba Group, Inc.
September 17, 2014
4. Fake and Objectionable Products & Listings

As a marketplace, it is important for BABA to maintain trust among its customers. While
most of products listed and sold on BABAs marketplaces appear to be legitimate, weve
found several counterfeit luxury goods, NSFW items, etc. Also, our checks have
indicated that some transactions on BABAs marketplaces may be fake, with the aim
of boosting a sellers rating on the platform (which we believe could modestly inflate
reported GMV, but which would not result in fraudulent revenue). If BABA cannot
monitor and control the quality of listings by merchants, we believe that this could
negatively impact consumers willingness to transact on BABAs marketplaces.
5. VIE Structure
Given the VIE structure, we believe that ultimate control lies among BABAs PRC
nationals and not foreign investors. Alibaba Group Holding Limited is a Cayman Islands
holding company. The Company operates businesses in which foreign investment is
prohibited in the PRC through wholly-foreign owned enterprises, (WFOE), majorityowned entities and variable interest entities (VIE). In a VIE structure, the offshore
holding company forms a new wholly owned subsidiary in China which controls, and
receives, the economic benefits of the domestic company (VIE) through a series of
contractual arrangements. The relevant variable interest entities (VIE), 100% owned
by PRC citizens or by PRC entities owned by PRC citizens, hold the licenses and operate
businesses in which foreign investment is restricted or prohibited. As a result of the
contractual arrangements, the offshore holding company is able to consolidate the
financials of all businesses. While the VIE structure allows foreign investors to invest in
PRC companies, we believe it also carries significant risk, as potential recourse options
by investors or consumers may not necessarily be recognized in the Cayman.
6. Peanut Butter Investment/Acquisition Strategy?
BABA has been a highly acquisitive company over its history, but over the past year or
so, the Company has been acquiring a number of companies that appear to be non-core
to the Companys marketing and e-commerce businesses. In 2014 alone, BABA has
made approximately 12 of acquisitions or investments, and we believe that there could
be integration risk with current and future acquisitions. Below we highlight the key
deals over the past few years. We note that in 2014 alone, BABA has invested ~$6.3B+
in various companies, many of which we view as non-core to the business, such as a
video game company, taxi-service business, a soccer team, TV studio, traditional
newspaper, etc. We view this investment strategy as the peanut butter investment
philosophy (thanks, former-Yahoo! VP Brad Garlinghouse for your famous Peanut
Butter Manifesto in 2006!) which stated that YHOO was investing in anything and
everything, akin to smearing peanut butter across everything. To be fair, U.S. Internet
companies have certainly made some speculative investments in the past, such as FBs
acquisition of Oculus Rift, AMZNs recent acquisition of Twitch, EBAYs acquisition of
Skype, and Google buying Nest, etc.
Page 24

Alibaba Group, Inc.
September 17, 2014
Exhibit 17. Select BABA Acquisitions & Investments

Target
Investm't/
Acquist'n
Date
Price ($M)
Kabam Inc.
Investment
Jul-14
$120
10% stake in the mobile gaming company
UCWeb Inc.
Acquisition
Jun-14
NA
Leading mobile browser company in China
Guangzhou Evergrande Football Club
Investment
Jun-14
$192
50% stake in professional Chinese soccer club
Singapore Post Limited (SingPost)
Investment
May-14
$250
A leading provider of e-commerce logistics solutions and communications in Singapore
AutoNavi
Acquisition
Apr-14
$1,500
Navigation and location based service in China
Wasu Digital TV Media
Investment
Apr-14
$1,050
20% stake in a leading new media and Internet culture industry group in China
Lyft
Investment
Apr-14
$250
Youku Tudou
Investment
Apr-14
$1,220
TangoMe Inc.
Investment
Mar-14
$215
~20%-25% stake in the mobile messaging and fee-calling app based in Mountain View, California
China Vision Media Group ltd.
Acquisition
Mar-14
$804
60% stake in the media Co. that does TV & film production, print, mobile and TV advertising in PRC
Intime Retail Group
Investment
Mar-14
$692
~25% stake in one of China's leading department store operators
CITIC 21CN Co
Investment
Jan-14
$171
38% stake in the S.I & software developer for drug authentication, tracking and logistics
Goodaymart
Investment
Dec-13
$361
Stake in the logistics unit of Haier Electronics Group
Quixey
Investment
Oct-13
NA
Mountain View, CA based mobile app search company. BABA led the Series C round for $50M
ShopRunner
Investment
Oct-13
NA
Provides e-commerce subscription services such as 2-day delivery
Weibo
Investment
Apr-13
$586
18% stake in the Chinese social networking micro blogging service
Shenzhen One-Touch
Acquisition
Nov-10
NA
Alibaba.com acquired this China based export service provider
Vendio Services Inc.
Acquisition
Jun-10
NA
Platform for SMBs to sell across various online sources like AMZN and EBAY
HiChina Web Solutions
Acquisition
Dec-09
$79
Provides comprehensive Internet application services to businesses in China
Description
Ride-sharing platform. BABA, Third Point & others invested $250M in Lyft's latest round
18.5% stake in the producer of TV programs and other videos over the Internet
Source: Press, Company Reports and CRT Capital Group LLC estimates.
7. Competition
Alibaba faces intense competition in China on several fronts. On the retail side, BABA
competes with JD.com, NewEgg, Dang Dang, Amazon, Walmart, eBay, and others. On
Search Advertising, BABA competes with Baidu, and on the digital media side, BABA
competes with Tencent, Weibo (although BABA has an investment in Weibo) and
others. Given recent investments in social media and communications and content, we
believe that BABA aspires to transform itself from a eCommerce powerhouse to an allencompassing digital experience platform. But that has significant risks, as we believe
that many of BABAs new ventures are outside its core competencies. As BABA aspires
to enter new International markets like the U.S. and Europe, it will face intense
competition from the likes of Google, Amazon, Apple, Facebook, LinkedIn, Twitter,
Yandex, Mercado Libre, and other well-entrenched businesses.
8. 80%+ Shares To Face Lock Up Expiration In One Year
In the exhibit below, we highlight the three key lock-up expiration dates and percentage
of shares outstanding that these shares represent. 181 days post the offering, about
17% of the shares will be eligible for sale. A year post the offering, about 82% of total
shares will be eligible for sale. This does not include the 128M shares that are available
for sale immediately after the offering and not beholden to lock-up restrictions.
Page 25

Alibaba Group, Inc.
September 17, 2014
Exhibit 18. Select BABA Acquisitions & Investments

Share Lock Up Analysis
Diluted Shares Outstanding Post Offering
Shares available for trading 91 days after trading
Total shares available for trading after 366 days
Shares
2,465.0
8.1
429.1
1,579.3
2,016.5
% of Total Lock Up Dates

--0%
17%
64%
82%
12/19/2014
3/19/2015
12/21/2015
Source: Press, Company Reports and CRT Capital Group LLC estimates.
Page 26

Alibaba Group, Inc.
September 17, 2014
How Alibaba Makes Money

Note: refers to Chinese yuan Renminbi, unless otherwise noted.
Alibaba Group reports revenue across four key reporting lines: China Commerce (86.0%
of total F2014 revenue), International Commerce (9.2% of total F2014 revenue), Cloud
Computing (1.5% of total F2014 revenue) and Other (3.3% of total F2014 revenue).
1. China Commerce
$7.2B in F14A,+55% YoY; $10.5B in F15E, +46% YoY
China Commerce revenue is derived from the operations of Alibabas China retail
businesses (including Taobao Marketplace, Tmall, and Juhuasuan) and Alibabas China
wholesale business 1688.com. China Commerce accounted for 86% of total Company
revenue in F2014 and grew 55% YoY in F2014 to 45.1B, or $7.2B. We are currently
forecasting that China Commerce revenue will grow at a 37% CAGR from F2014 to
F2017E, growing to $18.7B, driven primarily by continued strong revenue growth within
the Companys China retail marketplaces and more moderate growth at the 1688.com
China wholesale marketplace.
Exhibit 19. BABA Historical and Projected China Commerce Revenue
140.0B
120%
106%
120.0B
104%
100%
87%
100.0B
80%
80.0B
60%
55%
60.0B
46%
40%
40%
40.0B
27%
20%
20.0B
3.7
7.7
15.6
29.2
45.1
65.7
91.8
117.1
F2010A
F2011A
F2012A
F2013A
F2014A
F2015E
F2016E
F2017E
0.0B
0%
China Commerce Revenue (B)
YoY Growth
China Commerce Retail Taobao Marketplace, Tmall, Juhuasuan

$6.9B in F14A,+59% YoY; $10.0B in F15E, +47% YoY
China Commerce Retail revenue is derived from the Companys China retail
marketplaces, including Taobao Marketplace, Tmall and Juhuasuan. China Commerce
Retail revenue accounted for 95% of China Commerce revenue and 82% of total
revenue in F2014 and grew 59% YoY in F2014 to 42.8B, or $6.9B. We are currently
forecasting that China Commerce Retail revenue will grow at a 38% CAGR from F2014 to
F2017E, or $18.1B.
Page 27

Alibaba Group, Inc.
September 17, 2014
Exhibit 20. BABA Historical and Projected China Commerce Retail Revenue
120.0B
120%
101%
100.0B
100%
80.0B
80%
60.0B
60%
59%
47%
41%
40.0B
40%
28%
20.0B
20%
13.4
27.0
42.8
62.8
88.4
113.2
F2012A
F2013A
F2014A
F2015E
F2016E
F2017E
0.0B
0%
China Commerce Retail Revenue (B)
YoY Growth
China Commerce Retail Monetization Model

Alibaba derives revenue from its China Commerce Retail operations from three primary
sources: 1) Online Marketing Services ($4.8B, +51% YoY and 69.4% of F2014 China
Commerce Retail revenue), 2) Commission ($1.9B, +95% YoY and 28.1% of F2014 China
Commerce Retail revenue) and 3) Other Revenue ($173M, -3% YoY and 2.5% of China
Commerce Retail revenue).
Online Marketing Services Revenue is derived from P4P (Pay for Performance)
marketing, Display marketing, the Taobaoke affiliate marketing program, and Placement
Fees. P4P marketing includes keyword-based cost-per-click advertising sold to
marketplace sellers via a bidded auction. Display Marketing includes advertising sold on
a CPM basis to marketplace sellers, with ad inventory sold either at fixed prices or via
real-time bidding. P4P and Display products may be displayed both on Alibaba websites
and mobile applications and by third-party marketing affiliates; Alibaba has disclosed
that 6.0% of its combined P4P and Display Marketing revenue was derived from services
provided through third-party marketing services in F2014. Taobaoke revenue is derived
from commission-based affiliate marketing programsTaobao and Tmall sellers pay
Alibaba commissions based on a percentage of GMV for transactions settled through
Alipay from users sourced from third-party marketing affiliates. As with other managed
affiliate marketing programs (e.g., CNVRs Commission Junction), Alibaba only
recognizes net revenue derived from its share of commissions. Placement Fees include
fees paid to purchase promotional placement on the Juhuasuan marketplace. We
believe that Online Marketing Services revenue reported within the China Commerce
Retail segment is primarily derived from Alibabas Taobao Marketplace, although the
Tmall and Juhuasuan sellers/marketplaces also generate significant online marketing
services revenue for Alibaba.
Page 28

Alibaba Group, Inc.
September 17, 2014
Exhibit 21. BABA China Commerce Retail Online Marketing Services Revenue
35.0B
120%
101%
30.0B
100%
25.0B
80%
20.0B
60%
51%
15.0B
29%
10.0B
40%
20%
5.0B
9.8
19.7
29.7
6.5
8.4
F2012A
F2013A
F2014A
6/13A
6/14A
0.0B
0%
China Commerce Retail - Online Marketing Services (B)
YoY Growth
Online Marketing Services revenue derived from the China Commerce Retail segment
grew 101% YoY in F2013 to 19.7B ($3.2B), and grew 51% YoY to 29.7B ($4.8B)in
F2014. Quarterly reporting to this level of revenue detail in BABAs public filings has
been limited, however, the Company has reported China Commerce Retail Online
Marketing Services revenue for F1Q15 and F1Q14 (ending June 30, 2014 and June 30,
2013, respectively). The trend of revenue deceleration in Online Marketing Services
revenue in F2014 has carried through to F1Q15 results, with YoY revenue growth
decelerating to 29% in F1Q15 from 51% in F2014.
We believe that ongoing deceleration in revenue growth in Online Marketing Services
is due to the greater proportion of GMV generated on mobile devices and lower
monetization of mobile GMV compared to GMV transacted on PCs. We believe that
merchants are allocating a smaller proportion of their budget to purchase online
marketing services on mobile devices relative to the GMV generated on mobile
devices.
Commission Revenue is derived primarily from sellers on Tmall and Juhuasuan who
pay a commission based on a percentage of GMV for transactions settled through
Alipay. Commission percentages typically range from 0.3% to 5% depending on product
category; Alibaba has set commission rates based on the Companys estimate of
industry profit margins in specific product categories (e.g., our research indicates that
that Alibaba generally charges a commission on the order of 5% in the apparel category
and a commission on the order of 1%-2% in the electronics category) and other strategic
considerations. We note that Taobao Marketplace also derives some of its revenue from
lottery commissions, which took on greater prominence in the Companys financial
results with World Cup-related lotteries in C2Q14/F1Q15.
Page 29

Alibaba Group, Inc.
September 17, 2014
Exhibit 22. BABA China Commerce Retail Commission Revenue

14.0B
120%
114%
12.0B
115%
111%
10.0B
110%
8.0B
105%
6.0B
100%
95%
4.0B
95%
2.0B
90%
2.9
6.2
12.0
1.9
4.0
F2012A
F2013A
F2014A
6/13A
6/14A
0.0B
85%
China Commerce Retail - Commission (B)
YoY Growth
Commission revenue derived from the China Commerce Retail segment grew 111% YoY
in F2013 to 6.2B ($986M) and grew 95% YoY in F2014 to 12.0B ($1.9B). For F1Q15,
Commission revenue grew 114% YoY to 4.0B ($644M). Commission revenue growth
has been driven by strong growth in Tmall GMV (where Commission revenue is the
primary mode of monetization); given that commission rates are identical for
transactions generated from PCs and mobile devices, mobile mix shift has not
represented a headwind for BABAs Commission revenue.
With respect to the Companys strong Commission revenue growth performance in
F1Q15 (+114% YoY), we note that BABA has disclosed that lottery commissions
increased by 372M in F1Q15 (BABA did not report total lottery commission revenue for
the quarter, but rather the increase in commission revenue versus F1Q14); as such, the
YoY increase in lottery commissions alone in F1Q15 accounted for more than 9% of total
Commission revenue in the quarter. BABA has also reported that while its published
commission rates did not change versus the prior-year period, mix shift to product
categories which are charged higher commission rates served as a tailwind for blended
commission take rate in F1Q15. We believe that higher lottery sales in F1Q15 related to
World Cup were also a significant factor in the higher blended commission rate enjoyed
by the Company in F1Q15.
Other Revenue is primarily derived from storefront fees, which are comprised of
monthly subscription fees for Wangpu, Alibabas storefront software. We believe these
fees are primarily derived from Taobao Marketplace. Other Revenue declined 3% YoY to
1.1B ($173M) in F2014 and declined 22% YoY in F1Q15.
Page 30

Alibaba Group, Inc.
September 17, 2014
Exhibit 23. BABA China Commerce Retail Other Revenue

1.2B
70%
58%
60%
1.0B
50%
40%
0.8B
30%
0.6B
20%
10%
0.4B
-3%
0%
-10%
0.2B
-22%
0.7
1.1
1.1
0.3
0.2
F2012A
F2013A
F2014A
6/13A
6/14A
0.0B
-20%
-30%
China Commerce Retail - Other Revenue (B)
YoY Growth
Exhibit 24 below summarizes the sites and sellers from which Alibaba derives its key
revenue sources in the China Commerce Retail segment. As noted above, in addition to
Online Marketing Services revenue and revenue from Storefront fees, Taobao
Marketplace also derives revenue from lottery commissions.
Exhibit 24. Alibaba Group Historical and Projected China Commerce Retail Revenue
Purchaser of Services
Marketplace / Platform
Taobao Marketplace Sellers
Tmall Merchants
Taobao Marketplace
Tmall
Juhuasuan
P4P Marketing Fees

Display Marketing Fees
Taobaoke Commissions
Storefront Fees
NA
Commissions
Placement Fees
P4P Marketing Fees

Commissions
P4P Marketing Fees
Taobaoke Commissions
Commissions
Placement Fees
Forecasting the China Commerce Retail Segment

As noted above, we are currently forecasting that BABA will grow its China Commerce
Retail revenue at a 38% CAGR from F2014 to F2017E. Our forecast for BABAs China
Commerce Retail growth is based on the following assumptions:
Continued Strong Growth in China Retail e-Commerce. We are currently

forecasting the China retail e-commerce market to grow at a 35% CAGR from
F2014 to F2017. We expect Chinese GDP growth to remain relatively stable,
Chinese consumption to increase as a share of GDP, and Chinese e-commerce to
grow its share of total Chinese consumption.
Page 31

Alibaba Group, Inc.
September 17, 2014
Relatively Stable BABA Market Share. We expect that BABAs China Retail GMV
will grow at a 34% CAGR from F2014 to F2017. We expect that BABA will
modestly grow its share of the China retail e-commerce market from 81.5% in
F2014 to 82.2% in F2015, but that BABAs share will modestly decline through
the remainder of our forecast period, exiting F2017E with 79.7% market share.
Mix shifts within the China e-commerce market inform our forecastmobile
commerce is growing rapidly and BABA is clearly dominant here with
approximately 86% market share, per iResearch. However, branded B2C ecommerce is also growing faster than C2C e-commerce in China, and here BABA
is less dominant, with approximately 60% market share in B2C vs. 90%+ market
share in C2C, again per iResearch.
Exhibit 25. BABA Historical and Projected China Retail GMV

4,500.0B
60%
56%
4,000.0B
50%
3,500.0B
42%
3,000.0B
40%
34%
2,500.0B
30%
2,000.0B
25%
1,500.0B
20%
1,000.0B
10%
500.0B
1,077.2
1,677.6
2,385.8
3,197.6
3,997.0
F2013A
F2014A
F2015E
F2016E
F2017E
0.0B
0%
China Retail GMV (B)
YoY Growth
Mix Shift to Mobile, Tmall. As we have noted, BABAs business is characterized

by two key mix shifts: 1) the mix shift from PC-based to mobile commerce and
2) the mix shift from C2C e-commerce (Taobao) to branded B2C e-commerce
(Tmall).
With respect to mobile commerce, we expect mobile to grow from 19% of
BABAs total China retail GMV in F2014 to 56% of BABAs China retail GMV in
F2017E. We are forecasting that BABAs Mobile China retail GMV will grow at a
92% CAGR from F2014 to F2017E, while we expect that BABAs PC-based China
retail GMV will grow at a 9% CAGR over the same timeframe.
We are also forecasting that Tmall will continue to grow its GMV substantially
faster than Taobao. We are currently forecasting that Tmall GMV will grow at a
57% CAGR from F2014 to F2017E while we are forecasting that Taobao GMV will
grow at a 20% CAGR over the same timeframe. Consequently, we are
forecasting that Tmalls share of BABAs total China retail GMV will grow from
30% in F2014 to 49% in F2017E.
Page 32

Alibaba Group, Inc.
September 17, 2014
Exhibit 26. BABA Historical and Projected China Retail GMV by Platform
2,500.0B
350%
301%
300%
2,000.0B
250%
1,500.0B
200%
194%
150%
1,000.0B
100%
500.0B
69%
42%
79.5
318.5
937.9
1,584.9
2,250.9
F2013A
F2014A
F2015E
F2016E
F2017E
0.0B
50%
0%
Mobile China Retail GMV (B)
YoY Growth
2,000.0B
40%
36%
1,800.0B
35%
1,600.0B
30%
1,400.0B
25%
1,200.0B
1,000.0B
20%
800.0B
15%
600.0B
11%
400.0B
10%
8%
7%
5%
200.0B
997.7
1,359.1
1,447.8
1,612.7
1,746.1
F2013A
F2014A
F2015E
F2016E
F2017E
0.0B
0%
PC-Based China Retail GMV (B)
YoY Growth
100%
90%
80%
50.4%
70%
60%
50%
43.7%
60.7%
81.0%
92.6%
40%
30%
49.6%
20%
10%
0%
56.3%
39.3%
19.0%
7.4%
F2013A
F2014A
F2015E
Mobile Share of BABA China Retail GMV
F2016E
F2017E
PC Share of BABA China Retail GMV
Page 33

Alibaba Group, Inc.
September 17, 2014
Exhibit 27. BABA Historical and Projected China Retail GMV by Marketplace
2,500.0B
120%
100%
99%
2,000.0B
80%
73%
1,500.0B
61%
60%
1,000.0B
39%
500.0B
40%
20%
253.2
504.6
874.7
1,409.1
1,958.5
F2013A
F2014A
F2015E
F2016E
F2017E
0.0B
0%
Tmall GMV (B)
YoY Growth
2,500.0B
45%
42%
40%
2,000.0B
35%
30%
29%
1,500.0B
25%
20%
18%
1,000.0B
14%
15%
10%
500.0B
5%
824.0
1,173.0
1,511.1
1,788.5
2,038.5
F2013A
F2014A
F2015E
F2016E
F2017E
0.0B
0%
Taobao GMV (B)
YoY Growth
100%
90%
80%
70%
60%
76.5%
69.9%
63.3%
55.9%
51.0%
50%
40%
30%
20%
10%
23.5%
30.1%
36.7%
44.1%
49.0%
0%
F2013A
F2014A
F2015E
Tmall Share of BABA China Retail GMV
F2016E
F2017E
Taobao Share of BABA China Retail GMV
Relatively Stable Take Rate. After expanding 5 bps YoY to 2.55% in F2014, we
are forecasting that BABAs blended take rate (i.e., revenue take rate as a
percentage of GMV transacted) in the China Commerce Retail segment will
grow to 2.63% in F2015E and should reach 2.83% in F2017E. While BABAs take
rate has suffered due to the ongoing consumer adoption of mobile combined
Page 34

Alibaba Group, Inc.
September 17, 2014
with sellers lower allocations of their marketing spend to mobile, we expect

that the combination of a ramp-up in seller opt-in to Alimamas mobile CPC
auction and mix shift to Tmall (which we believe generally captures a higher
take rate than Taobao given that Tmall sellers pay GMV-based commissions and
buy online marketing services from BABA, and given that Tmalls percentage
commissions are identical for otherwise similar transactions completed on PCs
and mobile devices) will drive significant improvement in mobile take rate, while
PC take should continue to improve modestly due to mix shift to Tmall.
We are currently forecasting that mobile take rate will increase from 0.91% in
F2014 to 1.84% in F2015E, representing 92 bps of YoY improvement. While this
forecast may appear aggressive in light of the 42 bps YoY improvement in
mobile take rate in F2014, we note that 1) mobile take rate grew 91 bps YoY in
F1Q15 to 1.49% (though take rate likely benefitted from lottery commissions
associated with World Cup lotteries), 2) we expect to see a seasonal uptick in
mobile and blended take rate in C4Q14/F3Q15 on seasonal mix shift to Tmall (as
we saw last year when F3Q14 mobile take rate increased 58 bps YoY and 92 bps
QoQ), and 3) with mobile GMV accounting for 33% of BABAs total China Retail
GMV in F1Q15 (up from 12% in F1Q14) and BABAs PC-based China retail GMV
rapidly decelerating due to shifts in consumer behavior (PC-based GMV grew
21% YoY, representing 4,800 bps of deceleration versus F1Q14), BABA sellers
may feel increasing economic pressure to allocate a larger share of their
budgets to mobile. Compared to mobile take rate, we are forecasting more
modest improvement in PC take rate through F2017, driven by continued mix
shift to Tmall.
Exhibit 28. BABA Annual Historical and Projected Take Rate by Platform
3.50%
3.00%
3.15%
3.21%
3.26%
2.76%
2.83%
2.94%
2.66%
2.50%
2.50%
2.55%
2.63%
2.50%
2.31%
2.00%
1.84%
1.50%
1.00%
0.91%
0.50%
0.49%
0.00%
F2013A
F2014A
PC Take Rate
F2015E
Mobile Take Rate
F2016E
F2017E
Blended Take Rate
Page 35

Alibaba Group, Inc.
September 17, 2014
Exhibit 29. BABA Quarterly Historical and Projected Take Rate by Platform
4.00%
3.53%
3.53%
3.43%
3.50%
3.03%
2.95%
3.00%
2.50%
2.57%
2.40%
2.46%
2.50%
2.00%
2.77%
2.61%
2.52%
3.05%
3.08%
2.67%
2.57%
3.13%
2.96%
2.94%
2.52%
2.51%
2.31%
3.13%
2.63%
2.77%
2.30%
3.03%
2.88%
2.18%
2.59%
2.34%
2.09%
2.04%
12/14E
F3Q15E
3/15E
F4Q15E
2.14%
2.77%
2.49%
2.44%
12/15E
F3Q16E
3/16E
F4Q16E
2.04%
1.50%
1.00%
1.12%
0.50%
0.00%
0.44%
0.47%
0.55%
0.47%
6/12A
F1Q13A
9/12A
F2Q13A
12/12A
F3Q13A
3/13A
F4Q13A
0.58%
0.61%
6/13A
F1Q14A
9/13A
F2Q14A
PC Take Rate
12/13A
F3Q14A
1.49%
1.44%
6/14A
F1Q15A
9/14E
F2Q15E
0.98%
3/14A
F4Q14A
Mobile Take Rate
6/15E
F1Q16E
9/15E
F2Q16E
Blended Take Rate
Taking Buyer Growth Into Account. While we are not utilizing BABAs China
Commerce Retail buyer growth as an explicit driver of our forecasts, we believe
that modeling buyer growth (and GMV per buyer) serves as a useful sanity
check for our forecasts. BABA has reported that the Company had 279M active
buyers (on a trailing twelve-month basis) as of the end of F1Q15, up 51% YoY
and representing a third-consecutive quarter of accelerating active buyer
growth. We believe strong growth in active buyers has been driven by growth in
the Chinese middle class and particularly by growth in mobile Internet usage in
China, where BABA is proving to be particularly dominant. Despite recent
acceleration, we are forecasting a moderation in buyer growth going forward as
BABA increasingly penetrates China Internet user population. We are currently
forecasting that active TTM buyers will grow at a 35% CAGR from F2014 to
F2017E, exiting the forecast period at 622M TTM active buyers. Our forecasted
buyer growth implies flattish-to-down GMV per active buyerwe note that
BABA has reported modest YoY declines in GMV per active buyer over the past
two quarters and we believe continued modest declines are a reasonable
likelihood as BABA increases its penetration of Tier 2 and Tier 3 cities and
outlying regions. Though we believe that shoppers in smaller Chinese cities
generally have fewer and less appealing shopping options than those in large
Chinese cities (i.e., online shopping in general faces less competition from brickand-mortar retail), we also believe that incremental buyers in smaller Chinese
cities may also have lower disposable income to spend within Alibabas
marketplaces.
Page 36

Alibaba Group, Inc.
September 17, 2014
Exhibit 30. BABA TTM Active China Retail Buyers

700
60%
600
50%
48%
500
42%
40%
40%
400
34%
29%
30%
300
20%
200
10%
100
123
172
255
361
482
622
F2012A
F2013A
F2014A
F2015E
F2016E
F2017E
0%
TTM Active Buyers (MM)
YoY Growth
Exhibit 31. BABA China Retail GMV Per Active Buyer

7,000
20%
6,000
16%
15%
5,000
10%
4,000
3,000
5%
5%
2,000
0%
0%
0%
1,000
5,390
6,263
6,579
6,604
6,629
-3%
6,424
F2012A
F2013A
F2014A
F2015E
F2016E
F2017E
-5%
GMV Per Active Buyer ()
YoY Growth
China Commerce Wholesale 1688.com

China Commerce Wholesale revenue (5% of China Commerce revenue in F2014) is
derived primarily from BABAs 1688.com China wholesale marketplace. Revenue is
generated from a combination of memberships and value-added services for sellers,
which combined to account for 74% of China Commerce Wholesale segment revenue in
F2014, and P4P online marketing services, which accounted for 26% of segment revenue
in F2014. Revenue from the China wholesale business declined 1% YoY in F2013 and
grew 5% YoY in F2014. However, we note that the segment has demonstrated strong
growth acceleration of late, with revenue growth accelerating from 5% YoY in F3Q14 to
22% YoY in F4Q14 and 35% YoY in F1Q15. In the Companys public filings, BABA has
attributed the segments accelerating revenue growth to an increase in paying members
and an increase in average revenue per paying member. We also note that BABA has
enabled transactional functionality on 1688.com (historically, the 1688.com
marketplace allowed wholesale buyers to locate sellers and find products, but did not
enable transactions)buyers and sellers are now able to conduct transactions via Alipay
directly on 1688.com with access to settlement and other services. While BABA has not
Page 37

Alibaba Group, Inc.
September 17, 2014
yet determined a monetization mechanism for these upgraded services, we believe

monetizing these services could provide an additional avenue of growth.
Based on the reacceleration of the business in late F2014, we are currently forecasting
that China Commerce Wholesale revenue will grow at a 19% CAGR from F2014 to
F2017E. However, given much more rapid growth in the China Retail business, we
expect China Commerce Wholesale to continue to decline as a percentage of China
Commerce segment revenue.
Exhibit 32. BABA Historical and Projected China Commerce Wholesale Revenue
4.5B
30%
28%
4.0B
25%
3.5B
20%
3.0B
16%
2.5B
15%
13%
2.0B
10%
1.5B
5%
5%
1.0B
0%
-1%
0.5B
2.2
2.2
2.3
2.9
3.4
3.9
F2012A
F2013A
F2014A
F2015E
F2016E
F2017E
0.0B
-5%
China Commerce Wholesale Revenue (B)
YoY Growth
2. International Commerce
International Commerce revenue is derived from the operations of Alibabas
International wholesale business (Alibaba.com) and the operation of its International
retail business (primarily Aliexpress.com). International Commerce accounted for 9% of
total Company revenue in F2014, growing 17% YoY to 4.9B. We are currently
forecasting that the International Commerce segment will grow revenue at a 25% CAGR
from F2014 to F2017E, driven by rapid growth in the retail business and modest growth
in the relatively mature wholesale business.
Page 38

Alibaba Group, Inc.
September 17, 2014
Exhibit 33. BABA Historical and Projected International Commerce Revenue

10.0B
35%
9.0B
31%
30%
8.0B
27%
7.0B
23%
24%
6.0B
25%
20%
5.0B
17%
15%
4.0B
3.0B
10%
10%
10%
2.0B
5%
1.0B
2.6
3.4
3.8
4.2
4.9
6.2
7.6
9.4
F2010A
F2011A
F2012A
F2013A
F2014A
F2015E
F2016E
F2017E
0.0B
0%
International Commerce Revenue (B)
YoY Growth
International Commerce Wholesale Alibaba.com

Similar to the China wholesale operations of 1688.com, Alibaba.com is monetized
through membership fees and value-added services sold to marketplace sellers (88% of
international commerce wholesale revenue in F2014) and P4P online marketing
services, also sold to marketplace sellers (12% of international commerce wholesale
revenue in F2014). Alibaba.com is one of BABAs most mature businesses, and revenue
growth has been modest in recent years, up 6% YoY in F2013 and up 4% YoY in F2014.
However, we note that growth accelerated in F1Q15 to 18% YoY, which BABA has
attributed to an increase in membership. Given limited quarterly disclosures to this subsegment level of detail and the record of modest growth at Alibaba.com in recent years,
we are assuming that growth will decelerate in relatively short order to levels
comparable to those seen in recent years. We are currently forecasting that
International Commerce Wholesale revenue will grow at an 8% CAGR from F2014 to
F2017E.
Page 39

Alibaba Group, Inc.
September 17, 2014
Exhibit 34. BABA Historical and Projected International Commerce Wholesale Revenue
6.0B
14%
12%
12%
5.0B
10%
4.0B
8%
3.0B
6%
6%
6%
5%
2.0B
4%
4%
1.0B
2%
3.5
3.8
3.9
4.4
4.7
4.9
F2012A
F2013A
F2014A
F2015E
F2016E
F2017E
0.0B
0%
International Commerce Wholesale Revenue (B)
YoY Growth
International Commerce Retail AliExpress

The AliExpress marketplace is monetized through a combination of commissions (5% of
GMV for transactions settled through Alipay) and a commission-based third-party
affiliate marketing program. Commissions associated with affiliate marketing are
charged in addition to the standard GMV-based commission charge for transactions
settled through Alipay. International Commerce Retail revenue increased grew 139%
YoY in F2014, which BABA has attributed to an increase in GMV transacted on
AliExpress, primarily from an increase in the number of active buyers, particularly in
Russia, Brazil and the United States. We expect continued strong growth in this segment
and are currently forecasting that International Commerce Retail revenue will grow at a
69% CAGR from F2014 to F2017E.
Exhibit 35. BABA Historical and Projected International Commerce Retail Revenue
5.0B
160%
4.5B
140%
139%
4.0B
120%
3.5B
100%
3.0B
87%
2.5B
80%
76%
67%
2.0B
55%
1.5B
60%
40%
1.0B
20%
0.5B
0.2
0.4
0.9
1.8
2.9
4.5
F2012A
F2013A
F2014A
F2015E
F2016E
F2017E
0.0B
0%
International Commerce Retail Revenue (B)
YoY Growth
3. Cloud Computing and Internet Infrastructure. Alibaba realizes cloud computing

revenue from time- and usage-based fees associated with cloud computing services
(e.g., elastic computing, database services, storage, etc.) offered to Alibaba marketplace
sellers and other third-party customersas of the end of F1Q15, more than 1.4M total
Page 40

Alibaba Group, Inc.
September 17, 2014
customers were using Alibaba cloud computing services either directly or indirectly
through independent software vendors. Cloud computing revenue represented
approximately 1.5% of total revenue in F2014, growing 19% YoY to 0.8B. However,
segment revenue growth has accelerated over the past two quarters, with revenue up
28% YoY in F4Q14 and up 36% YoY in F1Q15. We are currently forecasting that segment
revenue will grow at a 27% CAGR from F2014 to F2017E.
Exhibit 36. BABA Historical and Projected Cloud Computing Revenue
1.8B
35%
31%
1.6B
1.4B
30%
26%
26%
1.2B
25%
23%
1.0B
20%
19%
0.8B
15%
0.6B
10%
0.4B
5%
0.2B
0.5
0.7
0.8
1.0
1.3
1.6
F2012A
F2013A
F2014A
F2015E
F2016E
F2017E
0.0B
0%
Cloud Computing Revenue (B)
YoY Growth
4. Other Revenue. Other Revenue accounted for 3.3% of total revenue in F2014. The
Other Revenue segment was Alibabas fastest-growing business line in F2014, growing
224% YoY to 1.7B. BABA has reported that Other segment revenue is primarily derived
from interest income on the Companys micro loan portfolio. As of the end of F1Q15,
the Companys small and medium-sized enterprise (SME) micro loan business had over
400,000 borrowers with a total outstanding loan balance of 14.6B. In August, as part of
the broader restructuring of its relationship with Small and Micro Financial Services
Company and Alipay, BABA agreed to dispose of the SME loan business in exchange for
cash consideration of 3.2B (to be paid no later than the second anniversary of the
closing of the transaction or an IPO of Small and Micro Financial Services Company) and
annual fees over a term of seven years (2.5% of the average daily balance of the SME
loans made by Small and Micro Financial Services Company for calendar years 20152017; an annual fee equal to the annual fee paid in C2017 for C2017-C2021). However,
for regulatory reasons, BABA will retain approximately 3.2B of the existing SME loan
portfolio, which will be wound down over time as the loans are repaid. BABA expects
the transaction to complete closing conditions and regulatory approvals in
C4Q14/F3Q15. We expect that loan receivables will continue to build during F2Q15
before being reduced to 3.2B by the sale of the SME micro loan business in F3Q15, and
that the portfolio balance will decline rapidly thereafter given the generally short-term
nature of SME micro loans (loan terms are generally in the range of 7 to 360 days, per
Company reports). As with royalty and technology services fees currently paid by Alipay,
we expect that the fees to be paid by Small and Micro Financial Services Company with
respect to the transferred SME loan business will be recognized as Other Income, and
not as revenuein any case, we believe that the fees to be paid by Small and Micro
Page 41

Alibaba Group, Inc.
September 17, 2014
Financial Services to BABA with respect to the SME loan business will be far smaller than
the revenue which BABA would have recognized had it retained the business. Based
upon our interpretation of BABAs public filings and our research into the average
interest rate charged on micro loans by BABAwe believe interest rates are typically in
the range of 18-21% on an annualized basiswe believe that SME micro loans currently
generate roughly 90% of segment revenue and that this revenue stream will decline
rapidly following the transfer of the business to Small and Micro Financial Services
Company. We are currently forecasting that Other revenue will grow 28% YoY in F2015E
(down from 224% YoY growth in F2014E), decline by 79% in F2016E and grow 2% YoY in
F2017E.
Exhibit 37. BABA Historical and Projected Other Revenue
2.5B
500%
400%
400%
2.0B
300%
224%
1.5B
200%
100%
1.0B
28%
0.5B
2%
-79%
0%
-100%
0.1
0.5
1.7
2.2
0.5
0.5
F2012A
F2013A
F2014A
F2015E
F2016E
F2017E
0.0B
-200%
Other Revenue (B)
YoY Growth
Page 42

Alibaba Group, Inc.
September 17, 2014
Valuation
Our $95 Target Price is based the average of our 2016 EV/EBITDA and C2016 Adjusted
P/E Valuation methodologies.
Using an EV/EBITDA analysis, if we apply a 26x multiple to our 2016 Adjusted EBITDA
estimate of $8.3B, adjusting for $35.9B in calendar year-end 2015 cash and $9.9B in
calendar year-end 2015 debt, we derive a valuation of $91 per share. Our target multiple
is derived from historical and future growth assumptions, comparable public company
multiples, and various intangibles like management, product pipeline, defensible
business model, etc. For context, we estimate that BABAs stock would trade at 19x our
C2015 EV/EBITDA estimate, if the stock prices at the high end of the range at $68. We
note that the median of the U.S. Internet comps is 16x 2015 EV/EBITDA, and the median
of the Chinese Internet comps is 19x.
Using a P/E analysis, if we apply a 32x multiple to our 2016 Adjusted P/E estimate of
$3.04, this would imply a $97 target price. For context, BABA would trade at 22x our
C2015 EPS estimate if the stock prices at the high end of the range. We note that the
median P/E of the U.S. Internet comps is 36x, and the median of the Chinese Internet
comps is 25x.
The average of these two methodologies yields a target price of $94.30, which we round
to $95 for convenience.
We note that BABA is growing faster than all of the large cap Internet comps, including
FB, GOOG, AMZN and EBAY. And while BABA is growing more slowly than some of its
Chinese comps, it is significantly more profitable than most of its Chinese peers.
Exhibit 38. BABA Valuation Sensitivity Analysis
CY2016 EV/EBITDA Multiple Range
18x
20x
22x
24x
26x
28x
30x
32x
34x
36x
38x
x CY 2016 EBITDA
$8,286
$8,286
$8,286
$8,286
$8,286
$8,286
$8,286
$8,286
$8,286
$8,286
$8,286
= Enterprise Value
$149,149
$165,721
$182,293
$198,865
$215,437
$232,009
$248,581
$265,153
$281,725
$298,297
$314,869
+ C4Q15 Cash
$35,905
$35,905
$35,905
$35,905
$35,905
$35,905
$35,905
$35,905
$35,905
$35,905
$35,905
- C4Q15 Debt
$9,937
$9,937
$9,937
$9,937
$9,937
$9,937
$9,937
$9,937
$9,937
$9,937
$9,937
$175,117
$191,689
$208,261
$224,833
$241,405
$257,977
$274,550
$291,122
$307,694
$324,266
$340,838
(USD $Ms, except per share data)
= Market Capitalization
/ C4Q15 Shares
2,648
2,648
2,648
2,648
2,648
2,648
2,648
2,648
2,648
2,648
2,648
= Implied Share Target Price
$66
$72
$79
$85
$91
$97
$104
$110
$116
$122
$129
(USD $Ms, except per share data)
24x
26x
28x
30x
32x
34x
36x
38x
40x
42x
44x
$3.04
$3.04
$3.04
$3.04
$3.04
$3.04
$3.04
$3.04
$3.04
$3.04
$3.04
$73
$79
$85
$91
$97
$104
$110
$116
$122
$128
$134
CY2016 P/E Multiple Range

CY 2016 Adjusted P/E
= Implied Share Target Price
Page 43

Alibaba Group, Inc.
September 17, 2014
Exhibit 39. BABA Comparable Valuation Analysis

Alibaba Group Holding Ltd
Ticker
Rating
Price
Target
Price
Shares
Out.
Market
Cap
EV
2014
BABA
Buy
$95
$68.00
2,491
169,388
157,709
14.3x
10.4x
8.0x
27.3x
19.0x
13.9x
34.5x
25.7x
19.2x
37.3x
22.3x
17.2x
36%
35%
59%
52%
$588.78
$76.08
$327.76
$51.61
$50.83
686
2,615
461
1,310
596
404,117
198,949
151,097
67,609
30,275
344,127
185,319
146,230
61,869
28,379
5.2x
15.0x
1.6x
3.4x
21.2x
4.4x
11.6x
1.3x
3.0x
13.0x
3.8x
9.8x
1.1x
2.6x
8.5x
13.2x
22.7x
23.4x
10.6x
117.9x
11.1x
18.3x
16.4x
9.2x
57.1x
9.5x
15.5x
13.3x
7.9x
32.4x
27.4x
60.8x
NM
NM
NM
21.4x
48.1x
116.0x
19.0x
NM
17.7x
40.8x
61.2x
16.7x
NM
22.0x
44.1x
148.6x
17.3x
NM
17.8x
35.7x
56.4x
15.4x
132.5x
15.1x
30.7x
36.9x
13.7x
60.6x
18%
34%
20%
14%
71%
17%
35%
28%
13%
126%
41%
61%
7%
34%
11%
39%
66%
7%
32%
18%
MEDIAN
MEAN
5.2x
9.3x
4.4x
6.7x
3.8x
5.2x
22.7x
37.5x
16.4x
22.4x
13.3x
15.7x
44.1x
44.1x
34.7x
51.1x
29.3x
34.1x
33.0x
58.0x
35.7x
51.6x
30.7x
31.4x
20%
32%
28%
44%
34%
31%
32%
33%
143,656
71,609
28,224
9,946
3,643
1,168
11.1x
9.0x
1.5x
7.6x
11.1x
0.9x
9.0x
6.4x
1.0x
5.2x
7.7x
0.7x
7.4x
5.0x
0.7x
4.0x
5.5x
0.6x
26.3x
27.7x
NM
27.4x
NM
48.3x
20.7x
19.3x
NM
16.2x
44.4x
18.2x
16.5x
14.4x
60.2x
11.5x
20.9x
10.1x
36.6x
36.6x
NM
43.1x
NM
56.5x
28.7x
26.6x
NM
24.9x
87.0x
19.6x
22.7x
19.6x
NM
16.2x
31.7x
9.2x
37.0x
35.2x
NM
31.4x
NM
51.8x
27.6x
25.1x
NM
19.9x
66.5x
19.7x
22.0x
18.5x
90.1x
14.4x
28.2x
8.7x
25%
40%
49%
55%
52%
24%
34%
31%
-68%
---
36%
42%
0%
27%
-10%
-2%
42%
32%
-2%
28%
1%
2%
MEDIAN
MEAN
8.3x
6.9x
5.8x
5.0x
4.5x
3.9x
27.5x
32.4x
19.3x
23.8x
15.5x
22.3x
39.9x
43.2x
26.6x
37.4x
19.6x
19.9x
36.1x
38.9x
25.1x
31.8x
20.3x
30.3x
45%
41%
34%
44%
14%
15%
15%
17%
U.S. Online Marketplaces / eCommerce / Online Marketing Services

Googl e, Inc.
GOOGL
Buy
$660
Fa cebook, Inc.
FB
Buy
$90
Ama zon.com, Inc.
AMZN Fa i r Va l ue $350
eBa y, Inc.
EBAY
Fa i r Va l ue $55
Twi tter, Inc.
TWTR
Buy
$58
China Internet
Tencent Hol di ngs Ltd.
700-HK
Ba i du, Inc.
BIDU
JD.com, Inc.
JD
Qi hoo 360 Technol ogy Co., Ltd.
QIHU
Wei bo Corp.
WB
E-Commerce Chi na Da ngda ng, Inc.DANG
Not Ra ted
Not Ra ted
Not Ra ted
Not Ra ted
Not Ra ted
Not Ra ted
NA
NA
NA
NA
NA
NA
$15.73
$215.57
$27.80
$77.97
$21.55
$13.05
9,361
351
1,203
131
192
110
147,249
75,581
33,437
10,240
4,142
1,430
EV/Sales
2015
2016
2014
EV/EBITDA
2015
2016
2014
GAAP P/E
2015
2016
Non-GAAP P/E
2014
2015
2016
2012-15 CAGR
Sales EBITDA
EBITDA Mgn.
2013 2014
Source: Company reports and CRT Capital Group LLC estimates. Priced as of the market close on September 16, 2014.
Page 44

Alibaba Group, Inc.
September 17, 2014
Management
Jack Yun Ma Executive Chairman
Jack Ma is the lead founder and has served as the executive chairman since May 2013.
From the inception of the Company in 1999 to May 2013, Jack served as the chairman
and chief executive officer. Jack currently serves on the board of SoftBank Corp. Mr. Ma
graduated from Hangzhou Teachers Institute with a major in English language
education and taught English in China prior to founding Alibaba.
Joseph C. Tsai Executive Vice Chairman
Joe joined the company in 1999 as a member of the Alibaba Group founding team and
has served as the companys executive vice chairman since May 2013. Joe previously
served as the chief financial officer and has been a member of the board of directors
since 1999. From 1995 to 1999, Mr. Tsai worked in Hong Kong with Investor AB. Prior to
that, he was vice president and general counsel of Rosecliff, Inc., in New York. From
1990 to 1993, Joe was an associate attorney in the tax group of Sullivan & Cromwell LLP,
a New York-based international law firm. He received his bachelors degree in
Economics and East Asian Studies from Yale College and a J.D. degree from Yale Law
School.
Jonathan Zhaoxi Lu Chief Executive Officer
Mr. Lu will serve as a director upon the completion of the offering. He joined Alibaba
Group in 2000 and succeeded Jack Ma as chief executive officer in May 2013, and has
served as the top executive officer of several of the companys key business units. Prior
to his current role, he served as the chief data officer and also oversaw the YunOS
division. He joined Taobao in January 2008 and served as its chief executive officer from
January 2010 to June 2011. In September 2004, he became Alipays first president. From
2000 to 2004 he held several leadership positions at Alibaba.com and managed its South
China sales region. Before joining Alibaba Group, he was the co-founder of a network
communications company. Mr.Lu received a graduate certificate in hotel management
from Guangzhou University and a masters degree in business administration from China
Europe International Business School.
Daniel Yong Zhang Chief Operating Officer
Mr. Zhang will also serve as a director upon completion of the offering. He has been the
chief operating officer since September 2013. Before that, he was appointed president
of Tmall.com in June 2011, and chief financial officer of Taobao from August 2007 until
June 2011. Before joining Alibaba Group, he served as the chief financial officer of
Shanda Interactive Entertainment Limited, from August 2005 to August 2007. From
2002 to 2005, he was a senior manager of PricewaterhouseCoopers Audit and Business
Advisory Division in Shanghai, prior to which he worked for Arthur Andersen for seven
years. He received a bachelors degree in finance from Shanghai University of Finance
and Economics, and he is a member of the Chinese Institute of Certified Public
Accountants.
Page 45

Alibaba Group, Inc.
September 17, 2014
Maggie Wei Wu Chief Financial Officer

Ms. Wu has been the chief financial officer since May 2013. She served as the deputy
chief financial officer from October 2011 to May 2013. She joined the company in July
2007 as chief financial officer of Alibaba.com Before joining the company, she was an
audit partner at KPMG in Beijing. She is a member of the Association of Chartered
Certified Accountants (ACCA) and a member of the Chinese Institute of Certified Public
Accountants. She received a bachelors degree in accounting from Capital University of
Economics and Business.
Jian Wang Chief Technology Officer
Mr. Wang has been the chief technology officer since August 2012. Prior to his current
position, he was the chief architect from the time he joined the company in September
2008. He also served as president of Alibaba Cloud Computing from September 2009
until September 2013. Before joining the company, he was assistant managing director
at Microsoft Research Asia. Prior to that, he worked at Zhejiang University in Hangzhou,
as a professor and head of psychology department. Mr. Wang received a bachelors
degree in psychology and a PhD in engineering from Hangzhou University.
Financial Model
Our historical and projected income statement, balance sheet and cash flow statement
for BABA are included on the following pages. We note that select quarterly data for
the financial statements have not been provided by the company.
Page 46

Alibaba Group, Inc.
September 17, 2014

FYE March 31, 2013
BABA Historical and Projected Income Statement
FYE March 31, 2014
F1Q13A
6/12A
6,793
5,028
573
F2Q13A
9/12A
7,457
5,600
552
F3Q13A
12/12A
11,593
9,588
584
155
63
1,087
164
92
1,193
Cos t of revenue
2,158
Gross Profit
4,635
Operating Expenses
Product Devel opment
Sa l es a nd Ma rketi ng
Genera l a nd Admi ni s tra ti ve
Amorti za ti on of Inta ngi bl e As s ets
Impa i rment of goodwi l l a nd i nta ngi bl e a s s ets
Ya hoo TIPLA Amendment Pa yment
Operating Income
(FYE March 31; RMB in millions, except share and per share amounts)
Total Revenue
Chi na Commerce Reta i l Revenue (Ta oba o, Tma l l , Juhua s ua n)
Chi na Commerce Whol es a l e Revenue (1688.com)
Interna ti ona l Commerce Reta i l Revenue (Al i Expres s )
Interna ti ona l Commerce Whol es a l e Revenue (Al i ba ba .com)
Cl oud computi ng a nd Internet i nfra s tructure Revenue
Other Revenue
Total Revenue ($B)
165
162
1,855
F4Q13A
3/13A
8,674
6,754
488
128
915
166
223
1,388
F1Q14A
6/13A
10,778
8,667
526
179
938
174
294
1,724
F2Q14A
9/13A
10,950
8,645
568
212
964
190
371
1,752
2,373
2,911
2,277
2,727
5,084
8,682
6,397
8,051
2,290
848
869
537
36
0
0
6,190
888
974
804
37
0
3,487
3,622
1,163
1,249
1,003
32
175
0
1,945
854
521
545
25
0
0
2,345
(1,106)
5,060
4,452
FYE March 31, 2015

F1Q15A
6/14A
15,771
12,639
709
358
1,111
236
718
2,523
F2Q15E
9/14E
15,673
12,394
738
413
1,089
251
787
2,508
FYE March 31, 2016
F3Q14A
12/13A
18,745
16,149
612
253
1,011
196
524
2,999
F4Q14A
3/14A
12,031
9,371
594
285
1,009
213
559
1,925
F3Q15E
12/14E
25,431
22,296
765
468
1,112
255
536
4,069
F4Q15E
3/15E
18,252
15,446
731
513
1,090
275
198
2,920
F1Q16E
6/15E
21,278
18,176
851
627
1,178
302
144
3,404
F2Q16E
9/15E
21,495
18,334
871
703
1,155
319
114
3,439
F3Q16E
12/15E
33,534
30,273
880
773
1,179
321
109
5,365
F4Q16E
3/16E
24,873
21,620
826
821
1,155
343
109
3,980
3,001
4,171
3,470
4,585
4,388
6,104
5,173
6,080
5,911
7,880
6,925
7,949
14,574
8,561
11,186
11,285
19,328
13,079
15,198
15,584
25,653
17,948
2,631
1,018
713
865
35
0
0
2,701
1,168
657
793
39
44
0
5,773
1,707
1,897
2,046
123
0
0
3,110
1,200
1,278
514
118
0
0
4,342
1,952
1,212
944
234
0
0
4,795
2,038
1,411
1,097
250
0
0
7,727
3,179
2,950
1,348
250
0
0
5,415
2,190
1,734
1,241
250
0
0
5,825
2,489
1,915
1,170
250
0
0
5,817
2,450
1,827
1,290
250
0
0
9,204
3,689
3,521
1,744
250
0
0
6,095
2,612
1,990
1,244
250
0
0
5,420
5,248
8,801
5,451
F2012A
20,025
13,422
2,215
223
3,542
515
108
3,204
F2013A
34,517
26,970
2,197
392
3,768
650
540
5,523
F2014A
52,504
42,832
2,300
938
3,913
773
1,748
8,401
F2015E
75,128
62,775
2,943
1,753
4,402
1,016
2,239
12,020
F2016E
101,179
88,402
3,427
2,923
4,666
1,285
476
16,189
F2017E
128,553
113,185
3,873
4,530
4,899
1,581
485
20,569
6,554
9,719
13,369
20,250
26,796
33,456
13,471
24,798
39,135
54,878
74,383
95,098
8,456
2,897
3,058
2,211
155
135
0
14,047
3,753
3,613
2,889
130
175
3,487
14,215
5,093
4,545
4,218
315
44
0
22,280
9,359
7,307
4,630
984
0
0
26,941
11,240
9,253
5,447
1,000
0
0
30,286
13,137
9,659
6,440
1,050
0
0
6,844
6,489
11,601
7,664
9,373
9,767
16,450
11,853
5,015
10,751
24,920
32,598
47,443
64,812
Interes t a nd i nves tment i ncome, net

Interes t expens e
Other i ncome, net
466
(1,081)
241
6,828
(410)
711
500
(400)
860
500
(400)
1,203
500
(400)
1,254
500
(400)
1,333
500
(400)
1,390
500
(400)
1,687
500
(400)
1,761
258
(68)
327
39
(1,572)
894
1,648
(2,195)
2,429
8,328
(1,610)
4,028
2,000
(1,600)
6,122
2,000
(1,600)
8,572
Income Before Taxes
5,046
13,973
7,450
12,904
9,018
10,806
11,256
18,237
13,714
5,532
10,112
26,802
43,344
53,965
73,784
591
1,445
745
1,290
902
1,297
1,351
2,188
1,646
842
1,457
3,196
4,382
6,482
11,068
(7)
(90)
(80)
(70)
(60)
(50)
(40)
(30)
(20)
(25)
(6)
(203)
(300)
(140)
(100)
12,438
34
12,404
6,625
18
6,607
11,543
32
11,512
8,056
22
8,034
9,460
26
9,434
9,865
27
9,838
16,018
44
15,975
12,048
33
12,016
4,665
437
4,228
8,649
117
8,532
23,403
88
23,315
38,662
106
38,556
47,343
130
47,213
62,616
171
62,445
(8)
(52)
12,344
6,607
11,512
8,034
9,434
9,838
15,975
12,016
0
0
4,228
(17)
(111)
8,404
(31)
(208)
23,076
(8)
(52)
38,496
Income Ta x Expens es
Ea rni ngs i n Equi ty Inves tees
Net Income
Net Income Attri buta bl e to Noncontrol l i ng i nteres ts
Net Income Attri buta bl e to Al i ba ba Group Hol di ng Li mi ted
Accreti on of converti bl e preference s ha res
Di vi dends a ccrued on converti bl e preference s ha res
Net Income Attributable to Ordinary Shareholders
1,847
(1,558)
4,094
4,266
1,722
(1,560)
4,045
4,197
4,448
(4)
4,444
(8)
(52)
4,384
4,937
8,357
5,661
4,883
8,266
5,543
47,213
62,445
EPS Attributable to Ordinary Shareholders (RMB)

EPS, Ba s i c
EPS, Di l uted
2.02
1.93
5.62
5.20
2.65
2.62
4.58
4.52
3.16
3.12
3.68
3.63
3.80
3.75
6.11
6.03
4.55
4.50
1.71
1.67
3.66
3.57
10.61
10.00
15.80
15.37
18.13
17.91
23.10
23.24
Shares Outstanding
Ba s i c
Di l uted
2,170
2,272
2,196
2,374
2,491
2,523
2,516
2,548
2,541
2,573
2,566
2,598
2,591
2,623
2,616
2,648
2,641
2,673
2,473
2,532
2,296
2,354
2,175
2,308
2,436
2,505
2,604
2,636
2,704
2,686
Adjusted Net Income

Adjusted Net Income Per Share (RMB)
Adjusted Net Income Per Share ($)
2,097
2,430
4,834
4,508
4,583
5,893
10,463
5,402
7,317
3.08
0.49
8,048
3.19
0.51
13,016
5.11
0.82
9,579
3.72
0.60
11,033
4.25
0.68
11,488
4.38
0.70
17,691
6.68
1.07
13,771
5.15
0.82
6,209
2.45
0.39
13,700
5.82
0.93
26,606
11.53
1.84
37,960
15.16
2.43
53,935
20.46
3.27
69,808
25.99
4.16
Adjusted EBITDA
Adjusted EBITDA ($B)
2,852
456
3,073
492
5,774
924
4,908
785
6,094
975
6,505
1,041
11,246
1,799
5,617
899
8,574
1,372
8,360
1,338
13,547
2,168
9,685
1,550
11,469
1,835
11,938
1,910
18,696
2,991
14,174
2,268
7,274
1,164
16,607
2,657
29,462
4,714
40,166
6,427
56,277
9,004
74,646
11,943
0
Growth
Revenue - YoY
Revenue - QoQ
Gros s Profi t - YoY
Opera ti ng Income - YoY
Net Income - YoY
Adjus ted EBITDA - YoY
65.6%
33.6%
68.7%
165.0%
106.6%
84.5%
71.3%
9.8%
74.6%
--127.3%
78.8%
55.5%
94.8%
158.7%
154.6%
124.1%
70.6%
-25.2%
90.7%
227.6%
187.5%
172.8%
58.7%
24.3%
73.7%
131.1%
140.8%
113.7%
46.8%
1.6%
56.4%
-574.5%
-416.9%
111.7%
61.7%
71.2%
67.9%
73.9%
104.1%
94.8%
38.7%
-35.8%
33.8%
22.4%
32.7%
14.4%
46.3%
31.1%
38.9%
26.3%
179.6%
40.7%
43.1%
-0.6%
42.0%
23.7%
34.2%
28.5%
35.7%
62.3%
32.6%
31.8%
38.1%
20.5%
51.7%
-28.2%
52.8%
40.6%
42.3%
72.4%
34.9%
16.6%
35.9%
37.0%
-23.9%
33.8%
37.1%
1.0%
38.1%
50.5%
48.9%
42.8%
31.9%
56.0%
32.7%
41.8%
38.8%
38.0%
36.3%
-25.8%
37.2%
54.7%
49.6%
46.3%
68.2%
-60.3%
279.3%
190.1%
141.7%
72.4%
-84.1%
114.4%
85.4%
128.3%
52.1%
-57.8%
131.8%
170.6%
77.4%
43.1%
-40.2%
30.8%
65.2%
36.3%
34.7%
-35.5%
45.5%
22.5%
40.1%
27.1%
-27.8%
36.6%
32.3%
32.6%
% of Revenue
Product Devel opment
Sa l es a nd Ma rketi ng
Genera l a nd Admi ni s tra ti ve
12.5%
12.8%
7.9%
11.9%
13.1%
10.8%
10.0%
10.8%
8.7%
9.8%
6.0%
6.3%
9.4%
6.6%
8.0%
10.7%
6.0%
7.2%
9.1%
10.1%
10.9%
10.0%
10.6%
4.3%
12.4%
7.7%
6.0%
13.0%
9.0%
7.0%
12.5%
11.6%
5.3%
12.0%
9.5%
6.8%
11.7%
9.0%
5.5%
11.4%
8.5%
6.0%
11.0%
10.5%
5.2%
10.5%
8.0%
5.0%
14.5%
15.3%
11.0%
10.9%
10.5%
8.4%
9.7%
8.7%
8.0%
12.5%
9.7%
6.2%
11.1%
9.1%
5.4%
10.2%
7.5%
5.0%
68.2%
34.5%
42.0%
68.2%
-14.8%
41.2%
74.9%
43.6%
49.8%
73.7%
51.3%
56.6%
74.7%
50.3%
56.5%
11.7%
72.6%
47.9%
59.4%
--
77.7%
47.0%
60.0%
--
71.2%
45.3%
46.7%
--
70.9%
43.4%
54.4%
10.3%
72.0%
41.4%
53.3%
10.0%
76.0%
45.6%
53.3%
10.0%
71.7%
42.0%
53.1%
10.0%
71.4%
44.1%
53.9%
12.0%
72.5%
45.4%
55.5%
12.0%
76.5%
49.1%
55.8%
12.0%
72.2%
47.7%
57.0%
12.0%
67.3%
25.0%
36.3%
15.2%
71.8%
31.1%
48.1%
14.4%
74.5%
47.5%
56.1%
11.9%
73.0%
43.4%
53.5%
10.1%
73.5%
46.9%
55.6%
12.0%
74.0%
50.4%
58.1%
15.0%
Margin
Gros s Ma rgi n
Opera ti ng Ma rgi n
Adjus ted EBITDA Ma rgi n
Ta x Ra te
Source: Compa ny reports a nd CRT Ca pi ta l Group LLC es ti ma tes
Page 47

Alibaba Group, Inc.
September 17, 2014

FYE March 31, 2013
BABA Historical and Projected Balance Sheet

Ca s h a nd equi va l ents
Short-term i nves tments
Res tri cted ca s h a nd es crow recei va bl es
Loa n recei va bl es , net
Inves tment s ecuri ties
Prepa yments , recei va bl es a nd other a s s ets
Current Assets
F1Q13A
6/12A
F2Q13A
9/12A
FYE March 31, 2014

F3Q13A
12/12A
F4Q13A
3/13A
30,396
2,290
3,687
4,426
629
1,734
43,162
F1Q14A
6/13A
F2Q14A
9/13A
FYE March 31, 2015
FYE March 31, 2016
F3Q14A
12/13A
41,714
7,248
4,244
12,434
1,207
2,980
69,827
F4Q14A
3/14A
33,045
10,587
4,921
13,159
1,442
4,679
67,833
F1Q15A
6/14A
51,912
5,970
6,118
14,642
1,737
7,145
87,524
F2Q15E
9/14E
120,296
5,970
6,118
16,292
1,737
7,101
157,514
F3Q15E
12/14E
155,860
5,970
6,118
3,244
1,737
11,522
184,450
F4Q15E
3/15E
161,442
5,970
6,118
1,622
1,737
8,269
185,158
F1Q16E
6/15E
177,994
5,970
6,118
406
1,737
9,640
201,864
F2Q16E
9/15E
189,351
5,970
6,118
203
1,737
9,738
213,117
F3Q16E
12/15E
218,439
5,970
6,118
0
1,737
15,192
247,457
F4Q16E
3/16E
225,961
5,970
6,118
0
1,737
11,269
251,055
F2012A
16,857
4,887
3,312
581
593
1,669
27,899
F2013A
30,396
2,290
3,687
4,426
629
1,734
43,162
F2014A
33,045
10,587
4,921
13,159
1,442
4,679
67,833
F2015E
161,442
5,970
6,118
1,622
1,737
8,269
185,158
F2016E
225,912
5,970
6,118
0
1,737
11,269
251,006
F2017E
294,640
5,970
7,773
0
1,737
14,317
324,438
Inves tment i n equi ty i nves tees

Inves tment s ecuri ties
Property a nd equi pment, net
La nd us e ri ghts
Intangi bl e a s s ets
Goodwi l l
Total Assets
1,555
242
1,496
3,808
1,895
334
11,294
63,786
13,009
1,095
2,041
5,973
1,863
1,610
11,640
107,058
17,666
3,023
2,087
5,581
1,660
1,906
11,793
111,549
24,443
3,190
2,409
6,738
1,650
5,950
29,289
161,193
24,443
3,190
2,306
7,438
1,650
5,700
29,289
231,530
24,443
3,190
3,207
8,827
1,650
5,450
29,289
260,507
24,443
3,190
2,718
9,666
1,650
5,200
29,289
261,314
24,443
3,190
3,194
10,701
1,650
4,950
29,289
279,282
24,443
3,190
3,106
11,728
1,650
4,700
29,289
291,222
24,443
3,190
4,140
13,610
1,650
4,450
29,289
328,230
24,443
3,190
3,639
14,834
1,650
4,200
29,289
332,299
1,642
248
1,466
2,463
1,701
355
11,436
47,210
1,555
242
1,496
3,808
1,895
334
11,294
63,786
17,666
3,023
2,087
5,581
1,660
1,906
11,793
111,549
24,443
3,190
2,718
9,666
1,650
5,200
29,289
261,314
24,443
3,190
3,639
14,834
1,650
4,200
29,289
332,250
24,443
3,190
3,639
21,907
1,650
4,200
29,289
412,755
Current ba nk borrowi ngs

Secured borrowi ngs
Income tax pa ya bl e
Es crow money pa ya bl e
Accrued expens es , a ccounts pa ya bl e a nd other l i a bi l i ties
Mercha nt depos i ts
Deferred revenue a nd cus tomer a dva nces
Current Liabilities
3,350
2,098
259
1,315
8,961
3,083
4,929
23,995
1,200
8,884
451
2,073
13,544
7,879
6,306
40,337
1,100
9,264
1,267
2,659
11,887
4,711
6,496
37,384
4,241
8,831
1,253
2,930
15,347
5,832
6,596
45,030
4,241
8,831
1,253
2,930
14,689
5,796
6,746
44,486
4,241
8,831
1,253
2,930
20,430
9,404
6,896
53,985
4,241
8,831
1,253
2,930
17,316
6,750
7,046
48,366
4,241
8,831
1,253
2,930
20,350
7,868
7,196
52,669
4,241
8,831
1,253
2,930
19,786
7,949
7,346
52,335
4,241
8,831
1,253
2,930
26,378
12,401
7,496
63,529
4,241
8,831
1,253
2,930
23,180
9,198
7,646
57,279
1,283
0
375
339
4,659
745
4,350
11,751
3,350
2,098
259
1,315
8,961
3,083
4,929
23,995
1,100
9,264
1,267
2,659
11,887
4,711
6,496
37,384
4,241
8,831
1,253
2,930
17,316
6,750
7,046
48,366
4,241
8,831
1,253
2,930
23,180
9,198
7,646
57,279
4,241
8,831
1,253
2,930
28,940
11,686
7,646
65,528
Deferred revenue
Deferred tax l i a bi l i ties
Redeema bl e Preference Sha res
Non-current ba nk borrowi ngs
Other l i a bi l i ties
Total Liabilities
Mezza ni ne Equi ty
Shareholders' Equity
389
643
5,191
22,462
60
52,740
10,533
513
396
1,774
0
30,226
72
72,805
10,361
23,892
428
2,136
0
30,711
72
70,731
10,401
30,417
452
2,986
0
49,033
1,850
99,351
10,458
51,384
476
2,986
0
49,033
1,850
98,831
0
132,699
500
2,986
0
49,033
1,850
108,354
0
152,152
524
2,986
0
49,033
1,850
102,759
0
158,555
548
2,986
0
49,033
1,850
107,086
0
172,196
572
2,986
0
49,033
1,850
106,776
0
184,446
596
2,986
0
49,033
1,850
117,994
0
210,236
620
2,986
0
49,033
1,850
111,768
0
220,531
529
413
0
0
104
12,797
30
34,383
389
643
5,191
22,462
60
52,740
10,533
513
428
2,136
0
30,711
72
70,731
10,401
30,417
524
2,986
0
49,033
1,850
102,759
0
74,675
620
2,986
0
49,033
1,850
111,768
0
124,543
720
2,986
0
49,033
1,850
120,117
0
187,379
Source: Compa ny reports a nd CRT Ca pi tal Group LLC es tima tes
Page 48

Alibaba Group, Inc.
September 17, 2014

FYE March 31, 2013
BABA Historical and Projected CF Statement
F4Q13A
3/13A
F1Q14A
6/13A
F2Q14A
9/13A
F3Q14A
12/13A
F4Q14A
3/14E
FYE March 31, 2016

F3Q15E
12/14E
11,543
1,946
0
0
0
0
473
250
1,223
0
0
0
0
0
0
23,937
0
13,048
1,389
0
0
5,741
3,609
150
37,426
F4Q15E
3/15E
8,056
2,021
0
0
0
0
498
250
1,273
0
0
0
0
0
0
(3,158)
0
1,622
839
0
0
(3,114)
(2,655)
150
6,919
F1Q16E
6/15E
9,460
2,096
0
0
0
0
523
250
1,323
0
0
0
0
0
0
6,555
0
1,217
1,035
0
0
3,034
1,119
150
18,110
F2Q16E
9/15E
9,865
2,171
0
0
0
0
548
250
1,373
0
0
0
0
0
0
895
0
203
1,026
0
0
(564)
80
150
12,931
F3Q16E
12/15E
16,018
2,246
0
0
0
0
573
250
1,423
0
0
0
0
0
0
13,280
0
203
1,883
0
0
6,592
4,452
150
31,544
F4Q16E
3/16E
12,048
2,321
0
0
0
0
598
250
1,473
0
0
0
0
0
0
(5,026)
0
0
1,224
0
0
(3,197)
(3,203)
150
9,343
F2012A
4,665
2,822
(24)
138
264
3
715
155
1,254
0
135
3
25
150
4
1,788
(113)
(226)
(240)
230
94
1,332
583
128
9,275
F2013A
8,649
2,691
(68)
(80)
245
(8)
805
130
1,259
0
175
3
6
104
120
3,136
(974)
(2,828)
(354)
(116)
976
3,657
2,338
437
14,476
F2014A
23,403
7,469
3
(90)
21
(387)
1,339
315
2,844
1,269
44
0
203
1,466
442
(4,493)
(1,329)
(9,175)
(3,567)
1,008
1,344
3,992
1,628
1,606
26,379
F2015E
38,662
1,800
0
(207)
(6,251)
43
1,842
984
4,742
0
0
(5)
90
473
89
21,061
(286)
11,448
3,156
(15)
271
3,875
2,039
574
61,523
F2016E
47,343
8,834
0
0
0
0
2,242
1,000
5,592
0
0
0
0
0
0
15,703
0
1,622
5,168
0
0
5,865
2,448
600
71,880
F2017E
62,611
9,568
0
0
0
0
2,342
1,084
6,142
0
0
0
0
0
0
5,964
(974)
0
(354)
(116)
976
3,657
2,338
437
78,143
Decrea s e i n s hort-term i nves tments , net

Decrea s e i n res tri cted ca s h
Decrea s e i n tra di ng i nves tment s ecuri ti es , net
Acqui s i ti on of a va i l a bl e-for-s a l e i nves tment s ecuri ti es
Di s pos a l s of a va i l a bl e-for-s a l e i nves tment s ecuri ti es
Acqui s i ti ons of La nd us e ri ghts a nd cons tructi on i n progres s
Acqui s i ti ons of Other property, equi pment a nd i nta ngi bl e a s s ets
Di s pos a l s of property a nd equi pment
Ca s h pa i d for bus i nes s combi na ti ons , net of ca s h a cqui red
Decons ol i da ti on a nd di s pos a l of s ubs i di a ri es , net of ca s h proceeds
Loa ns to empl oyees , net of repa yments
Acqui s i ti ons of equi ty i nves tees
Di s pos a l s of equi ty i nves tees
Net Cash From Investments
5,033
(180)
11
(14)
0
(152)
(1,155)
0
(2,471)
0
1
(11,483)
0
(10,410)
0
0
0
0
0
0
(1,148)
0
0
0
0
0
0
(1,148)
0
0
0
0
0
0
(1,862)
0
0
0
0
0
0
(1,862)
0
0
0
0
0
0
(1,337)
0
0
0
0
0
0
(1,337)
0
0
0
0
0
0
(1,558)
0
0
0
0
0
0
(1,558)
0
0
0
0
0
0
(1,574)
0
0
0
0
0
0
(1,574)
0
0
0
0
0
0
(2,456)
0
0
0
0
0
0
(2,456)
0
0
0
0
0
0
(1,822)
0
0
0
0
0
0
(1,822)
3,728
(2,108)
167
(508)
1,966
(1,419)
(749)
1
(191)
(20)
(305)
(761)
74
(125)
2,589
334
(12)
(60)
26
(1,457)
(1,046)
301
(52)
551
(344)
(452)
167
545
(8,304)
199
(147)
(2,972)
372
(1,491)
(3,285)
0
(732)
(46)
(212)
(16,468)
89
(32,997)
5,033
(180)
11
(14)
0
(152)
(5,502)
0
(2,471)
0
1
(11,483)
0
(14,757)
0
0
0
0
0
0
(7,410)
0
0
0
0
0
0
(7,410)
0
0
0
0
0
0
(9,415)
0
0
0
0
0
0
(9,415)
Is s ua nce of ordi na ry s ha res

Repurcha s e of ordi na ry s ha res
Is s ua nce of ordi na ry s ha res for Pa rtner Ca pi ta l Inves tment Pl a n
Is s ua nce of Converti bl e Preference Sha res
Pa yment of di vi dend on Converti bl e Preference Sha res
Redempti on of Redeema bl e Preference Sha res
Acqui s i ti on of s ha res of Al i ba ba .com Li mi ted
Pa yment for pri va ti za ti on of Al i ba ba .com Li mi ted
Acqui s i ti on of the rema i ni ng noncontrol l i ng i nteres t i n a s ubs i di a ry
Di vi dend pa i d by a cons ol i da te s ubs i di a ry to noncontrol l i ng i nteres ts
Di s pos a l s of pa rti a l i nteres t i n s ubs i di a ri es
Proceeds from s ecured borrowi ngs rel a ti ng to mi cro l oa ns
Proceeds from current ba nk borrowi ngs
Repa yment of current ba nk borrowi ngs
Proceeds from non-current ba nk borrowi ngs
Repa yment of non-current ba nk borrowi ngs
Net Cash From Financing
421
(64)
0
0
0
0
0
0
0
0
0
(433)
4,287
(3,361)
18,240
0
19,090
62,531
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
62,531
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
618
(2)
0
0
0
0
(419)
0
0
(9)
166
0
827
(706)
0
0
475
16,792
(40,111)
0
10,542
(103)
0
0
(15,134)
(335)
0
11
2,098
2,439
(2,584)
24,979
0
(1,406)
1,638
(157)
442
0
(208)
(5,131)
0
0
(9)
0
0
7,166
681
(423)
30,153
(24,788)
9,364
62,952
(64)
0
0
0
0
0
0
0
0
0
(433)
4,287
(3,361)
18,240
0
81,621
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Increa s e i n Ca s h a nd Ca s h Equi va l ents

Ca s h a nd Equi va l ents , BOP
Ca s h a nd Equi va l ents , EOP
F3Q13A
12/12A
FYE March 31, 2015

F2Q15E
9/14E
6,625
1,871
0
0
0
0
448
250
1,173
0
0
0
0
0
0
(1,494)
0
(1,650)
700
0
0
(658)
(36)
150
7,001
Effect of Exchange Rates
F2Q13A
9/12A
FYE March 31, 2014
F1Q15A
6/14A
12,438
(4,038)
0
(207)
(6,251)
43
423
234
1,073
0
0
(5)
90
473
89
1,777
(286)
(1,572)
228
(15)
271
1,906
1,121
124
10,177
Net Income
Adjustments to Net Income
Ga i n on di s pos a l s of equi ty i nves tees
Rea l i zed a nd unrea l i zed l os s rel a ted to i nves tment s ecuri ti es
Cha nge i n fa i r va l ue of other a s s ets a nd l i a bi l i ti es
Los s on di s pos a l s of other s ubs i di a ri es
Depreci a ti on a nd a morti za ti on
Amorti za ti on of i nta ngi bl e a s s ets
Sha re-ba s ed compens a ti on
Equi ty-s ettl ed dona ti on expens e
Impa i rment of goodwi l l a nd i nta ngi bl e a s s ets
Los s on di s pos a l s of property a nd equi pment
Sha re of res ul ts of equi ty i nves tees
Deferred i ncome ta xes
Al l owa nce for doubtful a ccounts rel a ti ng to mi cro l oa ns
Changes in assets and liabilities, net of effects of acquisitions and disposals
Res tri cted ca s h a nd es crow recei va bl es
Loa n recei va bl es
Income ta x pa ya bl e
Es crow money pa ya bl e
Accrued expens es , a ccounts pa ya bl e a nd other l i a bi l i ti es
Mercha nt depos i ts
Deferred revenue a nd cus tomer a dva nces
Net Cash From Operations
F1Q13A
6/12A
10
(54)
(76)
(97)
10
18,867
33,045
51,912
68,384
51,912
120,296
35,564
120,296
155,860
5,582
155,860
161,442
16,552
161,442
177,994
11,357
177,994
189,351
29,088
189,351
218,439
7,521
218,439
225,961
9,571
7,286
16,857
13,539
16,857
30,396
2,649
30,396
33,045
128,397
33,045
161,442
64,470
161,442
225,912
68,729
225,912
294,640
Source: Compa ny reports a nd CRT Ca pi ta l Group LLC es ti ma tes
Page 49

Alibaba Group, Inc.
September 17, 2014

REQUIRED DISCLOSURES
The recommendations and guidance expressed in this research report accurately reflect the personal recommendations and guidance of the research
analyst principally responsible for the preparation of this report
No part of the compensation received by the analyst principally responsible for the preparation of this report was, is or will be directly or indirectly
related to the specific recommendations and guidance expressed in this report. Direct or indirect analyst compensation may be based on performancerelated considerations associated with the recommendations and guidance expressed by the analyst in this report
The research analyst primarily responsible for the preparation of this report received compensation that is based upon CRT Capital Group LLCs total
business revenues, including revenues derived from CRTs investment banking business
Rating
Buy
Meaning
Expected rate of return on investment at current prices levels is above that rate required,
in CRT's view, to undertake the attendant risks perceived- positive risk/reward investment
balance.
Expected rate of return on investment at current prices levels is in line with that rate
required, in CRT's view, to undertake the attendant risks perceived- equitable/reward
investment balance.
Expected rate of return on investment at current prices levels is below that rate required,
in CRT's view, to undertake the attendant risks perceived- negative risk/reward investment
balance.
Fair Value
Sell
Ratings Percentages
As of September 17, 2014
Buy 61.65%
Fair Value 36.84%
Sell 1.50%
Percentage of Banking Clients Within Each Rating Category

As of September 17, 2014
6.10%
0.00%
0.00%
Valuations are based on estimates using traditional industry methods including, inter alia, analysis of earnings multiples, discounted cash flow calculations
and net asset value assessments. Price targets should be considered in the context of all prior CRT research published in connection with the subject
issuer, which may or may not have included price targets, as well as developments relating to the company, its industry and financial markets. Risks that
may impede achievement of the stated price target, if any, include, but are not limited to, broad market and macroeconomic fluctuations and unforeseen
changes in the subject companys fundamentals or business trends.
OTHER DISCLOSURES
This report has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. This report is published
solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The
securities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. This report is based on information obtained
from sources believed to be reliable but is neither guaranteed to be accurate nor intended to be a complete statement or summary of the securities,
markets or developments referred to in the report. Recipients should not use this report as a substitute for the prudent exercise of their own judgment.
Any opinions expressed in this report are subject to change without notice and CRT is under no obligation to update or keep current the information
contained herein. CRT and/or its directors, officers and employees may have or may have had interests or long or short positions in, and may at any time
make purchases and/or sales as principal or agent, or may have acted or may act in the future as market maker in the relevant securities or related financial
instruments discussed in this report. CRT may rely on informational barriers such as Chinese Walls to control the flow of information situated in one or
more areas within CRT into other units, divisions or groups within CRT.
Past performance is not necessarily indicative of future results. Options, derivative products and futures are not suitable for all investors due to the high
degree of risk associated with trading these instruments. Foreign currency rates of exchange may adversely effect the value, price or income of any security
or related instrument described in this report.
CRT accepts no liability whatsoever for any loss or damage of any kind arising out of the use of all or any part of this report. CRT specifically prohibits the
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2014 CRT Capital Group LLC. All rights Reserved. The Copyright Act of 1976 prohibits the reproduction by photocopy machine or any other means of all
or any portion of this issue except with permission of the publisher. 262 Harbor Drive, Stamford, CT 06902
Page 50

Alibaba Group, Inc.
September 17, 2014
Analyst
Phone
Email
Shagun Singh Chadha, Senior Vice President
(203) 569-4345
ssingh@crtllc.com
Jack Chan, Research Associate

Tim Chiang, Managing Director
Michael Derchin, Managing Director
Neil Doshi, Managing Director
Robert Coolbrith, Vice President & Associate
David Epstein, CFA, Managing Director
Lee J. Giordano, CFA, Managing Director
Michael Gunther, Research Associate
(203) 569-4351
(203) 569-4355
(203) 569-4354
(203) 548-8245
(203) 548-8246
(203) 569-4328
(203) 569-4350
(203) 569-4322
jchan@crtllc.com
tchiang@crtllc.com
mderchin@crtllc.com
ndoshi@crtllc.com
rcoolbrith@crtllc.com
depstein@crtllc.com
lgiordano@crtllc.com
mgunther@crtllc.com
Michael Kim, Managing Director and Partner

Kirk Ludtke, Managing Director and
Co-Head of Research
Scott Petralia, Research Associate
(203) 569-4368
(203) 569-4361
mkim@crtllc.com
kludtke@crtllc.com
(203) 569-4381
spetralia@crtllc.com
Patrick Marshall, Research Associate

Brian Ruttenbur, Managing Director
Corey Allen, Research Associate
Kevin Starke, CFA, Managing Director
Amer Tiwana, Managing Director
Lance Vitanza, CFA, Managing Director and Partner
Brad Tesoriero, CFA, Research Associate
(203) 569-4373
(203) 569-4363
(203) 569-4313
(203) 569-6421
(203) 569-4318
(203) 569-4337
(203) 569-4376
pmarshall@crtllc.com
bruttenbur@crtllc.com
callen@crtllc.com
kstarke@crtllc.com
atiwana@crtllc.com
lvitanza@crtllc.com
btesoriero@crtllc.com
Jim von Riesemann, Managing Director

Kevin Prior, CFA, Research Associate
(203) 569-4336
(203) 569-4375
jvonriesemann@crtllc.com
kprior@crtllc.com
Carol Werther, Managing Director
(203) 569-4325
cwerther@crtllc.com
Coverage Universe
Medical Technology
Generalist, Distressed, High-Yield, Special Situations
Specialty/Generic Pharmaceuticals
Airlines, Aerospace, Transportation
Internet & Interactive Media
Convertible Specialist
Consumer/Staples & Consumer Discretionary/Retail
REITs, Homebuilders, Building Products
Autos, Industrials, Specialty Finance
Security, Space, and Defense Technology

Media and Telecom
Utilities
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CRT Research | Internet

Alibaba Group, Inc.

(BABA, Buy, PT: $95.00, Close: NA)

Buy - PT: $95.00

BABA-Bing! Initiating Coverage of Alibaba with a Buy rating &

Why We Are Buyers Of BABA: 1) Large scale drives

CRT vs. Street Consensus

CRT Research | Internet

Alibaba Group, Inc. (BABA, Buy, PT:$95.00)

1) Large scale drives network effects

Chart Data Not Available

5) BABA Partnership & VIE structure will

CRT Research | Internet

Alibaba Group, Inc. (BABA, Buy, PT:$95.00)

Alibaba founded in Jack Mas apartment in Hangzhou

Taobao Marketplace launched

Aliwangwang instant messenger launched on Taobao Marketplace

Alimama monetization platform launched

Alibaba Cloud Computing founded

Alipay separated from the company

Source: Company reports

CRT Research | Internet

Alibaba Group, Inc. (BABA, Buy, PT:$95.00)

CRT Research | Internet

Alibaba Group, Inc. (BABA, Buy, PT:$95.00)

The BABA IPO

Shares Outstanding, Post Offering [a+b]

Proceeds to the company at $67 per share ($M)

Implied Market Capitalization at $66 ($M)

New shares issued from this offering

Source: Company reports and CRT Capital Group LLC estimates

CRT Research | Internet

Alibaba Group, Inc. (BABA, Buy, PT:$95.00)

Key Investment Positives

Strong China Market Fundamentals. We believe consensus expectations are for

Exhibit 2. 2013 GDP Growth Rate By Country

Strong China e-Commerce Potential. China had approximately 618M Internet

CRT Research | Internet

Alibaba Group, Inc. (BABA, Buy, PT:$95.00)

Exhibit 3. China Internet Metrics vs. Other Countries

Online shopper penetration (Online shopper as a %

Exhibit 4. Retail space per capital in square meters, 2013

Source: Euromonitor International

Mobile Driving Incremental Internet & eCommerce Adoption. China is seeing a

2. Unique Platform/Ecosystem and Strong Network Effects

CRT Research | Internet

Alibaba Group, Inc. (BABA, Buy, PT:$95.00)

As illustrated in Exhibit 5, BABA operates four principle retail marketplaces (Taobao,

Source: Company reports

We believe BABA provides an extraordinary value proposition to marketplace sellers and

CRT Research | Internet

Alibaba Group, Inc. (BABA, Buy, PT:$95.00)

Source: Company reports

We highlight the following key platform components:

Alimama. Launched in 2007, Alimama is the key historical monetization engine

CRT Research | Internet

Alibaba Group, Inc. (BABA, Buy, PT:$95.00)

Display marketing Display advertising on select areas of the Taobao

Taobao Affiliate Network BABA also operates the Taobaoke affiliate

Exhibit 7. Sample Taobao Search Results Page with P4P Marketing

China Smart Logistics. BABAs 48%-owned affiliate China Smart Logistics,

CRT Research | Internet

Alibaba Group, Inc. (BABA, Buy, PT:$95.00)