Alibaba Group Started New O2O E-Commerce Strategy, 'Buy'

Se Source

52 Weeks high/low ( high/low 52 Weeks vol. average 3 month ( cap. Market Share 201 2 20 20 20 3 年结 Mar       e O2O 阿里巴巴集团全面开启新 Group Alibaba 阿里巴巴集团公司报告： Company Report: /31 01

th 16 15 14 8 7

End e : F F F A A the Company, las in issue (m) issue in

RMB65 ned its flagship store in Tmall Tmall in store flagship its ned ope O2O new started monetization mobile R reached rating after offline sales, online in cooerpate to begin might Suning and Company The E-commerce O2O into enter to units buisness rate monetization mobile with yoy, Company points Key revenue 苏宁易购旗舰店已经进驻天猫。要点阿里巴巴略降 might urge Alipay to transfer its financial its transfer to Alipay urge might Slightly cut T cut Slightly 亿。目标价团目前有放缓。。，后者是互联网金融重要入口务网络来支持耐用品电商 finance internet for entrance key a to networks service ground nationwide RMB Group Alibaba 和移动支付开展全面合作。将与苏宁在线上销售，线下售后服务，物流网络， 2 早期，仍然有较大上升空间。 0.19ppt RMB RMB 其中移动 FY1 RMB371 expectation 高出市场预期

page 目标： 6 80.14 202 sales -sales 我们 20,24 US 18 -18 1 . ，

）电商货币化水平依然非常低。

. We thinkWe China . 价公布了 $ 4 45 ( 10 GMV fo 其中移动端仅

Turnover RMB

FY1 Non GAAP net profit profit net GAAP Non

reached 亿，同比增长 ’ m) 182,665 182,665 134,349 100,771 Guotai Junan International Guotai Junan

至 bn s overall monetization rate only reached 2. reached only rate monetization overall s r bn . 100 MB 5 76,204 76,204 52,504 总股数

亿，同比增长个业务单元在向 US disclaimer services

: 1 . USD100 . . 3 , up up , 6 市值 mn, up up mn, 收入

. 达到 G Our 9,496 - 0 1) 1) 0 1QFY16 $) 52 $) 个月平均成交股数 m) arget arget 1 %

0 MV reached RMB673 reached MV 8

。美元，相当于

Monetization rate was still very low very still was rate Monetization 年

(m) (

TP TP RMB US announced RMB 125.8

commerce strategy E-commerce 周高

Non GAAP GAAP Non mn, up up mn, , logistics, and mobile payment. mobile and , logistics, 0 (

% 226.6 P Net Profit Net

BABA US $ 2.16% 0 ( % 3.3 yoy, % 28.5 of of 财年业绩， has has 股东净利 RMB

Page Page rice , 3, m) / 's 43,885 43,885 33,368 50,636 24,149 23,076 % 28.5 低 8, Alibaba Group .00 USD100 维 710 % yoy, 5 yoy, %

014 O2O

E-commerce 持

） great upside potential upside great 4 ，同比上升 m) to USD100 to 。 29.8 ）央行新政可能要求支付宝把金融业务转移至投资评级亿，同比增长 Start Non GAAP Non 阿里巴巴集团全面开启 3 ，低于市场预期

2.4 净利润预测是线下服构建多层次的全国性电商进军。公司未来可能

estimate mn 符合 )

( Earnings / Earnings ‘ % above market consensus. consensus. market above % 1.0 yoy, % 000) 1QFY16 1QFY16 倍的 , up up , 每 1QFY16 5.1 预期。 3) 3) 为 o

represent ADS of 2.16%, up0.67

n Aug 17 n Aug

0.67ppt % of total GMV. Revenue reached reached GMV. Revenue total of % , up up bn,

Non GAAP FY1 GAAP Non “ 净利润达到 Alibaba Group invested in Suning. Suning. in invested Group Alibaba

. 16.030 16.030 12.554 19.622 10.330 10.610 ( ed s support durable g durable support 0 buyer % 226.6 RMB GMV 买入

below below 0 AD % 125.8 are 净利

公司电商货币化率仅 . Currently, the Company the Currently, . RMB422 电商 and maintain maintain and results, results, S 3.

) ”

。我们认为移动电商货币化率还处于达到

business to MYbank to business

34.3 RMB42 3

s New New growth 。 % 1

，占到总 consensus 32.4 2 and will build will and up multi 我们认为电商行业用户增长可能 ( 。其中移动端零售电商收入达到 . 每 yoy RMB RMB6, 新 0 % yoy, with mobile GMV of of GMV mobile yoy,% with 3 Earnings Earnings BABA US . 4) PBoC 4) 战略，“ . ） 00 ADS 亿， 2) O2O . 7 x FY 公司 . in line with with line in 0 188 94.96 2

市盈率。 N might

/ 730 Alibaba Group has has Group Alibaba RMB509 33 净利变动 b

2, Suning has already already has Suning net on GAAP 71 GMV5

, , 电商战略战略投资了苏宁 n 288 907.4 512. 1 oods E oods ppt ( 0.19 down %, O2O E (36.0) , 189.9 189.9 ‘ . / . △ 7

亿，同比增长亿，同比增长 AD B

300 300

(2.6) 27.7 27.7 90.0 RMB50

's In 1QFY16, the the 1QFY16, In forecast Non GAAP PE GAAP Non . %) uy’ slow down. Our

3 4 2. S

yoy. % 5.1

new policies policies new 33%

买入”

亿

investment investment commerce, -commerce,

。 ) ，和

。收入达到阿里巴巴集， . 市盈率 . We think think We 9 8 FY15 FY16 (%) float Free MYbank Major Major . Mobile Mobile . PER

同比下降

RMB654 28.6 28.6 36.5 23.3 44.3 43.2

market market 月 bn has 10 has

% 34.3 % 29.8 (x) 。 - profit 17 level

公司 - and and - Net gearing Net ppt ppt 17 shareholder shareholder

日 commerce 每 . ，，。

PEG PEG

ADS B 104.383 104.383

FY15 自由流通比率 V/ 90.919 90.919 80.650 67.335 13.985 ( 净资产 RMB AD

FY1

Source 平均 Avg 相对纳指变动 % to Rel. 绝对变动 % Abs. ADR Change in 大股东股价表现 Stock performance - S ADS from Revised 6 评级： Rating: 17 17 )

- 6 .

18m TP 18m ADR ADR 变动

净负债市盈率相对盈利增长比率 :

Bloomberg, 市净率价：

NASDAQ % 价（美元） price(

ADR P 32.8 32.8 (%)

BR 4.4 4.4 5.0 5.7 6.8 (x)

股东资金 %

Price

目标价

原目标价 $)

Strategy Guotai Junan International Junan Guotai index

DP 每股股息

( ( RMB : 0.000 0.000 0.000 0.000 0.000 0.000 /AD %

: (11.37)

) (9.97)

79.15 1

S 个月

) 1 M

(13.74) (15.19) [email protected] Ray Zhao Ray

83.67 股息率 +86 755 23976755 3 , Yield 个月 19 August 2015 August 19 . 3 M

(%)

0.0 0.0 0.0 0.0 0.0 0.0 ‘

US B

SoftBank

US 买入 Maintained uy’ 净资产收益率

$ US

90.92 100.00 $

n n .a. .a. $ 73.880 N 赵 1 1 Y

110.00 Buy et cash et 年 (

1 维持) 149.2 149.2

% 31.9

ROE

24.8 24.8 14.8 27.7 25.7 of of 睿 (%) 17.5 2.

Company Report Alibaba Group 阿里巴巴集团（BABA US） GTJA Research 国泰君安研究

17 grew fast. still Total Tmall GMV but down slowed GMV RMB427 below RMB371 Table mobil Se International. Junan Company, the Guotai Source: Assets Intangible of Amortization Expenses Development Product Expenses Administrative and General Expenses Marketing and Sales Ratio Expenses profit net GAAP Non profit operating GAAP Non Growth% profit net GAAP Non Non GAAP EBITDA GAAP Non Total Others a Computing Cloud Retail Commerce International Wholesale Retail Commerce China Revenue GMV retail of Rate Monentization Mobile Desktop Retail marketplace Taobao GMV Retail China Shareholders Common to Available Income Net (Loss) Income Net Tax) (After Interest Minority Investees of Equity of Results Share Tax Income for Provision Assets intangible Goodwill, of Impairment Net Income, Other Net Income/(Loss), Investment and Interest Expense Interest Profit Operating Assets Intangible of tion Amortiza Payment Amendment Tipla Yahoo Expenses Development Product Expenses Administrative and General Expenses Marketing and Sales Proift Gross Revenues of Cost Revenues Statement Income Alibaba Groupdelivered Tmall Mobile Desktop

Mobile Monetization on on Monetization Mobile PC e

th E

, which might boost Tmall GMV growth in 2H15. in growth GMV Tmall boost might which , - Monetization Rate on Rate Monetization th

commerce

Wholesale

e revenue RMB8,014 of e

1 market las : Alibaba Group

bn, up 24.3% yoy, and Tmall GMV of RMB246bn, up 54.7% yoy. Suning has bn, up 125.8% yoy, 55.1% of total GMV. Retail E t nd Internet Infrastructure Internet nd Revenue

page

Mobile consensus and non GAAP net profit reached RMB9,496

PC PC fo

Retail GMV Retail r

Retail GMV Retail disclaimer

’ s Results Compared to Our Expectations

1QFY16

, up 226.6% yoy, 51.0% of total revenue. We think its mobile mobile its think We revenue. total of 51.0% yoy, 226.6% up ,

( ) 2Q15

mn RMB mn RMB mn RMB mn RMB mn RMB % % % bn bn RMB bn RMB bn RMB bn RMB bn RMB bn RMB bn RMB mn RMB mn RMB mn RMB mn RMB mn RMB mn RMB mn RMB mn RMB mn RMB mn RMB mn RMB mn RMB mn RMB mn RMB mn mn RMB mn RMB mn RMB % % % % % % % mn RMB mn RMB mn RMB mn RMB mn RMB mn RMB

RMB

results.

Our Expectation

(1,397) (2,573) (2,573) (2,573) (7,505) 16,359 16,359 17,352 16,359 13,937 21,442 10,629 10,629 21,442 2.10% 2.66% 2.36% 12.0% 12.0% 12.0% 38.1% 29.3% 24.0% Alibaba Group ’ 9,463 9,463 1,795 1,333 1,870 7,820 8,539 5,421 5,421 1,159 5,758 (140) (680) (460) 2.1% (28) (30) 537 537 993 254 440 372 322 694 779 425 425

2) 2)

Both m Actual

(1,394) (3,241) (2,244) (2,241) (6,711) 27,382 27,382 13,534 20,245 10,585 10,585 20,245 15,712 16,709 15,712 30,843 30,843 - 1 11.1% 11.1% 41.4% 29.8% 23.5% 2.16% 2.55% 2.33%

5,161 5,161 9,496 9,496 1,305 1,245 1,746 8,014 7,698 commerce (407) (477) (647) 3.2% 6.0% GMV reachedRMB673 551 551 485 485 501 997 246 427 371 302 673

27 0

obile GMV and revenue grew fast

s 2Q15 revenue reach revenue 2Q15 s 3413.7% - 191.3% 468.9% 468.9% 196.6%

------52.5% 29.8% 12.8% 10.6% 51.8% 27.3% 10.4% 12.9% 40.5% 26.0% 44.9% 14.2% 2Q15 (1QFY16) 2Q15 ------0.2% 2.9% 0.3% 6.6% 0.4% 2.5% 3.3% 0.4% 6.1% 5.6% 0.4% 5.6% 6.7% 6.6% 4.0% 3.7% 9.8% 4.0% 2.8% 3.0% - - 0.06 0.06 0.11 0.02

- - revenue reached RMB15,712 1.0 1.0 4.0 0.9 3.2 0.9 0.9 mn, upmn, 29.7% yoy, 1.0% above market consensus.

expenses sales expected than Lower cut rate fee Juhuasuan to due lower was rate monetization Commission acquisition AutoNavi and UCWeb to due expenses R&D expected than Higher expectations. our with line in was profit net GAAP Non Financial Ant to sold was loans SME as expected than Lower globally deploy to announced Aliyun as expected than Faster expected than faster grew rate monetization Mobile Mobi low. still was rate monetization Overall revenue total of 51% for accounted has GMV Mobile expected. as strong grew GMV Tmall next in down slow might growth GMV Taobao expected as strong grew GMV Mobile growth GMV expected than Lower

Large non cash gain from dec from gain cash non Large

le monetization rate reduced perhaps due to less ads less to due perhaps reduced rate monetization le bn, up 34.3% yoy, with Taobao GMV of

opened ed 20,245

onsolidate Alibaba Pictures (1060.HK) Pictures Alibaba onsolidate

- flag

commerce several quarters due to counterfeit trade regulation trade counterfeit to due quarters several ship ship

mn, up 28.5% yoy, 3.3%

mn, up24.3%yoy, with

. Mobile GMV reached reached GMV Mobile .

store in Tmall Tmall in store

is driven by Alipay. Alipay. by driven is

Page

o 2 n Aug n Aug of of 17 1) 1)

Company Report Alibaba Group 阿里巴巴集团（BABA US） 19 August 2015 Se Total Others Infrastructure Internet and Computing Cloud Commerce International Commerce China Growth Total Others Infrastructure Internet and Computing Cloud Commerce International Commerce China Proportion% Total Others Infrastructure Internet and Computing Cloud Commerce International Commerce China Revenue gradually. quarters several next in 3% around to rise to rate monetization track. trending Juhuasuan has cut take rates attractto more high quality sellers. 1) Mobile GMV rate monetization is in an room. upside great with stage, early at still reached 2. Retail S Figure GMV. GMV. However, mobile rateonly monetization reach several quarters. Suning has joined Tmall, we think Suning and Tmall could work gradually to improve 3C& white goods sales gradually nextin Taobao( Wangpu Table F in ource: e

million Y14). th 100 200 300 400 500 600 700

Wholesale Wholesale Retail Wholesale Retail Wholesale Retail Wholesale Retail Wholesale Retail Retail e

Tmall sellers have to pay 5% 5% pay to Tmall have has higher monetization rate than Taobao. sellers Tmall 2 the Company the

las E 133 2Q12 1 :

- : Alibaba Group

145 commerce t 3Q12 Taobao AnnualBuyers Active

page 33

160 4Q12

%, down 0.19ppt yoy, with mobile monetization rate

172 Annual Active Users Annual Active 1Q13

185 2Q13 Mobile GMV has accounted 55% for of total GMV and mobile revenue accounted has , Guotai Junan International. Junan Guotai , r

Alibaba Groupretail

202 淘宝旺铺 3Q13 disclaimer

231 4Q13

255 m 1Q14

279 onetization ratio was ratio onetization ’s Revenue Breakdown 2Q14 52.0%

307

3Q14

) has to pay 1.5% transaction commission fees. fees. commission transaction 1.5% pay to has )

334 4Q14

44.6%

350 1Q15 37.3%

31.5%

367 2Q15

398 3Q15E 400.0% 100.9% 100.

34,517 34,517 26,970 29,167

84.5% 72.4% 26.2% 75.8% 10.5% 86.5% 10.9% 12.1% 78.1% - 426 FY13 3,768 3,768 4,160 2,197 4Q15E growth yoy of Annual Active Active growthyoy ofUsers Annual 0.8% 6.4% 1.6% 1.9% 1.1% 6.4% 540 650 392 0% E

439 1Q16E -

commerce

453 2Q16E

483 Pro 3Q16E

509 4Q16E the to According

jection

516

1Q17E

2.16%, muchPC lower thanof monetization 2.55%. rate It

still very low. 223.7% 139.3% 100.0% 524 52,504 52,504 42,832 45,132 2Q17E

52.1% 18.9% 16.6% 58.8% 54.7% 81.6% 86.0% FY14 1,748 1,748 3,913 4,851 2,300 3.8% 4.7% 3.3% 1.5% 7.5% 1.8% 9.2% 4.4%

549 773 938 monetization ratemonetization was still far below EBay (11% in FY14) and Rakuten (7% 3Q17E

568

4Q17E

11.0%

573 1Q18E

0% 10% 20% 30% 40% 50% 60% 215.2% 100.0% 76,204 76,204 59,732 62,937 45.1% 64.4% 20.6% 88.5% 33.7% 39.3% 39.5% 39.5% 78.4% 82.6% FY15 management, weak monetization rate 2Q15in was because 5,510 5,510 1,271 4,718 1,768 6,486 3,205 7.2% 1.7% 6.2% 2.3% 8.5% 4.2%

In 1QFY16,In the Company

of 2.16%, up 0.67ppt yoy. We think mobile monetization is

Figure Figure S

ource: ource: million

100 200 300 400 500 600 0 2) 2)

the Company the 2Q12 91 2 After After yoy. 54.7% at grew still GMV Tmall 2Q15, In :

Tmall GMV GMV Tmall

100,771 100,771 100.0% FY16E 136 76,150 76,150 80,642 3Q12 32.2% 7 92.9% 18.1% 40.0% 2 40.1% 27.5% 28.1% 75.6% 80.0% Taobao’s 9,630 9,630 2,452 5,573 2,475 8,048 4,491 4.8% 4.1% 9.6% 2.4% 5.5% 2.5% 8.0% 4.5%

163 4Q12

188

Mobile Monthly Active Users Active Monthly Mobile 1Q13

217 , Guotai Junan International. International. Junan Guotai , 2Q13

transaction 77.3%

138.5% 265 3Q13 Mobile Buyers Projection Buyers Mobile

will

94.9% 289 4Q13

307 134,349 134,349 104,378 100.0%

FY17E ’ 15,407 15,407 98,180 1Q14 33.3% 60.0% 90.0% 20.0% 30.0% 23.1% 38.0% 28.9% 29.4% 73.1% 77.7% 11.5% s overalls monetization rate only

63.3% 4,658 4,658 6,688 3,218 9,906 6,198 3.5% 5.0% 2.4% 7.4% 4.6% gain

338 2Q14 55.6%

405 3Q14

commission

hi 52.7%

417 4Q14

40.3% gherproportion in total

44.4%

431 for 51% of total revenue. revenue. total of 51% for 1Q15

36.0%

459 2Q15 19.5%

182,665 182,665 128, 136,955

100.0% FY18E 484 24,652 24,652 12,208 3Q15E 36.0% 60.0% 90.0% 20.0% 30.0% 23.2% 35.0% 31.0% 31.2% 13.5% 70.4% 75.0% ’ 8,850 8,850 8,026 4,183 8,367 17.5% 4.8% 4.4% 2.3% 6.7% 4.6% s possible mobile mobile possible s

588 588

491 4Q15E

fees

15.5% growth yoy

498 1Q16E 13.5%

521 Page 2Q16E

11.5%

while

540 3Q16E upward 11.0%

545 3 4Q16E of of

250,625 250,625 168,253 179,299 100.0% FY19E only 39,443 39,443 16,815 15,068 11,045 37.2% 60.0% 90.0% 20.0% 30.0% 23.4% 32.0% 30.8% 30.9% 15.7% 67.1% 71.5% 9,631 9,631 5,438 20% 40% 60% 80% 100% 120% 140% 160% 0% 6.7% 3.8% 2.2% 6.0% 4.4% 17

Company Report Alibaba Group 阿里巴巴集团（BABA US） 19 August 2015 Se Assets Intangible of Amortization Expenses Development Product Exp Administrative and General Expenses Marketing and Sales Ratio Expenses profit net GAAP Non profit operating GAAP Non Growth% profit net GAAP Non Non EBITDA GAAP GAAP Non Total Others Infrastructure Internet and Computing Cloud Wholesale Commerce International Wholesale Commerce China Revenue Mobile Mon GMV retail of Rate Monentization Desktop Retail Tmall marketplace Taobao Mobile Desktop GMV Retail China Shareholders Common to Available Income Net (Loss) Income Net Tax) (After Interest Minority Investees Equity of Results of Share Tax Income for Provision Assets intangible Goodwill, of Impairment Net Income, Other In Investment and Interest Expense Interest Profit Operating Assets Intangible of Amortization Payment Amendment Tipla Yahoo Expenses Development Product Expenses Administrative and General Expenses Marketing and Sales Proift Gross Revenues of Cost Revenues Statement Income Table International. Junan Company, the Guotai Source: e PC Mobile

E th

- Monetization Rate on Rate Monetization commerce e

Retail Retail 3

las

: Alibaba 1 Group t

Mobile on etization page

Revenue

come/(Loss), Net come/(Loss), r

disclaimer

PC PC

enses

Retail GMV Retail

QFY1

Results

mn RMB mn RMB mn RMB mn RMB mn RMB mn RMB % % % mn RMB mn RMB mn RMB bn RMB bn RMB bn RMB bn RMB bn RMB mn RMB mn RMB mn RMB mn RMB mn RMB mn RMB mn RMB mn RMB mn RMB mn RMB mn RMB mn RMB mn RMB mn RMB mn RMB mn RMB mn RMB mn RMB % % % % % % % mn RMB mn RMB mn RMB mn RMB mn RMB

2Q14 1QFY15

(1,445) (1,212) (1,952) (4,585) 12,344 12,344 12,404 11,186 15,771 15,771 15,771 12,639 13,348 10,185 12,639 12.4% 53.1% 40.7% 1.49% 3.03% 2.52%

6,828 6,828 6,844 7,317 7,317 8,574 1,111 1,469 2,454 (410) (234) (944) 1.5% 7.7% 6.0% (34) (90) 337 501 711 718 236 358 709 159 342 164 0 0

3Q14 2QFY15

(1,339) (2,581) (1,960) (1,749) (5,596) 11,233 11,233 16,829 16,829 16,829 12,769 13,559 12,769 15.3% 11.6% 10.4% 15.5% 30. 1.87% 2.54% 2.30%

3,028 3,028 3,028 4,345 6,808 6,808 8,493 1,368 1,198 1,617 3,719 9,050 (301) (521) (598) 3.6% 357 556 378 468 285 419 790 176 380 199 6% (2) 0 0

4Q14 3QFY15

(2,429) (1,344) (3,083) (2,419) (3,021) (7,520) 18,659 18,659 26,179 13,115 13,115 15,103 26,179 21,275 22,135 14,855 21,275 11.8% 11.5% 25.3% 34.3% 1.96% 3.23% 2.70%

5,936 5,936 5,936 9,522 1,919 1,919 1,209 1,763 6,420 (805) (175) (614) 2.3% 9.2% (47) 460 787 901 313 362 554 860 293 494 327 0

1Q15 4QFY15

(1,203) (2,477) (2,531) (3,042) (6,133) 11,292 11,292 17,425 17,425 17,425 13,049 13,895 13,049 14.2% 14.5% 17.5% 16.0% 24.6% 1.73% 2.64% 2.17%

2,893 2,893 2,893 1,846 2,599 7,741 7,741 8,583 1,505 1,200 1,637 5,247 7,802 (394) (475) (643) 3.7% 296 600 496 388 437 846 219 381 304 24 0 0

2Q15 1QFY16

(1,394) (3,241) (2,244) (2,241) (6,711) 30,843 30,843 30,84 27,382 13,534 20,245 10,585 10,585 20,245 15,712 16,709 15,712 16.0% 11.1% 11.1% 29.8% 23.5% 2.16% 2.55% 2.33%

5,161 5,161 9,496 9,496 1,305 1,245 1,746 8,014 7,698 (407) (477) (647) 3.2% 302 673 551 485 501 997 246 427 371 27 3 0 0

- 149.9% 148.7% 352.2% 301.0% 176.5% 167.4% 137.7% 105.5% 226.6% 125.8% 179.4% - - - - 34.3% 22.5% 16.3% 24.6% 14.8% 21.0% 46.4% 28.4% 29.8% 23.5% 28.4% 81.8% 12.1% 39.9% 18.9% 40.6% 24.3% 25.2% 24.3% 54.7% 24.9% 10.3% 24.4% - 3.5% - - - - YoY 23.3 23.3 0.67 0.48 0.19 17.2 17.2 - 1.7 1.7 8.3 5.1 1.3 Page

1383.3%

966.1% 966.1% of of - - - 22.7% 23.3% 16.2% 13.3% 25.0% 14.6% 17.8% 20.4% 20.3% 52.7% 20.4% 12.3% 12.1% 22.0% 12.2% 12.5% 15.9% 11.1% 98.6% 30.8% 19.9% 16.2% 11.3% 26.3% - 3.8% 6.7% 2.0% 3.3% 0.4% 0.6% 9 - 1.3% QoQ 13.7 13.7 0.43 0.09 0.16 17 .4% - - - - 0.5 0.5 1.8 6.4 3.4 3.4 1.2

Company Report Alibaba Group 阿里巴巴集团（BABA US） 19 August 2015 new 9.0 edition Alipay App. Media content mainly refers to Alibaba Pictures (1060.HK), which might release its first hot film hot first its release might which Journey(1060.HK), to the West: Conquering Demons the Pictures Alibaba to refers mainly content Media App. Alipay edition 9.0 new to help other online traffic portals, such as UCWeb, Youku, Weibo to incr to Weibo Youku, UCWeb, as such portals, traffic online other help to platform beyond Alibaba Group. Alimama epuippedis with the Data Management Platform (DMP), d Adchina.combig ( data in Alibaba Group, acquire has Alimama network. channel media of core the is developers. Meizu smartphone sales 2015in might reach a hardware OS entrances. Currently, the hardware OS app stores could charge abigger proportion of revenues from and Media Content, entrance strategy is m Se medium key up 3 set has Group Alibaba Source: Figure New Medium Ter International. Junan Company, the Guotai Source: obile entrances), O2O O2O entrances), obile e th e

the Company,the las 3 : Alibaba t page fo r

Guotai Junan International. International. Junan Guotai disclaimer

Group

to to

Channel m Strategy E build multi build

- Ecosystem

commerce

. Flyme. OS andYunOS Network (TV, Smartphone, Auto, - levelentrances. mobile strategy (Multi strategy

Evolution

term

in 2H16.in Alimama c

strategies.

- level ground service networks), and Internet Finance Strategy. 1 Strategy. Finance Internet and networks), service ground level

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) are very important important very are ) Wearable include

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Company Report Alibaba Group 阿里巴巴集团（BABA US） 19 August 2015

Tmall ( Tmall Universal Portal, to serve long tail tail long serve to Portal, Universal s differentiation platform 3C & white goods category over Tmall, such as deliveryfast network and after Figure Figure RMB300bn by the end of 2015. expansion. According entrance TmallSupermarket to page. the front in think Weeditionthe 9.0 Alipay has started just its O2O i mainly Life, and Ubox Vending Machine auto insurances are all related to durable goods sales. In these respects, Suning is aperfect is Suning respects, these In sales. goods durable to related all are insurances auto entrances for durable goods related financial services in the future. Consumption credit for 3C & white goods, auto loans, and make more differentiationB2B2Cstrategies make its more might in : mode Group Alibaba its hav Treasure. As Ant As Treasure. installation, and after There are several reasons: 1) Urban online buyers have more service strategiesdifferentiation GroupAlibaba might waiting for the remote account not allow Alipay to directly serve financial institutions. Alipay may have to transfer its financial services MYbankto Se N New E O2O Real i Thiscars. strategy is to compete against JD and to support internet finance. We will discuss this in details later. 3) payments offlineretail in andmulti Alipay. Currently, Alibaba Group has 10 business units in E O2O - multi nternet finance ew 9.0 edition e durable

e issued new opinion new e issued th - time bidding system (RTB). This strategy is to compete against Tencent media. media. Tencent against compete to is strategy This (RTB). system bidding time e level ground service networks. service ground level 品质天猫 las 4 ncludes all kinds of catering store coupons, movie tickets, hotel reservations and suburban tours. Alipay also gave an : the9 , Taobao and C2C platform t

page goods sales, to enhance online purchase experiences. 2) Competition from JD. JD has great trategy Taobaofor and Tmall. Taobao aimingis to become an E fo th ) mainly invites high quality well quality high invites ) mainly - r

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invested RMB6.0bn together in ) (a media invested by Alibaba Group), the GMV of Koubei might reach reach might Koubei of GMV the Group), Alibaba by invested media (a ) discus . Alipayhasits rebuilt 2 s this later. s a The new store page page ve mobile store traffic entrance new Koubei. to The - commerce

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Company Report Alibaba Group 阿里巴巴集团（BABA US） 19 August 2015 conduct Supermarket O2O Tmall with cooperate to begin might Retail Sunart under Feiniu.com payment. mobile consumption throughpayment. mobile at at least 10 business units entering O2O of O2O O2O of Meituan and Didi Alipay has 130k offline stores in cooperation and might reach around RMB8 trillion in China. In the near future E revenue Se cedannoun GroupKoubeiAlibaba its(50% that might GMV interest) Koubei Source: Alibaba Auto, Taobao Film Ticke Alipay is Source: high entry barriers: barriers: entry high Koubei coupons and take ’ China achieve huge scale. E the 1) GMV O2O gained access to characteristics: the traditional offline business, with three important E Tmall O2O supermarket in front page. front in supermarket O2O Tmall Alipay MAU growmight to 300mn by the end 2015 of and exceedmight Taobao’ Figure Figure important supports for its O2O durable goods sales. from support - e commercebusiness model th e

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has justed signed with the largest supermarket Sunart Retail (6808.hk) in Ant Financial.

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bank card information, c) high frequent payment habits. payment frequent high c) information, card bank O2O - commerce will will commerce Currently, Sesame Credit, Credit, Sesame Currently,

C more than RMB3more trilli Supermarket, Tmall Medicine, Tmall 3C & White Goods, Goods, & 3C White Tmall Medicine, Tmall Supermarket, . urrently, Alipay Life page began to exhibit products from Currently, according to our research, Alibaba hasGroup . -

commerce We believe that Internet E Internet that believe We reach be able to provideablebe to users with all traditional reach 270mn, up around 80% yoy. We think

companies may also expand also may companies

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Company Report Alibaba Group 阿里巴巴集团（BABA US） 19 August 2015 Table cre Consumer E E cinemas; C) door such as supermarket and take CRMandSCM. In O2O O2O payment. mobile and provide delivery, & offline ction transa online marketing, mobile includes chain value simple Se into penetrate (classified information news flow), JD (supermarket), and Dianping (Customer reviews). We think from different entrances: Alipay under Ant Financial (mobile pay E O2O in competition Fiercer International. Junan Guotai China, of Association & Clearing Payment rch, iResea Source: E O2O Total Office Box Online Tour Package Hotel tickets flight excluding OTA - Take O2O service Life Catering Buy Group O2O O2O Card Credit Bank Supermarket Catering Market Target and categories more to due choices. increases more will experience User tourism. suburban the and room hour hotel include mainly formats wedding service, f discount stores, convenience stores, and vending machines. Life service formats include entertainment, beauty service, a business services E China Travel industry revenue industry Travel China nd travel formats. Retail formats include shopping mall, hypermarket, supermarket, department store, specialty stores, stores, specialty store, department supermarket, hypermarket, mall, shopping include formats Retail formats. travel nd - - - e commercechain servicevalueincludes - five links: traffic Mobile commerce commerce Travel and Hotel and Travel Commodity other Commodity Entertainment

E th growth growth growth growth growth - commerce e 4

growth growth growth growth growth growth growth growth las out s : O2O -

commerce YoY YoY YoY mobile traffic and mobile marketing solution with big data. Online transaction & offline delivery can be divided into t

page

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business model are B side (offline sellers), C side (online users), and payment side. O2O O2O side. payment and users), (online C side sellers), (offline B side are model business

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2,244 2,244 2,054 2011 11.1 11.1 813 599 0.5 0.5 2.9 1.5 0.5 2.1 4.1 0.5 0.5

to provide comprehensive services for offline business.

The target market mainly includes all kinds of retail formats, life service formats formats service life formats, retail of kinds all includes mainly market target The 213.0% 251.9% There are 6 big Internet giants who are are who giants Internet 6 big are There 93.1% 39.9% 15.3% 19.1% 13.3% 1,137 1,137 2,587 2,328 2012 85.7 85.7 21.2 39.8 61.0 21.4

714 1.9 1.9 1.4 2.2 2.6 1.8 4.8 9.6

full coverage O2O services services O2O coverage full

157.2% 193.8% 157.2% 30.6% 67.7% 14.0% 62.3% 1,846 1,846 2,950 2,539 124.7 124.7 6.8% 9.1% 2013 30.3 30.3 49.4 79.7 18.8 35.9 762 4.8 4.8 4.2 1.7 3.2 3.6 8.6

and film tickets, as customers consume them in sellers’ shops or or shops sellers’ in them consume customers as tickets, film and

180.1% 180.1% 12 108.3% 26.8% 35.7% 14.6% 2,786 2,786 205.9 205.9 108.1 2,340 3,380 4.8% 5.0% 9.7% 2014 13.6 13.6 44.9 63.3 15.1 44.1 74.8 ment), MeituanBaidu(O2Obuy), group (mobile ment), map), 58 800 9.5 9.5 1.6 6.1 7.8

283.8% 110.0% 2015E 76.7% 76.7% 36.9% 14.8% 24.8% 11.0% 3,092 3,092 365.5 365.5 148.1 157.0 2,919 3,879 4.0% 23.9 23.9 63.1 85.0 36.5 11.8 16.9 27.0 99.0 832

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old th

e next 3 to 5 5 years. 3 to e next

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2017E 41.7% 41.7% 28.8% 80.0% 40.0% 15.0% 20.8% 3,748 3,748 709.1 709.1 117.7 135.0 252.7 239.3 351.6 4,327 5,129 9.8% 3.0% 51.8 51.8 53.1 26.4 36.1 46.3 883 3.5 3.5

the O2O O2O the

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door services. Tourism Tourism services. door 2018E 36.1% 18.8% 36.1% 25.6% 60.0% 35.0% 14.0% 4,098 4,098 947.4 947.4 155.3 162.0 317.3 332.6 474.7 5,138 5,848 the six big giants big six the 9.3% 3.0% E 70.4 70.4 85.0 35.6 48.7 55.4 The complete O2O complete The 910 3 key parts of O2O O2O of parts key 3 2.4 2.4 - E commerce

commerce

1,261.9 1,261.9 2019E 30.6% 16.8% 30.6% 34.0% 50.0% 30.0% 13.0% 4,460 4,460 230.9 230.9 194.4 425.3 127.5 444.7 617.1 5,999 6,608 E 8.8% 3.0% 92.0 92.0 46.3 58.4 65.9 937 1.9 1.9 - Page commerce

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, O2O O2O , 8 of of 1,584.9 1,584.9

2020E 19.9% 14.8% 19.9% 23.4% 40.0% 25.0% 12.0% 110.4 110.4 295.3 229.4 524.6 178.5 571.3 771.4 6,883 7,401 4,831 8.3% 3.0% will will 57.9 57.9 66.0 74.7 17 965 1.5 1.5 ’ s

Company Report Alibaba Group 阿里巴巴集团（BABA US） 19 August 2015 in in 2015, 1/3 of China ’ and has become Hotel3) could team ground efficient effective ground network. 1H15,In Meituan had network. catering GMV, including group buy and take leader, with around 55% and is its its Se might Group Alibaba withAlliance Suning Meituan is the leader in the catering Guotai Source: Figure e operation th e las expected reach full to 6

： and movie tickets have become new growth t

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is independent.is the end 1H15, of Meituan announced to cover all 1,111 county fo r an open platform for door

E disclaimer - commerce s

total box office and 60% of online ticket sales market. Meituan’s hotel GMV ranks the top three in China China in three top the ranks GMV hotel Meituan’s market. sales ticket online of 60% and office box total (002024.CH) start &White new 3C

Meituan help

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- Meituan is also the main competitor to K to competitor main the also is Meituan year target of RMB150 billion by the end of year.

Competition

share in 1H15. in 3C & White Goods Category Expansion

E - move commerce market. - to - out, might reach around RMB100 billion by the end of 2015. - door services. door

- take as such categories, service O2O other into Goods

served around 1.3 offlinemillion sellers. Moreover, Meituan’s large

Over 60% of O2O group buy markets are cate O2O O2O drivers.

E - Alibaba Group has invested around 15% commerce

Meituan C Meituan oubei. with Suning. Alibaba Group is at at

In E -

ye level cities level 1H15 Meituan GMV reached RMB46 billion, 1)

might sell RMB15might billion online film tickets Meituan is the O2O groupbuyis the O2O market Meituan

in Chinain out anddoor , an, amazing huge a ring services.

equity 2) Amazingground tr - ying ying to

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Company Report Alibaba Group 阿里巴巴集团（BABA US） 19 August 2015 make quick response supply chain to catch constantly, d) how to change its KPI system in local stores to cooperate with fast growing online sales. Suning might have to producthotrestock inventories possible, as soonas inst traffic, Suning traffic, suppliers JD oftwice of that net loss and very long account payable turnover days reach RMB60bn, up 23.8% yoy, and online sales to reach RMB18.2bn, up 104.6% yoy, its FY14 results are very bad, due to turnover da turnover traffic in its 3C & White Goods channel. Goods & 3C White its in traffic Se There Source: O2O deeply in 3C & White Goods online sales RMB18.2bn, up 104.6% yoy. services Currently, Suning has 1,600 stores and 5,000 sales points nationwide. Tmall has just announced extendto after announcedSuning to White Goods White Figure Figure cooperatemightwith Alipayoffline stores. in including Suning Cainiao and Logistics Suning will invest RMB14bn in Alibaba Group for 27.8mn new shares. membership and 1,220mn SKU. cooperating with Suning logistics, it communities. strategy. Currently, Cainiao has sales GMVof reserve utilization rate bemight only around e

th e E the Company,the Guotai las are are - 7 commerce : Sunings Open : in 3Cin & white goods from 7 days to 3 months.

t anymore. As anymore. 8 air 8 air

page also severalobstacles ys.

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invest provide a Junan International. International. Junan

s s operation was in bad condition in FY12 - centers, 12sorting centers, 49 regional logistic centers, 300 city sorting centers, and 5,000 social b result, moresuppliers

n a

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in with We think their future cooperation cooperation future their think We

g delivery, installation, and after

might cooperate might deeply. in Suning.in Alibaba Group invested RMB28.3bn Suningin for in realized

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cooperation.

Suning and AlibabaSuning and startnew Group might O2O

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- 1/3 of the of JD. It day deliveday w ere

cooperating cooperating

on Aug 17 Aug on

s revenue reached RM reached revenue s - has 1) marketing

In AugIn 17 132 days. Its account payable turnover days in FY14 were more than than more were FY14 in days turnover payable account Its days. 132

It It might take at least 1~2 quarters for Suning to accelerate its ead of wasting traffic, c) how to make efficient

ry in 41 cities and might reach 50 cities by the end of of end the by cities 50 reach and might cities 41 in ry enter Currently, Suning has 4.52 ’ s next s - sales services to to services sales e are lots of problems to solve. solve. to problems of lots e are ed will will th skills verya)hotquickly:skills choose how products, to b) how to th with JD instead of Suning. As Tmall has given Suning huge huge Suning given has Tmall As Suning. of JD instead with

2015 ~25 ’ Tmall in Aug 17 s goods news for Cainiao expandto next its 14. 14. include 3 levels: 3 levels: include - day delivery cities could could cities delivery day th Although

, Tmall arrangedhas 1 week promotion for Suning. I n 1H15, Suning announced to have 198mn B63bn, up23.8%B63bn, yoy, with online sales of

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Company Report Alibaba Group 阿里巴巴集团（BABA US） 19 August 2015 Table JD. with up catch to Suning for years corporate Se International. GuotaiJunan Tmall, Source: Figure Auto International. Junan Guotai Source: Flow Cash Free Working Capita FCF change capital Working Days Recycling Cash Advances AP IN AR customer from Advances AP IN AR COGS Revenue Suning months several take might it delivery services, management their connect

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system

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and 14,393 14,393 15,913 - 2,767 2,767 2,017 (174) 2.9% 1.1% 2005 (1 462 206 47 35 90 0) 2 3

Tmall Auto Purchase Procedure

Auto (3669.HK)

22,274 22,274 26,042 - 4,869 4,869 3,407 (291) 3.3% 1.1% 2006 (16) 864 126 63 44 91 2 3

3) Suning Tmalland

34,357 34,357 39,998 2,119 2,119 3,853 9,729 4,553 5.3% 9.6% 2007 (35) 282 108 78 42 2 2

10,730 10,730 41,344 49,693 1,199 1,199 4,908 2.4% 1.1% 2008 (48) 546 185 110 90 42 2 2

m, CRM, and SCM (WMS and TMS). and SCM (WMS and CRM, m, 19,002 19,002 48,210 58,02 11.6% 4,358 4,358 6,709 6,327 7.5% 2009 have (66) 113 277 347 43 1 5 9

very different s onlines sales and (1,674) 21,116 21,116 62,095 75,237 - - 9,474 9,474 1,105 (810) 1.1% 2.2% 2010 (56) 118 394 46 17 2

might 29,143 29,143 13,427 76,139 93,519 3,294 3,294 1,842 0.5% 3.5% 2011 (33) 499 120 350 55 34 1 corporate

take several quarters or or quarters several take

34,688 34,688 17,222 80,976 98,044 - 2,512 2,512 1,271 (785) 2.6% the 0.8% 2012 (41) 144 542 69 36 2

quality ofquality offline

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104,962 104,962 (2,715) 35,767 35,767 18,258 89,279 - 0.6% 2.6% 2013 (51) In general, In 609 144 508 671 73 22 2

108,568 108,568 (5,368) (1,598)

30,870 30,870 16,039 92,285 of of The - - 1,452 1,452 4.9% 1.5% 2014 (53) 132 536 17 68 14 3

Company Report Alibaba Group 阿里巴巴集团（BABA US） 19 August 2015 to to expand its re re Figu auto its business and it started needs a nationwide just has ground networkAuto to support itsAlibaba online sales. general, In sales. car used in recognition brand up its build to Chemao.com 145 Yongda Yongda Auto. Auto is 3 the top are more likely to cooperate with Tmall to make online sales. Tmall will bring more brand exposure to them. Chery has opened opened has Chery them. to exposure brand flagship its more bring will Tmall sales. online make to Tmall with cooperate to likely more are mature nationwide dealers. auto Obviously, it strategicof partners: A (TURE US), by selling deal certification online, along with Tmall and Automakers Se Yongda,Source: Guotai E E Auto entered has Auto Alibaba - e commerce realize

th manufacturer e las 9 : : Yongda Auto Nationwide Dealership Network t

page online Auto Repair Auto store ’ s very . Currently, Alibaba Auto has set up fo

in Tmall Tmall in

disclaimer auto sales. sales. auto authorized outlets

Junan International. International. Junan difficult

network network and the deal certification utomakers, Auto Dealers, and Used Car Sellers. 1) Alibaba Group cooperates with Chery

to directly cooperate with high end German and Japan Automakers, as they have strong sales and and sales strong have they as Automakers, Japan and German end high with cooperate directly to

Page Page 3) Chemao 3) nationwide

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8 ideal. -

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’

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Company Report Alibaba Group 阿里巴巴集团（BABA US） 19 August 2015 companies without bank licens wait for for wait businesses its greathave impacts onChina internet finance industry. companies to open accounts for financial accountsopen institutions.companies to for could sell public funds to its customers. Se PBoC new policies urge Alipaymight shift to its business financial to Yongda,Source: Guotai services leasing Finance endbrands high to Mid margin Gross services leasing Finance services rental Automobile end high to Mid - ultra Luxuryand Revenue - ultra Luxuryand car New ‘ Table Yongda,Guotai Source: outlets Total manufactures) vehicle the from authorization obtain to required (not outlets Total Pre showrooms comprehensive vehicle Passenger outlets leasing Finance outlets rental Automobile “Auto outlets authorized manufacturer Total a brands Luxury centers service authorized brands Luxury showrooms city brands Luxury 4S dealerships endbrands high to Mid ultra and Luxury Table regulation. PBoC intends to constrain 3 constrain to intends PBoC regulation. transaction commands to the customer alreadywho obtained bank licenses. conduct financial business until they get small loan licenses. The new policy is actuall payment companies. car New

e - owned vehicle comprehensive showrooms comprehensive vehicle owned

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e sales

7 6 - - las sales services sales services : Yongda: Business Matrix :

the 車易修 Yongda Auto Nationwide Dealership Network

uthorized certified pre certified uthorized - page Luxury and ultra Luxury and endbrands high to Mid luxury brands 4S dealerships 4S luxury brands

new remote account opening policies from PBoC. PBoC new policies will create great obstacles for other internet internet other for obstacles great create will policies new PBoC PBoC. from policies opening account remote new in Alipay: Ant Check Later (

business to to business )” luxury automobile maintenance and repair centers repair and maintenance automobile luxury )”

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’ cre 49,414 49,414 13,830 13,830 15,018

23.7% 37.4% balance payment functions. 3 1,038 1,038 4,111 9,719

5.6% 5.0% 7.8% 5.4% 2010 150 custodian 2009 ate 38 20 18

), Auto Loan (

great obstacles for andmedium small 3

MYbank rd 2) PBoC has forbidden 3

banks of the related financial institutions, for party payment companies could only send 2010 61,229 61,229 14,306 14,306 18,607 20,304 36.4% 38.2 1,517 1,517 4,301 6.0% 2.4% 7.9% 5.1% 2011 52 23 29 181 %

y benefitingy Alibaba Groupand Tencent,

车秒贷 . Currently, .

PBoC and CBRC new policies might 2011 1) Alipayhaveto might transfer 64 11 27 39 1 5 ). However, MYbank However, ). 35,844 35,844 34,039 69,883 15,009 15,009 19,440 21,712 36.5% 44.5%

2,049 2,049 4,431 8.2% 4.0% 2012 223

party payment companies companies payment party

there are 3 major credit credit major 3 are there 2012

106 18 29 52 2 5

39,558 39,558 42,324 81,862 18,392 18,392 23,243 26,097 85.0% 33.5% 46.8% 2,584 2,584 4,851 8.7% 4.2%

2013 266 party payment payment party 4 2013

131 130

17 30 74 1 1 2 7

still

13 has to to has

party party 103,602 103,602 23,831 23,831 29,074 32,938 43,365 60,237 of of 71.7% 27.3% 45.8% 3,537 3,537 5,243 8.1% 3.3% 2014 2014 274 192 145 17 53 47 25 13 12 34 88 2 2 5 2 9

Company Report Alibaba Group 阿里巴巴集团（BABA US） 19 August 2015 Se Guotai Source: Figure Guotai Source: Figure e

th e las 11 10 t

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Page Page

14 of of 17

Company Report Alibaba Group 阿里巴巴集团（BABA US） 19 August 2015 FY17 NonFY17 GAAP PE. FY16 fast andcome might fast into Se Source: Weighted Average Simple Average Weighted Average Simple Average Samsung Electronics Co Ltd SoftBank Corp. Inc book Face Microsoft Corp Google Inc Apple Inc Global Internet Conglomerate Weighted Average Simple Average Baidu Inc - TencentHoldings Ltd China Internet Conglomerate Weighted Average Simple Average I Ctrip.Com Dangdang Jumei International VipshopHoldings Ltd Jd.Com Inc China Vertical E Weighted Average Simple Average Rakuten Inc Yahoo Japan Corp Amazon.Com Inc Inc EBay Alibaba Group Holding- Large Global Company Table Slight e

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commerce 18 Non GAAP net profit profit net GAAP Non 18 ly 8 Bloomberg, Guotai Junan International Junan Guotai Bloomberg, - on Adr E

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005930 KS GOOG US AMZN US AMZN CTRP US CTRP MSFT US MSFT EBAY US EBAY BABA US BABA P AAPL US AAPL BIDU US BIDU Dang US VIPS US VIPS JMEI US JMEI

4755 JT 4689 JT 9984 JT 700 HK US FB rice JD US JD

Page Page KWR ency USD Curr USD USD USD USD HKD USD USD USD USD USD USD USD USD the Company's JPY JPY JPY

USD1 s ares RMB42.2bn, RMB50.9bn and RMB65.4bnestimate

1158000 656.13 535.02 166.11 95.17 47.27 140.6 69.28 19.03 26.62 27.77 73.88 116.5 7559 1813 price 16.7 Last Last 547 0 , 201 , 7 0

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5 2,080,372.5 2,080,372.5 2,931,550.3 1,321,627.8 1,4 1,940,341.9 1,940,341.9 5,151,568.9 5,151,568.9 1,115,867.0 1,115,867.0 3,567,611. Marke 285,326.9 285,326.9 262,322.7 566,030.7 566,030.7 161,690.5 161,690.5 194,285.0 452,750.8 452,750.8

Aug Aug 39,301.6 39,301.6 85,349.9 85,349.9 75,524.4 75,524.4 18,534.2 18,534.2 mn HKD mn with with 4,383.7 4,383.7 t Cap t

19 5 valuation.

‘ . B

2,957.8 2,957.8

1,828.0 1,828.0 uy’ FY14F 247.7 247.7 220.5 220.5 637.0 101.4 247.7 147.4 147.4 114.4 114.4 56.3 56.3 17.6 43.7 42.6 17.1 17.1 25.6 25.6 61.4 61.4 87.2 87.2 25.6 18.0 34.1 24.4 24.1 24.1 23.8 39.1 34.6 30.5 30.5 9.4 9.4 8.4 8.4

investment rating.

FY15F 113.0 113.0 We think China thinkWe Non GAAP Non 15.1 15.1 46.1 46.1 18.2 34.8 33.8 13.0 13.0 29.3 29.3 32.9 32.9 19.7 19.7 47.4 77.6 43.8 33.5 23.8 30.6 30.6 34 22.7 12.8 20.3 20.3 20.2 33.4 32.1 70.5 31.8 31.8 n.a. n.a. 8.4 8.4 .2 .2

PE FY16F 123.8 123.8

14.2 14.2 34.9 34.9 17.9 26.7 28.4 61.6 61.6 17.3 17.3 22.6 22.6 22.1 22.1 85.9 85.9 45.9 34.7 30.2 30.7 26.1 23.0 24.6 24.6 30.1 19.5 17.8 17.8 18.2 25.7 24.7 43.2 18.7 18.7 11.9 11.9 7.8 7.8

FY17F 12.7 12.7 27.0 15.5 20.8 21.7 39.7 39.7 14.4 14.4 16.4 16.4 46.1 46.1 15.8 15.8 35.0 35.0 21.6 21.4 12.2 23.5 22.0 21.2 18.7 18.7 19.7 16.9 10.8 15.2 15.2 15.3 16.4 16.4 29.8 12.7 12.7 7.4 7.4

E WeAlibaba think - commerce (537.9) (694.5) (290.8) (369.4) FY14F (41.2) (30.2) 148.1 148.1 344.9 92.4 92.4 16.8 55.2 17.8 17.8 26.7 26.7 72.5 72.5 44.3 24.9 33.2 33.2 16.8 93.1 93.1 30.2 30.2 30.8 47.9 40.9 n.a. n.a. n.a. 7.9 7.9 6.3 6.3

(118.3) FY15F (28.8) 357.1 357.1 108.2 108.2 212.2 193.7 193.7 19.5 19.5 45.9 45.9 88.0 88.0 31.1 35.0 27.9 27.9 96.2 34.8 23.8 59.0 59.0 48.2 28.5 12.5 13.0 13.0 31.4 31.4 35.1 35.1 39.2 39.2 29.6 29.6 30.2 34.1 33.2 GAAP PE PE GAAP 7.9 7.9 .

Our buy

FY16F

er er 345.3 345.3 135.5 545.3 545.3 114.2 114.2 TP TP 16.2 16.2 25.1 25.1 55.0 55.0 20.0 26.8 49.9 49.9 38.6 41.1 26.8 23.1 37.7 37.7 59.4 23.6 12.2 17.5 17.5 67.8 67.8 23.3 23.3 19.3 19.3 24.7 24.7 21.9 21.9 22.6 25.9 25.1 7 ’ .4 .4 s new businesses

growth

USD100.00 represents32.4x

FY17F 13.1 13.1 30.6 30.6 55.8 55.8 38.5 38.5 16.7 20.8 14.6 14.6 40.9 40.9 37.1 37.1 40.0 25.9 28.7 22.7 21.3 22.9 22.9 24.6 21.4 15.8 15.8 54.1 54.1 18.2 18.2 18.2 19.5 18.3 11.4 11.4 n.a. n.a. n.a. 7.0 7.0

might slow down. Our FY15F 10.1 10.1 27.8 27.8 23.7 23.7 23.4 23.4 24.0 23.5 23.5 22.5 22.5 17.8 17.8 41.7 75.3 18.2 17.2 12.1 14.2 14.2 20.4 13.3 10.6 10.6 10.5 23.7 23.3 23.9 23.9 26.0 26.0 n.a. n.a. 2.5 2.5 9.1 9.1 8.4 8.4 6.3 6.3

EV/EBITDA FY16F 21.4 21.4 18.5 18.5 16.8 16.8 18.3 18.3 18.3 16.1 16.1 54.1 54.1 27.9 27.8 14.4 13.6 12.5 12.5 16.6 10.8 17.8 17.8 17.2 76.1 76.1 .2 15.2 11.5 11.5 11.6 11.6 6.9 6.9 2.2 2.2 9.6 9.6 7.8 7.8 8.7 8.7 6.1 6.1 9.1 9.1 8.9

grew very very grew FY17F 15.9 15.9 12.6 12.6 12.9 12.9 14.1 12.8 12.8 10.9 10.9 20.6 20.6 13.8 12.6 10.3 10.6 10.6 13.3 13.3 12.5 26.8 26.8 11.8 11.8 11.8 n.a. 1.9 1.9 8.6 8.6 7.2 7.2 1.5 1.5 9.4 9.4 9.0 5.4 7.7 7.7 7.5 7.0 7.0 9.9 9.9 15

of of GAAP FY15 17 PEG Non (3.7) n.a. n.a. 1.6 1.6 1.1 1.1 1.2 1.2 0.9 0.9 2.2 2.2 1.1 1.1 0.9 1.2 1.2 0.7 0.7 1.2 1.2 0.9 1.3 1.2 1.4 0.2 0.4 0.4 1.7 1.1 3.8 0.6 0.6 0.9 0.9 0.8 0.3 0.3 0.5 0.5

- 17 17

Company Report Alibaba Group 阿里巴巴集团（BABA US） 19 August 2015 Se Source: EB BB Cash in Changes Net Flow Cash Effect Rate Exchange Foreign Other Adjustments Cash Flow from Financing Activities Others issuance Share Borrowings Secured Net Borrowings Bank Net Financing Activities Activities Investing from Flow Cash Others investment and assets intangible PPE, of Disposals Investment Expenditure Capital Activities Investing Cash Flow from Operating Activities Liabi Working Capital Change loss or gains cash non Other Receivable Loan Taxes Income Deferred Payable Tax Income Investees of Equity of Results Share Share Amortization and Depreciation Income Net Activities Operating mn Year Fiscal End (Mar Statement Flow Cash Diluted of Numbers Basic of Numbers Diluted GAAP Non Diluted Basic EPS income net GAAP Non Net Income Available to Common Shareholders Adjustments Stock Preferred Stock Preferred on Dividends Net income attributable to Alibaba Group Tax) (After Interest Minority Investees of Equity of Results Share Tax Income for Provision Taxes before Earnings Net Income, Other Net Income/(Loss), Investment and Interest Interest Operating Profit Assets intangible Goodwill, of Impairment Assets Intangible of Amortization Expenses Development Product Expenses Administrative and General Expenses Marketing and Sales Profit Gross Revenues of Cost Revenues Statement Income Statem Financial

Escrow Money Payable Money Escrow Receivables Escrow and Cash Restricted Other and Payable Accounts Expenses, Accrued Assets Other and Receivables Prepayments, Deposits Merchant Advances Customer and Revenue Deferred e lities -

Compensation based EPS th Expense

the Company the

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Shares (Mar End Fiscal Year mn Year Fiscal End (Mar

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RMB)

Page Page (13,369) (27,692) (32,997) (4,545) (3,416) (4,776) (1,329) (3,567) (9,175) (3,196) (2,195) (5,093) (4,218) FY1 FY1 39,135 39,135 52,504 26,379 26,379 23,403 10.000 10.610 27,610 23,076 23,315 26,802 24,920 33,045 33,045 30,396 11.840 11.840 2,649 2,649 9,364 7,166 5,623 4 1,34 3,992 1,628 1,606 3,674 1,302 1,466 1,008 2,844 1,654 2,332 2,175 2,429 1,648 (208) (203) (315) (944) (31) (88) (44) (97) 203 203 415 415 (9) 4 4 A A

(53,454) (10,295) (35,221) (23,834) (11,674) 108,193 108,193 (7,705) (2,253) (5,649) (1,590) (6,416) (2,750) (2,089) (9,353) (7,854) (9,764) FY1 FY1 33,045 33,045 75,148 87,497 61,334 19,891 41,217 10,578 13,028 24,320 14.051 10.330 34,981 24,149 24,261 32,326 23,135 52,370 76,204 12,118 12,118 6,153 6,153 2,490 1,317 1,659 1,410 1,590 4,415 2,490 2,338 9.700 2,486 9,455 (233) (851) (175) (112) (15) (97) (59) 837 837 119 5 5 A A

(50,430) (17,536) (26,582) (13,317) (10,997) (33,175) (16,383) (56,403) (11,336) 108,193 108,193 100,771 110,848 110,848 (3,422) (6 (2,893) (3,288) 48,881 48,881 10,153 50,712 FY1 15.346 18.425 19.622 42,175 50,636 50,636 58,124 30,066 28,658 67,597 FY1 10,177 10,177 26,560 11,064 11,064 9,018 9,018 2,178 2,608 1,624 3,582 7,929 2,748 2,581 2,29 2,655 2,655 (230) (917) ,495) (75) 500 500 547 917 6 6 E E 0 0 0 0 3 0 0 0 0

(14,317) (46,760) (54,591) (22,763) (13,150) (13,598) (76,403) 134,349 134,349 134,349 134,349 110,848 110,848 (4,673) (8,600) (3,210) (3,943) 87,589 87,589 FY1 58,485 58,485 33,540 FY1 17.988 12.554 50,918 33,368 33,368 43,000 42,581 23,501 23,501 41,418 15,307 11.788 11.788 11,800 11,800 26,111 2,831 2,831 2,658 3,417 3,395 3,395 4 1,623 4,705 2,150 4,775 (172) (860) (253) ,612 ,612 212 212 402 402 550 656 860 7 7 E E 0 0 0 0 0 0 0 0 0

(19,473) (19,456) (18,870) (64,546) (86,983) (59,192) (26,593) (11,311) 182,665 182,665 182,665 134,349 118,119 118,119 (1,131) (4,997) (3,942) (1,803) (9,740) 22.434 22.434 15.052 16.030 65,407 43,885 43,885 56,553 56,378 FY1 48,316 48,316 49,687 20,947 28,739 85,613 16,458 14,563 15,700 FY1 44,111 2,916 2,916 2,738 4,904 4,277 4,277 3,846 2,828 1,131 6,492 (226) (278) 268 268 605 605 787 (0) 8 8 E E 0 0 0 0 0 0 0 0

Merchant Deposits Merchant Revenue Deferred Payable Tax Income Borrowings Bank Current Borrowings Secured liabilities Other and Payable, Accounts Expenses, Accrued Liabilities Current Assets Total Total Non Current Assets Assets Other and Receivables Prepayments, Int Rights Use Land Goodwill Investee Equity in Investment Securities Investment net and Equipment, Property Assets Current Non Assets Current Total Escrow and Cash Restricted Assets Other and Receivables Prepayments, net Receivable, Loans Short Securities Investment Equivalents Cash and Cash Assets Current Sheet Balance GMV GMV Retail in rate monetization Ad GMV Retail Mobile in rate monetization Monetization Rate N N N N Margin% (GAAP) N N N N Revenue Growth YoY Stock N - Non N N Indicators Key Shareholders’ Equity & mezzanine Liabilities, Total Total Shareholders’ Equity sh Total AlibabaGroup Holding Limited Noncontroling Interest equi mezzanine Total Liabilities Current Non Total Other Liabilities Liabilities Tax Deferred Revenue Deferred Non Non CurrentLiabilities Liabilities Current Total Payable Money Escrow on on on on on- on- on- on- on- on- on- angible Assets angible Commission monetization rate in Retail Retail in rate monetization Commission Deskt in rate monetization equity areholders’

- - - - - GAAP Operating margin Operating GAAP margin Gross GAAP profit Net GAAP GAAP EBITDA profit Operating GAAP GAAP profit operating GAAP GAAP EBITDA GAAP Net margin Net GAAP GAAP EBITDA margin GAAP Gross Profit profit gross GAAP Borrowings Bank current

- - term Investments term Based compensation compensation Based

net profit net

customer Advances customer

op Retail GMV op Retail Receivables

111,549 111,549 111,549 111,549 FY1 FY1 43,716 43,716 17,666 67,833 13,159 10,587 33,045 27,610 27,610 30,731 28,167 40,289 30,417 29,338 10,401 34,354 37,384 11,887 11,887 11,793 30,711 30,711

0.72% 1.77% 0.91% 2.94% 2.55% 52.6% 58.5% 53.6% 76.7% 99.1% 85.0% 76.3% 60.0% 52.1% 6,496 6,496 1,267 1,100 9,264 2,087 1,906 1,660 3,023 5,581 4,921 4,679 1,442 2,844 2,844 1,079 1,079 2,136 2,659 4,711 4,711 428 428 4 4 A A

255,434 255,434 142,109 108,193 255,434 255,434 157,413 145,439 113,325 113,325 FY1 FY1 19,834 19,834 41,933 33,877 12,978 14,148 34,981 34,981 40,699 37,040 56,546 67,515 50,603 39,672 14,611 14,611 11,974 11,974 11,974

0.87% 1. 1.79% 2.89% 2.44% 45.9% 53.4% 48.6% 74.2% 26.7% 32.4% 31.5% 40.4% 45.1% 7,201 7,201 7,914 2,733 1,990 4,085 6,575 3,105 9,139 2,297 3,658 5,543 5,543 4,493 54% 835 835 658 658 445 5 5 A A 0 0

305,485 305,485 156,943 148,542 305,485 305,485 208,125 196,075 110,848 110,848 10,383 10,383 28,763 42,352 62,927 17,533 15,536 15,581 15,563 FY1 42,175 42,175 50,476 46,084 70,703 FY1 12,049 52,864 12,049 34,840 53,176

0.81% 1.53% 2.22% 2.58% 2.36% 41.9% 50.1% 45.7% 70.2% 20.6% 24.0% 24.4% 25.0% 32.2% 9, 3,280 1,370 4,904 9,857 3,833 2,527 4,024 3,582 3,582 5,392 379 379 790 790 584 6 6 E E 0 0 0

377,140 377,140 199,332 177,808 134,349 377,140 377,140 241,665 229,443 13,991 13,991 32,125 13,141 42,776 88,504 21,040 23,304 19,134 FY1 50,918 50,918 67,816 59,959 90,276 FY1 12,221 79,324 12,221 59,962 64,330 11,920 11,920 17,119

0.89% 1.53% 2.51% 2.28% 2.44% 37.9% 50.5% 44.6% 67.2% 20.7% 34.4% 30.1% 27.7% 33.3% 3,936 3,936 2,358 6,023 4,544 2,779 4,426 4,775 4,775 6,470 16 948 948 670 7 7 E E 0 0 0 of of

120,859 120,859 477,300 285,776 273,329 108,700 477,300 241,335 235,965 182,665 111,847 111,847 65,407 65,407 89,431 77,674 FY1 12,447 12,447 87,614 90,419 18,268 15,561 48, 17,148 43,204 25,248 30,296 26,543 18,831 FY1 0.97% 1.69% 2.81% 2.13% 2.68% 35.8% 49.0% 42.5% 66.2% 28.5% 31.9% 29.5% 33.9% 36.0%

6,492 6,492 1,137 7,764 4,723 3,445 8,355 5,238 3,057 4,869 421 421 875 875 8 8 E E 0 0 0

Company Report Alibaba Group 阿里巴巴集团（BABA US） 19 August 2015 Website: www.gtja.com.hk Website: Gran Block, 27/F., Low (4) 9118 Fax: -9118 Fax: 2509 Tel.: (852) (852) - 2509 201 © jurisdiction. such within requirement licensing or registration any to companies group its and Junan Guotai subject applicable to contrary be law would use or or regulation availability or which publication, would distribution, such where jurisdiction any in or a is citizen who entity or person any by, or use to distribution for or intended at, directed is not Report Research This de investment any to prior r advisers its and financial own objectives their investment consult the necessary where comprehend and and understand should Investors contain. may uncertainty conditions so economic situation, and mutable political future the of -looking assumptions forward the some from contain may derived Report forecasts and Research This estimates herein. data and information the of completeness and accuracy the guarantee not Repor Research this in contained data and information the of accuracy the ensure to made been has effort best Though Junan. Guotai of groups banking investment and management asset the by made decisions investment or opinions to contrary be report this in expressed opinions Any of companies. group Junan of Guotai executives professional other and dealers persons, e opinions Any s manager, lead agent, proprietarily). or invest placing the underwriter example, (for etc. and services investment banking, investment including reports, research its Ju and Guotai Junan by Guotai securities Junan"). for ("Guotai subscribe or Limited Kong) purchase (Hong acquire, to offer or invitation an constitute not does Report Research This DISCLAIMER (3) (2)

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