Alibaba IPO

Prepared by - Dheeraj Vaidya, CFA, FRM

email - dheeraj@wallstreetmojo.com
websites: www.wallstreetmojo.com www.educorporatebridge.com

Core Financial Statements

Quarterly IS
Income Statement
Balance Sheet
Cash Flows

Supporting Financial Modeling Schedules

Debt
Working Capital
Depreciation Schedule
Amortization Schedule
Shareholder's Equity
Shares Oustanding

Valuations
DCF Valuation
Option Value
Alibaba IPO
Quarterly Income Statement

30-Jun-12
(RMB in Million Except Per Share Amounts) 2012

China commerce 5,601

International commerce 974
Cloud computing and Internet infrastructure 155
Others 63
Revenue 6,793

Cost of revenue (2,158)

Gross profit 4,635

Operating expenses:
Product development expenses (848)
Sales and marketing expenses (869)
General and administrative expenses(2) (537)
Amortization of intangible assets
Impairment of goodwill and intangible assets —
Yahoo TIPLA amendment payment(3)
Total operating expenses (4,448)

Income (loss) from operations 2,345

Net loss attributable to common stockholders 1,722

(1) Share-based compensation expense 279

Growth Analysis and Drivers

Revenue

China commerce 5,601

% qoq (sequential)

International commerce 974

% qoq (sequential)

Cloud computing and Internet infrastructure (ii) 155

% qoq (sequential)
Others (iii) 63
% qoq (sequential)

Total 6,793
% qoq

Cost of revenue 2,158

% sales 31.8%

Product development expenses 848

% sales 12.5%

Sales and marketing expenses 869

% sales 12.8%

General and administrative expenses(2) 537

% sales 7.9%
 Quarter Ended
30-Sep-12 31-Dec-12 31-Mar-13 30-Jun-13 30-Sep-13 31-Dec-13 31-Mar-14
2012 2012 2013 2013 2013 2013 2014

6,152 10,172 7,242 9,193 9,213 16,761 12,571

1,049 1,094 1,043 1,117 1,176 1,264 1,201
164 165 166 174 190 196 198
92 162 223 294 371 524 707
7,457 11,593 8,674 10,778 10,950 18,745 14,677

(2,373) (2,911) (2,277) (2,727) (3,001) (4,171) (3,229)

5,084 8,682 6,397 8,051 7,949 14,574 11,448

(888) (1,163) (854) (1,018) (1,168) (1,707) (1,321)

(974) (1,249) (521) (713) (657) (1,897) (1,468)
(804) (1,003) (545) (865) (793) (2,046) (1,614)

(3,487) - - - - - -

(8,563) (6,533) (4,222) (5,358) (5,702) (9,944) (7,632)

(1,106) 5,060 4,452 5,420 5,248 8,801 7,045

(1,560) 4,045 4,197 4,384 4,883 8,266

462 293 225 396 864 659

6,152 10,172 7,242 9,193 9,213 16,761 12,571

9.8% 65.3% -28.8% 26.9% 0.2% 81.9% -25%

1,049 1,094 1,043 1,117 1,176 1,264 1,201

7.7% 4.3% -4.7% 7.1% 5.3% 7.5% -5%

164 165 166 174 190 196 198

5.8% 0.6% 0.6% 4.8% 9.2% 3.2% 1%
 92 162 223 294 371 524 707
46.0% 76.1% 37.7% 31.8% 26.2% 41.2% 35%

7,457 11,593 8,674 10,778 10,950 18,745 14,677

2,373 2,911 2,277 2,727 3,001 4,171 3,229

31.8% 25.1% 26.3% 25.3% 27.4% 22.3% 22%

888 1,163 854 1,018 1,168 1,707 1,321

11.9% 10.0% 9.8% 9.4% 10.7% 9.1% 9%

974 1,249 521 713 657 1,897 1,468

13.1% 10.8% 6.0% 6.6% 6.0% 10.1% 10%

804 1,003 545 865 793 2,046 1,614

10.8% 8.7% 6.3% 8.0% 7.2% 10.9% 11%
Alibaba IPO
Historicals
(RMB in Million Except Per Share Amounts) Mar-13 Mar-14 Mar-15

Revenue
China commerce 29,167 47,738 60,571
International commerce 4,160 4,758 5,388
Cloud computing and Internet infrastructure 650 758 588
Others 540 1,896 1,784
Total 34,517 55,150 68,331

Cost of revenue (9,719) (13,128) (16,399)

Gross profit 24,798 42,022 51,931

Operating expenses:
Product development expenses (3,753) (5,214) (6,491)
Sales and marketing expenses (3,613) (4,735) (5,808)
General and administrative expenses(2) (2,889) (5,318) (6,560)
Amortization of intangible assets (130) (197) -
Impairment of goodwill and intangible assets (175) (44) -
Yahoo TIPLA amendment payment(3) (3,487) -
Total operating expenses (14,047) (15,508) (18,859)

Income (loss) from operations 10,751 26,514 33,072

Interest and investment income (loss), net 39 1,080 1,132

Interest Expense (1,572) (1,842) (1,664)
Other income (expense), net 894 1,178

Loss before provision (benefit) for income taxes 10,112 26,930 32,540
Income tax expenses (1,457) (1,969) (3,905)
Share of results of equity investees (6) (174)
Net income (loss) 8,649 24,787 28,635
Net income (loss) attributable to noncontrolling int (117) (29)
Net income (loss) attributable to Alibaba Group Ho 8,532 24,758 28,635

Accretion of redeemable convertible preferred sto (17) (24)

Dividends accrued on convertible preference shar (111) (156)
Net loss attributable to common stockholders 8,404 24,578 28,635

EBITDA
Income from Operations 33,072
Add: Share-based compensation expense 2,392
Add: D&A 2,691
Adjusted EBITDA 38,154

Growth Analysis and Drivers

Revenue

China commerce
Retail (i) 26970 45421 58,139
% yoy 101% 68% 28%
Wholesale (i) 2197 2316 2,432
% yoy -1% 5% 5%
Total China commerce 29,168 47,738 60,571
87% 64% 27%

International commerce
Retail (i) 392 873 1,310
% yoy 76% 123% 50%
Wholesale (i) 3768 3884 4,078
% yoy 6% 3% 5%
Total international commerce 4,161 4,758 5,388
% yoy 11% 14% 13%

Cloud computing and Internet infrastructure (ii) 650 560 588

% yoy 26% -14% 5%
Others (iii) 540 1189 1,784
% yoy 400% 120% 50%

Total 34,519 54,245 68,331

% yoy 72% 57% 26%

Cost of revenue 9,719 13,128 16,399

% sales 28.2% 23.8% 24%

Product development expenses 3,753 5,214 6,491

% sales 10.9% 9.5% 10%

Sales and marketing expenses 3,613 4,735 5,808

% sales 10.5% 8.6% 8.5%

General and administrative expenses(2) 2,889 5,318 6,560

% sales 8.4% 9.6% 9.6%

Share based compensation expense 1259 1919 2,391.57

% Sales 3.6% 3.5% 3.5%
Effective tax rates 14.4% 7.3% 12%
 Forecasts
Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21

76,971 97,936 124,741 156,583 179,775 197,597

6,247 7,443 9,141 11,587 13,492 14,995
617 648 681 715 750 788
2,675 4,013 6,019 9,029 11,286 12,979
86,511 110,040 140,583 177,914 205,303 226,359

(20,763) (26,410) (33,740) (42,699) (49,273) (54,326)

65,748 83,631 106,843 135,214 156,030 172,033
29,040.5

(8,219) (10,454) (13,355) (16,902) (19,504) (21,504)

(7,353) (9,353) (11,950) (15,123) (17,451) (19,241)
(8,305) (10,564) (13,496) (17,080) (19,709) (21,730)
- - - - - -
- - - - - -

(23,877) (30,371) (38,801) (49,104) (56,664) (62,475)

41,871 53,260 68,042 86,110 99,367 109,558

1,540 2,211 3,236 4,602 6,226 8,041

(1,035) (600) (465) (435) (405) (374)

42,376 54,870 70,813 90,277 105,188 117,224

(5,933) (8,231) (11,330) (16,250) (21,038) (25,789)

36,443 46,640 59,483 74,027 84,151 91,435

36,443 46,640 59,483 74,027 84,151 91,435

36,443 46,640 59,483 74,027 84,151 91,435

41,871 53,260 68,042 86,110 99,367 109,558

3,028 3,851 4,920 6,227 7,186 7,923
5,069 8,089 11,938 16,831 22,717 29,348
 49,969 65,199 84,901 109,168 129,269 146,828

74,418 95,255 121,926 153,627 176,671 194,338

28% 28% 28% 26% 15% 10%
2,553 2,681 2,815 2,956 3,104 3,259
5% 5% 5% 5% 5% 5%
76,971 97,936 124,741 156,583 179,775 197,597
27% 27% 27% 26% 15% 10%

1,964 2,946 4,420 6,629 8,287 9,530

50% 50% 50% 50% 25% 15%
4,282 4,496 4,721 4,957 5,205 5,465
5% 5% 5% 5% 5% 5%
6,247 7,443 9,141 11,587 13,492 14,995
16% 19% 23% 27% 16% 11%

617 648 681 715 750 788

5% 5% 5% 5% 5% 5%
2,675 4,013 6,019 9,029 11,286 12,979
50% 50% 50% 50% 25% 15%

86,511 110,040 140,583 177,914 205,303 226,359

27% 27% 28% 27% 15% 10%

20,763 26,410 33,740 42,699 49,273 54,326

24% 24% 24% 24% 24% 24%

8,219 10,454 13,355 16,902 19,504 21,504

10% 10% 10% 10% 10% 10%

7,353 9,353 11,950 15,123 17,451 19,241

8.5% 8.5% 8.5% 8.5% 8.5% 8.5%

8,305 10,564 13,496 17,080 19,709 21,730

9.6% 9.6% 9.6% 9.6% 9.6% 9.6%

3,027.88 3,851.41 4,920.39 6,226.98 7,185.61 7,922.57

3.5% 3.5% 3.5% 3.5% 3.5% 3.5%
14% 15% 16% 18% 20% 22%
 Mar-22

207,477
16,221
827
14,277
238,802

(57,313)
181,490

(22,686)
(20,298)
(22,925)
-
-

(65,909)

115,580

10,006
(344)

125,242
(31,310)

93,931

93,931

93,931

115,580
8,358
36,493
160,431

204,055
5%
3,422
5%
207,477
5%

10,483
10%
5,738
5%
16,221
8%

827
5%
14,277
10%

238,802
5%

57,313
24%

22,686
10%

20,298
8.5%

22,925
9.6%

8,358.08
3.5%
25%
Alibaba IPO
Annual Balance Sheet
H
(RMB in Million Except Per Share Amounts) Mar-10

ASSETS
Current assets:
Cash and cash equivalents
Short-term investments
Restricted cash and escrow receivables
Loan receivables, net
Investment securities
Prepayments, receivables and other assets
Total current assets

Investment in equity investees

Investment securities
Prepayments, receivables and other assets
Property and equipment, net
Land use rights
Intangible assets
Goodwill
Total assets

LIABILITIES
Current liabilities:
Current bank borrowings
Secured borrowings
Income tax payable
Escrow money payable
Accrued expenses, accounts payable and other liabilities
Merchant deposits
Deferred revenue and customer advances
Total current liabilities

Deferred revenue
Deferred tax liabilities
Redeemable Preference Shares
Non-current bank borrowings
Other liabilities

Total liabilities
Mezzanine equity:
Others
Total mezzanine equity
Alibaba Group Holding Limited shareholders’ equity:
Ordinary shares
Additional paid-in capital
Treasury shares at cost
Subscription receivables
Statutory reserves
Accumulated other comprehensive income
Cumulative translation adjustments
Unrealized gain (loss) on available-for-sale investment securities, interest rate swaps and others
Retained earnings (Accumulated deficits)
Total Alibaba Group Holding Limited shareholders’ equity (deficits)
Non controlling interests
Total equity
Total liabilities + Shareholder's Equity

Check
 Historicals Forecasts
Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
proforma

16,857 30,396 48,550 64,630 89,337 131,732

4,887 2,290 7,248 7,248 7,248 7,248
3,312 3,687 4,244 4,244 4,244 4,244
581 4,426 12,434 15,033 19,032 24,209
593 629 1,207 1,207 1,207 1,207
1,669 1,734 2,980 3,758 4,758 6,052
27,899 43,162 76,663 96,120 125,826 174,692

1,642 1,555 13,009 13,009 13,009 13,009

248 242 1,095 1,095 1,095 1,095
1,466 1,496 2,041 2,041 2,041 2,041
2,463 3,808 5,973 10,115 13,697 16,612
1,701 1,895 1,863 1,863 1,863 1,863
355 334 1,610 3,931 6,916 10,738
11,436 11,294 11,640 11,640 11,640 11,640
47,210 63,786 113,894 139,814 176,088 231,690

1,283 3,350 1,200 0 0 0

0 2,098 8,884 8,884 8,884 8,884
375 259 451 451 451 451
339 1,315 2,073 2,624 3,322 4,226
4,659 8,961 13,544 16,399 20,763 26,410
745 3,083 7,879 9,840 12,458 15,846
4,350 4,929 6,306 8,200 10,381 13,205
11,751 23,995 40,337 46,398 56,259 69,021

529 389 396 396 396 396

413 643 1,774 1,774 1,774 1,774
0 5191 0 0 0 0
0 22,462 30,226 21,450 11,420 7,620
104 60 72 72 72 72

12,797 52,740 72,805 70,090 69,921 78,883

 10,447 0
30 86 126
30 10533 126 126 126 126

1 1 1
20,778 21,655 36,173
0 0 0
-819 -852 -493
1,096 1,337 2,388

-2121 -1666 -787

1 -8 139
12552 -20491 -4307
31,488 -24 33,114
2895 537 1013
34,383 513 40,963 69,598 106,041 152,681
47,210 63,786 113,894 139,814 176,088 231,690

- - - -
orecasts
Mar-18 Mar-19 Mar-20 Mar-21 Mar-22

191,888 268,277 354,324 449,749 550,834

7,248 7,248 7,248 7,248 7,248
4,244 4,244 4,244 4,244 4,244
30,928 39,141 45,167 49,799 52,537
1,207 1,207 1,207 1,207 1,207
7,732 9,785 11,292 12,450 13,134
243,247 329,902 423,481 524,697 629,203

13,009 13,009 13,009 13,009 13,009

1,095 1,095 1,095 1,095 1,095
2,041 2,041 2,041 2,041 2,041
18,732 19,693 17,506 10,794 -1,818
1,863 1,863 1,863 1,863 1,863
15,632 21,813 28,949 36,821 45,129
11,640 11,640 11,640 11,640 11,640
307,260 401,057 499,584 601,961 702,162

0 0 0 0 0
8,884 8,884 8,884 8,884 8,884
451 451 451 451 451
5,398 6,832 7,884 8,692 9,170
33,740 42,699 49,273 54,326 57,313
20,244 25,620 29,564 32,596 34,388
16,870 21,350 24,636 27,163 28,656
85,587 105,835 120,691 132,112 138,861

396 396 396 396 396

1,774 1,774 1,774 1,774 1,774
0 0 0 0 0
7,141 6,662 6,183 5,704 5,225
72 72 72 72 72

94,970 114,739 129,116 140,058 146,328

 126 126 126 126 126

212,164 286,191 370,342 461,777 555,708

307,260 401,057 499,584 601,961 702,162

- - - - -
Alibaba IPO
Annual Cash Flows
Historicals Forecasts
(RMB in Million Except Per Share Amounts) Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 4,665 8,649 24,578 28,635 36,443 46,640 59,483 74,027 84,151 91,435 93,931
Adjustments to reconcile net income to net cash provided by operating activities:
(Gain) Loss on disposals of equity investees (24) (68) 3
Realized and unrealized loss (gain) related to investment securities 138 (80) (151)
Change in fair value of other assets and liabilities 264 245 (36)
Loss (Gain) on disposals of other subsidiaries 3 (8) (316)
Depreciation and amortization of property and equipment and land use rights 715 805 947 2,691 5,069 8,089 11,938 16,831 22,717 29,348 36,493
Amortization of intangible assets 155 130 197 71 42 30 26 46 50 50 50
Share-based compensation expense 1,254 1,259 1,919
Equity-settled donation expense — — 1,269
Impairment of goodwill and intangible assets 135 175 44
Loss (Gain) on disposals of property and equipment 3 3 (1)
Share of results of equity investees 25 6 174
Deferred income taxes 150 104 1,141
Allowance for doubtful accounts relating to micro loans 4 120 359
Changes in assets and liabilities, net of effects of acquisitions and disposals:
Restricted cash and escrow receivables (113) (974) (760) - - - - - - - -
Loan receivables (226) (2,828) (8,367) (2,599) (4,000) (5,176) (6,719) (8,213) (6,026) (4,632) (2,738)
Prepayments, receivables and other assets (240) (354) (1,241) (778) (1,000) (1,294) (1,680) (2,053) (1,506) (1,158) (684)
Income tax payable 230 (116) 192 - - - - - - - -
Escrow money payable 94 976 758 551 698 904 1,173 1,434 1,052 809 478
Accrued expenses, accounts payable and other liabilities 1,332 3,657 4,526 2,855 4,363 5,647 7,330 8,959 6,574 5,053 2,986
Merchant deposits 583 2,338 4,796 1,961 2,618 3,388 4,398 5,376 3,944 3,032 1,792
Deferred revenue and customer advances 128 437 1,384 1,894 2,182 2,824 3,665 4,480 3,287 2,527 1,493
Net cash used in operating activities 9,275 14,476 31,415 35,281 46,416 61,050 79,614 100,886 114,242 126,463 133,802

CASH FLOWS FROM INVESTING ACTIVITIES:

Decrease (Increase) in short-term investments, net 3,728 2,589 (4,965)
(Increase) Decrease in restricted cash (2,108) 334 291
Decrease (Increase) in trading investment securities, net 167 (12) (160)
Acquisitions of available-for-sale and held-to-maturity investment securities (508) (60) (1,051)
Disposals of available-for-sale investment securities 1,966 26 365
Acquisitions of
- Land use rights and construction in progress (1,419) (1,457) (1,326)
- Other property, equipment and intangible assets (749) (1,046) (3,010) (9,225) (11,679) (14,855) (18,979) (24,018) (27,716) (30,558) (32,238)
Disposals of property and equipment 1 301 —
Cash paid for business combinations, net of cash acquired (191) (52) (422)
Deconsolidation and disposal of subsidiaries, net of cash proceeds (20) 551 134
Loans to employees, net of repayments (305) (344) (203)
Acquisitions of equity investees (761) (452) (11,934)
Disposals of equity investees 74 167 89
Net cash provided by (used in) investing activities (125) 545 (22,192) (9,225) (11,679) (14,855) (18,979) (24,018) (27,716) (30,558) (32,238)

Cash Flow available for Financing Activities 26,056 34,737 46,195 60,636 76,868 86,526 95,904 101,563

CASH FLOWS FROM FINANCING ACTIVITIES:

Issuance of ordinary shares, including repayment of loan and interest receivable on 618 16,792 1,598 - - - - - - - -
Repurchase of ordinary shares (2) (40,111) (116)
Issuance of ordinary shares for Partner Capital Investment Plan (Note 8(c)) — — 442
Issuance of Convertible Preference Shares, net of direct incidental fees incurred — 10,542 —
Payment of dividend on Convertible Preference Shares — (103) (104)
Redemption of Redeemable Preference Shares — — (5,131)
Acquisitions of shares of Alibaba.com Limited (419) — —
Payment for privatization of Alibaba.com Limited — (15,134) —
Acquisition of the remaining noncontrolling interest in a subsidiary — (335) (9)
Dividend paid by a consolidated subsidiary to noncontrolling interests (9) — —
Disposals of partial interest in subsidiaries, net of related costs 166 11 —
Proceeds from secured borrowings relating to micro loans — 2,098 6,786
Proceeds from current bank borrowings 827 2,439 403
Repayment of current bank borrowings (706) (2,584) (123) (1,200) - - - - - - -
Proceeds from non-current bank borrowings — 24,979 30,088
Repayment of non-current bank borrowings — — (24,788) (8,776) (10,030) (3,800) (479) (479) (479) (479) (479)
Net cash provided by (used in) financing activities 475 (1,406) 9,046 (9,976) (10,030) (3,800) (479) (479) (479) (479) (479)
Effect of exchange rate changes on cash and cash equivalents (54) (76) (115)

Net increase (decrease) in cash and cash equivalents 9,571 13,539 18,154 16,080 24,707 42,395 60,157 76,389 86,047 95,425 101,084

Cash and cash equivalents, beginning of period 7,286 16,857 30,396 48,550 64,630 89,337 131,732 191,888 268,277 354,324 449,749
Cash and cash equivalents, end of period 16,857 30,396 48,550 64,630 89,337 131,732 191,888 268,277 354,324 449,749 550,834

still need to incorporate IPO proceeds

Alibaba IPO
Working Capital

Historicals
(RMB in Million Except Per Share Amounts) Mar-10 Mar-11 Mar-12
Net Sales 6,670 11,903 20,025
Cost of Sales 1,634 3,497 6,554

Working Capital Balances

Loan receivables, net 581
Prepayments, receivables and other assets 1,669
Total Non Cash Current Assets - 2,250

Escrow money payable 339

Accrued expenses, accounts payable and other liabilities 4,659
Merchant deposits 745
Deferred revenue and customer advances 4,350
Total Non-Debt Current Liabilities - 10,093

Net Working Capital/ (Deficit) - (7,843)

(Increase)/ Decrease in Working Capital 7,843

Ratios & Assumptions

Loan receivables, net 581

% of Sales 2.9%

Prepayments, receivables and other assets 1,669

% of Sales 8.3%

Escrow money payable 339

% of COGS 5.2%

Accrued expenses, accounts payable and other liabilities 4,659

% of COGS 71.1%

Merchant deposits 745

11.4%

Deferred revenue and customer advances 4,350

% of COGS 66.4%
Historicals Forecasts
Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19
34,517 55,150 68,331 86,511 110,040 140,583 177,914
9,719 13,128 16,399 20,763 26,410 33,740 42,699

4,426 12,434 15,033 19,032 24,209 30,928 39,141

1,734 2,980 3,758 4,758 6,052 7,732 9,785
6,160 15,414 18,791 23,791 30,261 38,660 48,926

1,315 2,073 2,624 3,322 4,226 5,398 6,832

8,961 13,544 16,399 20,763 26,410 33,740 42,699
3,083 7,879 9,840 12,458 15,846 20,244 25,620
4,929 6,306 8,200 10,381 13,205 16,870 21,350
18,288 29,802 37,063 46,924 59,686 76,252 96,500

(12,128) (14,388) (18,272) (23,133) (29,425) (37,592) (47,574)

4,285 2,260 3,884 4,861 6,292 8,167 9,982

4,426 12,434 15,033 19,032 24,209 30,928 39,141

12.8% 22.5% 22.0% 22.0% 22.0% 22.0% 22.0%

1,734 2,980 3,758 4,758 6,052 7,732 9,785

5.0% 5.4% 5.5% 5.5% 5.5% 5.5% 5.5%

1,315 2,073 2,624 3,322 4,226 5,398 6,832

13.5% 15.8% 16.0% 16.0% 16.0% 16.0% 16.0%

8,961 13,544 16,399 20,763 26,410 33,740 42,699

92.2% 103.2% 100.0% 100.0% 100.0% 100.0% 100.0%

3,083 7,879 9,840 12,458 15,846 20,244 25,620

31.7% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0%

4,929 6,306 8,200 10,381 13,205 16,870 21,350

50.7% 48.0% 50.0% 50.0% 50.0% 50.0% 50.0%
ts
Mar-20 Mar-21 Mar-22
205,303 226,359 238,802
49,273 54,326 57,313

45,167 49,799 52,537

11,292 12,450 13,134
56,458 62,249 65,671

7,884 8,692 9,170

49,273 54,326 57,313
29,564 32,596 34,388
24,636 27,163 28,656
111,356 122,777 129,526

(54,898) (60,528) (63,856)

7,324 5,630 3,327

45,167 49,799 52,537

22.0% 22.0% 22.0%

11,292 12,450 13,134

5.5% 5.5% 5.5%

7,884 8,692 9,170

16.0% 16.0% 16.0%

49,273 54,326 57,313

100.0% 100.0% 100.0%

29,564 32,596 34,388

60.0% 60.0% 60.0%

24,636 27,163 28,656

50.0% 50.0% 50.0%
Alibaba IPO
Consolidated Depreciation and Capex

Historicals
(RMB in Million Except Per Share Amou Mar-10 Mar-11 Mar-12 Mar-13
Net Sales 6,670 11,903 20,025 34,517
Capital Expenditures 2,168 2,503
Capital Expenditures as % of Net Sales -10.8% -7.3%

Beginning Net PP&E

Capital Expenditures
(Depreciation Expense)
(Asset Sales )
Ending Net PP&E

(as of Dec'2013) below are gross amounts

PPE (Break-up for 2014) 2013 2014
Computer equipment and software 3,640.0 5,772.0
Furniture, office and transportation equipment 242.0 267.0
Buildings 892.0 2,630.0
Construction in progress 1,720.0 737.0

Total 6,494.0 9,406.0

Total Capex
Breakup
Computer equipment and software
Furniture, office and transportation equipment
Buildings
Construction in progress

Computer equipment and software - Straight Line Method

Useful Life 4
Computer equipment and software 5,772
Depreciation Expense (existing)

Year Capex Useful Life

2015 4193.11684 3.0
2016 5308.75168 3.0
 2017 6752.63347 3.0
2018 8626.86002 3.0
2019 10917.682 3.0
2020 12598.449 3.0
2021 13890.542 3.0
2022 14654.125 3.0

Depreciation (Computer equipment and software)

Furniture, office and transportation equipment

Useful Life 4
Furniture, office and transportation equipm 267.0
Depreciation Expense (existing)

Year Capex Useful Life

2015 194.0 3.0
2016 245.6 3.0
2017 312.4 3.0
2018 399.1 3.0
2019 505.0 3.0
2020 582.8 3.0
2021 642.5 3.0
2022 677.9 3.0

Total Depreciation (Furniture, office and transportation equipment)

Buildings
Useful Life 20
Buildings 2,630.0
Depreciation Expense (existing)

Year Capex Useful Life

2015 1,910.6 3.0
2016 2,418.9 3.0
2017 3,076.8 3.0
2018 3,930.8 3.0
2019 4974.6196 3.0
2020 5740.4576 3.0
2021 6329.1969 3.0
2022 6677.1219 3.0

Total Depreciation (Buildings)

Total Depreciation Expense

 Forecasts
Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20
55,150 68,331 86,511 110,040 140,583 177,914 205,303
4,336 6,833 8,651 11,004 14,058 17,791 20,530
-7.9% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%

5,973.0 10,115.2 13,697.0 16,612.5 18,732.4 19,693.2

6,833.1 8,651.1 11,004.0 14,058.3 17,791.4 20,530.3
(2,690.9) (5,069.3) (8,088.5) (11,938.3) (16,830.6) (22,717.1)

5,973.0 10,115.2 13,697.0 16,612.5 18,732.4 19,693.2 17,506.4

ss amounts
Useful Life Proportion of Assets
4 61.4%
4 2.8%
20 28.0% Straight Line Method of Depreciation
7.8% Straight Line Method of Depreciation
Straight Line Method of Depreciation

4,193 5,309 6,753 8,627 10,918 12,598

194 246 312 399 505 583
1,911 2,419 3,077 3,931 4,975 5,740
535 678 862 1,102 1,394 1,609

1,443.0 1,443.0 1,443.0 1,443.0 1,443.0 1,443.0

698.9 1,397.7 1,397.7 1,397.7 1,397.7 1,397.7

884.8 1,769.6 1,769.6 1,769.6 1,769.6
 1,125.4 2,250.9 2,250.9 2,250.9
1,437.8 2,875.6 2,875.6
1,819.6 3,639.2
2,099.7

2,141.9 3,725.5 5,735.7 8,299.0 11,556.4 15,475.8

66.8 66.8 66.8 66.8 66.8 66.8

32.3 64.7 64.7 64.7 64.7 64.7

40.9 81.9 81.9 81.9 81.9
52.1 104.1 104.1 104.1
66.5 133.0 133.0
84.2 168.3
97.1

99.1 172.3 265.3 383.9 534.6 715.9

131.5 131.5 131.5 131.5 131.5 131.5

318.4 636.9 636.9 636.9 636.9 636.9

403.2 806.3 806.3 806.3 806.3
512.8 1,025.6 1,025.6 1,025.6
655.1 1,310.3 1,310.3
829.1 1,658.2
956.7

449.9 1,171.5 2,087.5 3,255.4 4,739.7 6,525.5

2,690.9 5,069.3 8,088.5 11,938.3 16,830.6 22,717.1

 Mar-21 Mar-22
226,359 238,802
22,636 23,880
10.0% 10.0%

17,506.4 10,794.5
22,635.9 23,880.2
(29,347.8) (36,493.0)

10,794.5 (1,818.3)

13,891 14,654
643 678
6,329 6,677
1,774 1,871

1,443.0 1,443.0

1,397.7 1,397.7
1,769.6 1,769.6
 2,250.9 2,250.9
2,875.6 2,875.6
3,639.2 3,639.2
4,199.5 4,199.5
2,315.1 4,630.2
2,442.4

19,890.6 24,648.0

66.8 66.8

64.7 64.7
81.9 81.9
104.1 104.1
133.0 133.0
168.3 168.3
194.3 194.3
107.1 214.2
113.0

920.1 1,140.2

131.5 131.5

636.9 636.9
806.3 806.3
1,025.6 1,025.6
1,310.3 1,310.3
1,658.2 1,658.2
1,913.5 1,913.5
1,054.9 2,109.7
1,112.9

8,537.1 10,704.8

29,347.8 36,493.0
 Alibaba IPO
Consolidated Amortization & Intangible
###
Historicals
(RMB in Million Except Per Share Amou Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
Net Sales 6,670 11,903 20,025 34,517 55,150
Additions to Intangibles 106.0 1469.0
Additions to Intangibles as % of Net Sales 0.3% 2.7%

Beginning Net Intangibles

Additions to Intangibles
(Amortization Expense)
(Intangible Sales and write offs)
Ending Net Intangibles 1,610.0
 Forecasts
Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22
68,331 86,511 110,040 140,583 177,914 205,303 226,359 238,802
2391.6 3027.9 3851.4 4920.4 6227.0 7185.6 7922.6 8358.1
3.5% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5%

1,610.0 3,930.6 6,916.5 10,737.9 15,632.3 21,813.2 28,948.8 36,821.4

2,391.6 3,027.9 3,851.4 4,920.4 6,227.0 7,185.6 7,922.6 8,358.1
(71.0) (42.0) (30.0) (26.0) (46.0) (50.0) (50.0) (50.0)

3,930.6 6,916.5 10,737.9 15,632.3 21,813.2 28,948.8 36,821.4 45,129.5

Alibaba IPO
Debt Schedule

Historicals
(RMB in Million Except Per Share Amounts) Mar-10 Mar-11 Mar-12 Mar-13
Cash Flow Available for Financing Activities
Proceeds from/ (Repurchase of) Equity
+ Beginning Cash Balance
- Minimum Cash Balance
Cash Available for Debt Repayment
Long Term Debt Issuance
Long Term Debt (Repayments)
Cash Available for Revolving Credit Facility

Additional Revolving Credit Facility

Beginning Balance
Discretionary (Paydown)/ Borrowings
Ending Balance

Long Term (commited payments)

Beginning Balance
Issuance
(Repayment/ Amortization)
Ending Balance

Interest Expense Calculation

1) Revolving Credit Facility

Interest Expense (Revolving Credit)

2) Long Term (committed)

Interest Expense

(1) + (2): Total Interest Expense

Cash Balances

Cash Balance 48,550

Average Cash Balance

Interest Earned 2%
 Forecasts
Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20
26,056.1 34,736.8 46,194.7 60,635.7 76,867.8 86,525.7

48,550.0 64,630.1 89,336.8 131,731.5 191,888.2 268,277.0

(10,000.0) (10,000.0) (10,000.0) (10,000.0) (10,000.0) (10,000.0)
38,550.0 54,630.1 79,336.8 121,731.5 181,888.2 258,277.0
- - - - - -
(8,776.0) (10,030.0) (3,800.0) (479.0) (479.0) (479.0)
29,774.0 44,600.1 75,536.8 121,252.5 181,409.2 257,798.0

1,200.0 - - - - -
(1,200.0) - - - - -
1,200.0 - - - - - -

30,226.0 21,450.0 11,420.0 7,620.0 7,141.0 6,662.0

(8,776.0) (10,030.0) (3,800.0) (479.0) (479.0) (479.0)

30,226.0 21,450.0 11,420.0 7,620.0 7,141.0 6,662.0 6,183.0

600 - - - - -
6.0% 6.0% 6.0% 6.0% 6.0% 6.0%
36.0 - - - - -

25,838 16,435 9,520 7,381 6,902 6,423

6.3% 6.3% 6.3% 6.3% 6.3% 6.3%
1,628 1,035 600 465 435 405

1,664 1,035 600 465 435 405

64,630 89,337 131,732 191,888 268,277 354,324

56,590 76,983 110,534 161,810 230,083 311,300

1,132 1,540 2,211 3,236 4,602 6,226

 Mar-21 Mar-22
95,904.4 101,563.5

354,323.7 449,749.1
(10,000.0) (10,000.0)
344,323.7 439,749.1
- -
(479.0) (479.0)
343,844.7 439,270.1

- -
- -
- -

6,183.0 5,704.0

(479.0) (479.0)
5,704.0 5,225.0

- -
6.0% 6.0%
- -

5,944 5,465
6.3% 6.3%
374 344

374 344

449,749 550,834
402,036 500,291

8,041 10,006
Alibaba IPO
Consolidated Shareholder's Equity

Historicals
(RMB in Million Except Per Share Amounts) Mar-10 Mar-11 Mar-12 Mar-13
Beginning Equity Balance
Net Income
Issuance/ (Repurchase) of Equity
Ending Equity Balance
 Forecasts
Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20
40,963.0 69,598.2 106,041.2 152,681.1 212,164.2 286,191.3
28,635.2 36,443.0 46,639.9 59,483.1 74,027.2 84,150.5
-
40,963.0 69,598.2 106,041.2 152,681.1 212,164.2 286,191.3 370,341.8
 Mar-21 Mar-22
370,341.8 461,776.6
91,434.8 93,931.4

461,776.6 555,708.0
Alibaba IPO
Valuing Alibaba's Options
Assumptions
Inputs for Black­Scholes Model
Enter the current stock price = 70 $70 is expected IPO price; converting to RMB
Enter the strike price on the option = 12.33
Enter the expiration of the option = 4.1
Enter the standard deviation in stock prices = 42.00%
Enter the annualized dividend yield on stock = 0.00%
Enter the treasury bond rate = 2.70%
Enter the number of warrants (options) outstanding =               54.28 
Enter the number of shares outstanding =        2,446,646 

Calculation of Box Inc Option

Stock Price= 70
Strike Price= 12.33
Adjusted S = 70.0
Adjusted K = 12.33
Expiration (in years) = 4.1

Options Issued   54
Total Shares outstanding 2,446,646
T Bond Rate 2.70%
Variance 0.1764
Annualized dividend yield 0.00%
Interest Rate 2.70%

d1 =  2.5972
N (d1) = 0.9953

d2 =  1.7468
N (d2) = 0.9597

Value per Alibaba's option =   $           59.08 

Value of all Alibaba's options outstanding = $3,207 
converting to RMB
Alibaba IPO
Shares Oustanding Schedule
Common Shares

Current Structure
-
Ordinary Shares 2,321,114,237
Ordinary Shares 47,670,100 issuable upon vesting
Ordinary Shares 77,861,552 future issuable
Ordinary Shares Issued through IPO << put your number here
2,446,645,889

Options Data

Weighted-
Shares Subject to Average Exercise
Outstanding Options Price
Outstanding at March 31, 2013 (i) 26,189,060
Options granted 8,095,500
Options exercised (16,619,426)
Cancelled/forfeited/expired (1,308,213)
Outstanding at December 31, 2013 (i) 16,356,921 12.33

Total Number of outstanding options provided in the prospectus 54,279,500

(see below)
Weighted-Average Remaining Aggregate Intrinsic Value (in
Contractual Life (Years) thousands)

4.1
Alibaba IPO
DCF Valuations

Free Cash Flow Projections Historicals

(RMB in Million Except Per Share Amount Mar-10 Mar-11 Mar-12

EBIT (873) 1,322 5,015

Free Cash Flow to Firm
EBIT x (1-t) (1,420) 1,099 4,252
Add: Depreciation & amortization 715
Less: Capex (749)
Add: Change in working capital
FCFF

Cost of Capital 9.0%

Infinite growth rate 3%

Free cash flow to firm of explicit period (2015E to 2019E)

Mar-10 Mar-11 Mar-12
Cash Flows
NPV of explicit period 321,953

Terminal value @ perpetual growth (2019) Mar-10 Mar-11 Mar-12

Terminal value as of 2019
NPV of terminal value 812,148

DCF Valuation Summary

DCF calculation as of Valuation (RMB) Valuation (US$)

NPV of explicit period 321,953 51,791
NPV of terminal value 812,148 130,646
Enterprise Value 1,134,100 182,437
+ Cash $48,550 7,810
- Debt ($40,310) (6,484)
Equity value 1,142,340 183,851
+ Short term investments, restricted cash, investment s 12,587 2,025
+Investment in equity investees 13,009 2,093
+ Alipay valuation 24,866 4,000
Stock Option Value $3,207 516
Adjusted Equity Value 1,189,595 191,452 $191.5 billion dollars
Share Price 486.21 78.25

Sensitivity Analysis

191.45 7%
1%
2%

growth
3%
4%
5%
6.0%
als Forecasts
Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18

10,751 26,514 33,072 41,871 53,260 68,042

9,202 24,575 29,103 36,009 45,271 57,155

805 947 2,691 5,069 8,089 11,938
(1,046) (3,010) (9,225) (11,679) (14,855) (18,979)
4,285 2,260 3,884 4,861 6,292 8,167
13,246 24,772 26,453 34,261 44,795 58,282

Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18

26,453 34,261 44,795 58,282

Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18

0 0 - -

.5 billion dollars
 WACC
8% 9% 10% 11%

2.4169491525
Mar-19 Mar-20 Mar-21 Mar-22

86,110 99,367 109,558 115,580

70,610 79,493 85,455 86,685

16,831 22,717 29,348 36,493
(24,018) (27,716) (30,558) (32,238)
9,982 7,324 5,630 3,327
73,405 81,819 89,875 94,267

Mar-19 Mar-20 Mar-21 Mar-22

73,405 81,819 89,875 94,267

Mar-19 Mar-20 Mar-21 Mar-22

- - - 1,618,255
Alibaba IPO
FCFE Model

Free Cash Flow Projections - FCFE Historicals

(RMB in Million Except Per Share Amount Mar-10 Mar-11 Mar-12

Free Cash Flow to Equity

Net Income
Add: Depreciation & amortization
Add: Change in working capital
Less: Capex
Net Borrowings
FCFE

Cost of Equity
Infinite growth rate

Free cash flow to Equity of explicit period (2015E to 2019E)

Mar-10 Mar-11 Mar-12
Cash Flows
NPV of explicit period

Terminal value as of 2019

Terminal value @ perpetual growth (2019) Mar-10 Mar-11 Mar-12
Terminal value as of 2019
NPV of terminal value

DCF Valuation Summary

DCF calculation as of Valuation (RMB) Valuation (US$)

NPV of explicit period FCFE 273,162 43,942
NPV of terminal value using FCFE 467,003 75,124
Equity value 740,165 119,124
+ Cash $48,550 7,810
+ Short term investments, restricted cash, investment s 12,587 2,025
+Investment in equity investees 13,009 2,093
+ Alipay valuation 24,866 4,000
Stock Option Value $3,207 516
Adjusted Equity Value 835,970 134,535

Share Price 341.68 54.99

 Sensitivity Analysis

134.54 10%
1%
2%

growth
3%
4%
5%
6.0%
als Forecasts
Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18

28,635 36,443 46,640 59,483

2,691 5,069 8,089 11,938
3,884 4,861 6,292 8,167
(9,225) (11,679) (14,855) (18,979)
(9,976) (10,030) (3,800) (479)
16,009 24,665 42,365 60,131

12.0%
3%

Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18

16,009 24,665 42,365 60,131
273,162

Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18

0 0 - -
467,003
 Cost of Equity (ke)
11% 12% 13% 14%
Mar-19 Mar-20 Mar-21 Mar-22

74,027 84,151 91,435 93,931

16,831 22,717 29,348 36,493
9,982 7,324 5,630 3,327
(24,018) (27,716) (30,558) (32,238)
(479) (479) (479) (479)
76,343 85,997 95,375 101,034

Mar-19 Mar-20 Mar-21 Mar-22

76,343 85,997 95,375 101,034

Mar-19 Mar-20 Mar-21 Mar-22

- - - 1,156,283