Stock Report | August 27, 2018 | NYSE Symbol: BABA

Alibaba Group Holding Limited

Recommendation Price 12-Mo. Target Price Report Currency
STRONG BUY
$180.65 (as of Aug 27, 2018 4:00 PM ET) $211.00 USD
Equity Analyst Scott Kessler

GICS Sector Information Technology Summary This company is a leading provider of e-commerce services and is based in and focused on
Sub-Industry Internet Software & Services China. It completed the largest IPO in history in September 2014.
Key Stock Statistics (Source: CFRA, S&P Global Market Intelligence (SPGMI), Company Reports)

52-Wk Range $211.70 - 164.25 Oper. EPS 2019E 5.69 Market Capitalization(B) $464.6 Beta 2.49
Trailing 12-Month EPS 22.15 Oper. EPS 2020E 7.81 Yield (%) NA 3-Yr Proj. EPS CAGR(%) 32
Trailing 12-Month P/E 7.87 P/E on Oper. EPS 2019E 30.62 Dividend Rate/Share NA SPGMI's Quality Ranking NR
$10K Invested 5 Yrs Ago NA Common Shares Outstg.(M) 2,571.9 Institutional Ownership (%) 65
Price Performance Analyst's Risk Assessment

30-Week Mov. Avg. 10-Week Mov. Avg. GAAP Earnings vs. Previous Year Volume Above Avg. STARS LOW MEDIUM HIGH
12-Mo. Target Price Up Down No Change Below Avg.
Our risk assessment reflects our view of considerable
oversight by the Chinese government, notable
competitors, and a dynamic market for e-commerce and
other digital offerings. We also have some concerns
related to corporate governance.
Revenue/Earnings Data

Revenue (Million U.S. $)

1Q 2Q 3Q 4Q Year
2019 12,691 -- -- -- --
2018 7,314 8,264 12,556 9,743 37,802
2017 4,923 5,144 7,795 5,602 23,550
2016 3,264 3,518 5,405 3,697 15,913
2015 2,531 2,729 4,258 2,794 12,301
2014 1,750 1,787 3,078 1,972 8,581

Earnings Per ADS (U.S. $)

Source: CFRA, S&P Global Market Intelligence 1Q 2Q 3Q 4Q Year
Past performance is not an indication of future performance and should not be relied upon as such. 2020 E 1.79 E 1.82 E 2.71 E 1.61 E 7.81
Analysis prepared by Equity Analyst Scott Kessler on Aug 27, 2018 08:54 AM, when the stock traded at $174.23. 2019 0.52 E 1.24 E 2.07 E 1.27 E 5.69
2018 0.82 1.02 1.39 0.45 3.70
Highlights Investment Rationale/Risk
2017 0.45 0.45 1.02 0.60 2.53
We see revenue gains of 49% in FY 19, 38% in We upgraded our opinion to Strong Buy from 2016 1.92 1.41 0.77 0.32 4.39
FY 20, and 31% in FY 21. The company Buy on the ADSs in August 2018, after a 2015 0.83 0.20 0.37 0.18 1.57
generated 58% growth in FY 18 (Mar.). We see significant decline. BABA is the clear leader in Fiscal year ended Mar 31. Next earnings report expected: Early
continuing gains in Internet/mobile China digital commerce and has invested Nov. EPS Estimates based on CFRA's Operating Earnings;
penetration, digital commerce in China, and significantly to expand geographically and into historical GAAP earnings are as reported in Company reports.
local services, cloud offerings, and media and new categories like cloud solutions. BABA is Dividend Data
entertainment offerings. We see considerable best known for Taobao (China's largest online
opportunities to expand outside China and we shopping destination) and Tmall (China's No cash dividends have been paid in the last year.
note this is a priority over the next five to ten largest third-party platform for brands and
years. retailers). We think concerns related to the
The gross margin has narrowed in recent years, Chinese economy and currency are have been
and we see another decline in FY 19. However, largely priced into the ADSs.
we see stabilization in FY 20 and FY 21, at Risks to our opinion and target price include
around 48%, despite efforts to cut pricing and the potential for weakness in the Chinese
gain market share. EBITDA margins also economy and currency (perhaps related to U.S.
weakened over the last few years, reflecting tariffs and a trade war), an inquiry by the SEC
substantial investments to expand into new announced in May 2016, more competitive
areas and drive growth, and after a significant challenges, sustained margin pressures related
drop in FY 19, we also see them as stable to pricing and/or investments, actions involving
around 32% to 33% in FY 20 to FY 21. government regulators, and issues related to
We project per-ADS profits of $5.69 in FY 19 corporate governance.
and $7.81 in FY 20, after $0.57 in FY 13 rising Our 12-month target price of $211 reflects
to $5.19 in FY 18. BABA had approximately $28 peer analysis. Comparable companies recently
billion in cash and short-term investments and had a median forward P/E of 30.3X and a
$21 billion in debt as of June 2018. In May P/E-to-growth of 1.4. Applying these multiples
2017, BABA announced a $6 billion buyback. In and averaging the outputs resulted in our
June 2016, BABA bought back $2 billion in target. We think BABA's category leadership
shares from SoftBank. and related "network effects" are appealing.

Redistribution or reproduction is prohibited without written permission. Copyright © 2018 CFRA. This document is not intended to provide personal investment advice and it does not take into account the specific investment
objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek independent financial advice regarding the suitability and/or appropriateness of making an
investment or implementing the investment strategies discussed in this document and should understand that statements regarding future prospects may not be realized. Investors should note that income from such
investments, if any, may fluctuate and that the value of such investments may rise or fall. Accordingly, investors may receive back less than they originally invested. Investors should seek advice concerning any impact this
investment may have on their personal tax position from their own tax advisor. Please note the publication date of this document. It may contain specific information that is no longer current and should not be used to make an
investment decision. Unless otherwise indicated, there is no intention to update this document.
1
Stock Report | August 27, 2018 | NYSE Symbol: BABA
Alibaba Group Holding Limited
Business Summary August 14, 2018 Corporate Information

COMPANY OVERVIEW. Alibaba Group Holding Ltd. (BABA) is the largest online and mobile commerce Investor Contact
company in the world, in terms of gross merchandise volume in 2017. BABA operates its marketplaces as a
Office
platform for third parties, and does not engage in direct sales, compete with partner merchants or hold
969 West Wen Yi Road, Yu Hang District, Hangzhou,
inventory.
Zhejiang Province 311121
BABA operates Taobao Marketplace, China's largest online shopping destination; Tmall, China's largest
third-party platform for brands and retailers (in terms of gross merchandise volume); and Juhuasuan, Website
China's most popular group buying marketplace by monthly active users. These three marketplaces, which www.alibabagroup.com
comprise BABA's China retail marketplaces, generated a combined GMV (gross merchandise value) of
$768 billion in FY 18 (Mar.). There were 552 million annual active buyers using these marketplaces as of Officers
March 2018 and 617 million mobile active users. CEO & Director President & Director
BABA also operates Alibaba.com, China's largest global wholesale marketplace; 1688.com, a China Y. Zhang J. M. Evans
wholesale marketplace; and AliExpress, a global consumer marketplace. The company also provides cloud General Counsel & Chief Technology Officer
computing services.
Corporate Secretary J. Zhang
BABA offers technology infrastructure and marketing reach to help businesses leverage the power of the T. A. Steinert Chief Financial Officer
Internet to establish an online presence and conduct commerce with consumers and businesses. The
Founder & Executive W. Wu
company thinks it has been a leader in developing online marketplace standards in China, including
consumer protection programs, marketplace rules, qualification standards for merchants and buyer and Chairman
seller rating systems. Y. Ma
Given the scale BABA has achieved, an ecosystem has developed around its platform that consists of Board Members
buyers, sellers, third-party service providers, strategic alliance partners and investee companies. At the
center of this ecosystem are the platform and the role BABA plays in connecting buyers and sellers and B. E. Ekholm T. M. Kwauk
making it possible for them to do business anytime and anywhere. C. H. Tung W. Ling
Consumers and businesses benefit from BABA's ecosystem, because they can access products and C. Tsai X. Jing
services with a combination of selection, value, quality, convenience and customer experience that might C. Yang Y. Ma
not be available elsewhere. Merchants are enabled by BABA's tools and infrastructure to do business and J. M. Evans Y. Wu
flourish on its platform. Other ecosystem participants, including marketing affiliates, logistics providers, M. Son Y. Zhang
independent software vendors and various professional service providers, provide valuable services to the T. M. Kwauk
company's buyer and seller customers. BABA's ecosystem has strong self-reinforcing network effects that
benefit its marketplace participants, who are invested in its ecosystem's growth and success. Domicile Auditor
FINANCIAL TRENDS. The revenue BABA generates from retail marketplaces is highly correlated to the Cayman Islands PricewaterhouseCoopers
amount of GMV transacted and the monetization rates achieved. Revenue on wholesale marketplaces is LLP
Founded
largely driven by the number of paying members. BABA primarily derives revenue from online marketing 1999
services, where sellers pay marketing fees to acquire user traffic, commissions based on GMV for
transactions settled through Alipay and membership fees. In FY 18 (Mar.), pay-for-performance (P4P) and Employees
display marketing services, commissions, membership fees and value-added services as well as cloud 66,421
computing services accounted for 48%, 21%, 6% and 5% of total revenues, respectively.
Marketing services are primarily performance-based. They use market-based bidding systems so that
each merchant determines the price it is willing to pay for such services. The price a merchant is willing to
pay for marketing services generally depends on the merchant's expected GMV, profit margins and the
lifetime value of customers acquired from such marketing investment.
Mobile has become increasingly important for BABA, accounting for what believe is well over 80% of GMV
and revenues for China Commerce Retail for FY 18.
Core Commerce accounted for 85% of revenues in FY 18 and China Commercial Retail accounted for 72%
of revenues in FY 18.
As of March 2018, BABA had $34 billion in cash and short-term investments and around $19 billion in debt.
In September 2014, BABA completed the world's largest-ever IPO (based on capital raised and the initial
size of the company as a publicly-traded entity), with gross proceeds of $22 billion.

Redistribution or reproduction is prohibited without prior written permission. Copyright © 2018 CFRA. 2
Stock Report | August 27, 2018 | NYSE Symbol: BABA
Alibaba Group Holding Limited
Quantitative Evaluations Expanded Ratio Analysis

Fair Value Rank 4 1 2 3 4 5 2018 2017 2016 2015

LOWEST HIGHEST Price/Sales 1.91 1.75 2.00 2.73
Based on CFRA's proprietary quantitative model, Price/EBITDA 5.18 4.40 5.54 7.50
stocks are ranked from most overvalued (1) to most Price/Pretax Income 29.87 25.85 25.23 30.80
undervalued (5). P/E Ratio 7.49 6.35 2.83 8.58
Avg. Diluted Shares Outsg.(M) 2610 2573 2562 2500
Fair Value $188.41 Analysis of the stock's current worth, based on
Calculation CFRA's proprietary quantitative model suggests that Figures based on fiscal year-end price
BABA is slightly undervalued by $7.76 or 4.3%.

Volatility LOW AVERAGE HIGH

Key Growth Rates and Averages
Technical NEUTRAL Since July, 2018, the technical indicators for BABA
Evaluation have been NEUTRAL. Past Growth Rate (%) 1 Year 3 Years 5 Years
Sales 58.12 48.64 48.62
Insider Activity NA UNFAVORABLE NEUTRAL FAVORABLE Net Income 46.75 38.24 49.68

Ratio Analysis (Annual Avg.)

Net Margin (%) NM NM NM
% LT Debt to Capitalization 21.27 NA NA
Return on Equity (%) 16.21 NA NA

Company Financials Fiscal year ending Mar. 31

Per ADS Data (U.S. $) 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009
Tangible Book Value 10.39 7.73 7.96 6.06 1.01 -1.00 1.14 NA NA NA
Free Cash Flow 5.95 3.66 2.90 2.31 1.58 0.83 0.45 NA NA NA
Earnings 3.70 2.53 4.39 1.57 1.63 0.57 0.26 NA NA NA
Earnings (Normalized) 3.08 2.16 3.09 1.24 1.22 0.56 0.19 NA NA NA
Dividends NA NA NA NA NA NA NA NA NA NA
Payout Ratio (%) NA NA NA 0 1 1 NA NA NA NA
Prices: High 206.20 110.45 95.06 120.00 NA NA NA NA NA NA
Prices: Low 106.76 73.30 57.20 80.03 NA NA NA NA NA NA
P/E Ratio: High 9.5 7.7 9.7 NM NM NM NM NA NA NA
P/E Ratio: Low 6.7 2.3 2.8 NM NM NM NM NA NA NA

Income Statement Analysis (Million U.S. $)

Revenue 37,802 23,550 15,913 12,301 8,581 5,487 3,130 NA NA NA
Operating Income 10,665 7,278 4,650 3,763 4,287 2,291 805 NA NA NA
Depreciation + Amortization 3,306 2,111 1,098 719 263 142 134 NA NA NA
Interest Expense 539 397 306 444 342 250 11 NA NA NA
Pretax Income 12,025 8,184 12,546 4,961 4,347 1,607 861 NA NA NA
Effective Tax Rate 3.64 3.64 1.64 3.37 1.93 2.32 2.43 NA NA NA
Net Income 9,681 6,499 11,243 3,916 3,810 1,356 661 NA NA NA
Net Income (Normalized) 8,043 5,559 7,913 3,109 2,837 1,349 483 NA NA NA

Balance Sheet and Other Financial Data (Million U.S. $)

Cash 33,509 21,908 17,925 20,325 7,250 5,360 3,545 NA NA NA
Current Assets 40,944 26,420 20,766 22,923 10,911 6,944 4,428 NA NA NA
Total Assets 114,314 73,628 56,432 41,204 17,943 10,263 7,492 NA NA NA
Current Liabilities 21,649 13,593 8,062 6,399 6,013 3,861 1,865 NA NA NA
Long Term Debt 19,053 11,162 8,252 8,163 4,940 4,449 NA NA NA NA
Total Capital 89,585 59,979 47,580 33,876 13,154 7,089 5,660 NA NA NA
Capital Expenditures 4,507 2,611 1,706 1,244 781 398 339 NA NA NA
Cash from Operations 18,907 11,952 8,942 6,653 4,311 2,301 1,450 NA NA NA
Current Ratio 1.89 1.94 2.58 3.58 1.81 1.80 2.37 NA NA NA
% Long Term Debt of Capitalization 21.3 18.6 17.3 24.1 37.6 62.8 NA NA NA NA
% Net Income of Revenue 3.87 4.11 11.12 5.14 7.26 3.93 3.30 NA NA NA
% Return on Assets 7.21 7.02 5.96 7.94 18.70 16.23 0.10 NA NA NA
% Return on Equity 16.2 14.4 35.0 24.6 90.6 38.1 NA NA NA NA

Source: S&P Global Market Intelligence. Data may be preliminary or restated; before results of discontinued operations/special items. Per share data adjusted for stock dividends; EPS diluted.
E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked. UR-Under Review.

Redistribution or reproduction is prohibited without prior written permission. Copyright © 2018 CFRA. 3
Stock Report | August 27, 2018 | NYSE Symbol: BABA
Alibaba Group Holding Limited
Sub-Industry Outlook Industry Performance

Our fundamental outlook for the Internet driving traffic and usage, for example. GICS Sector: Information Technology
Software & Services sub-industry for the next However, we think mobile advertising is Sub-Industry: Internet Software & Services
12 months is positive, reflecting an increasing generally priced at lower rates than online Based on S&P 1500 Indexes
percentage of related budgets committed to the advertising, even as we have noted improving Five-Year market price performance through Aug 27, 2018
Internet (versus so-called traditional media) trends. Video is an emerging opportunity,
and pricing for associated online offerings, especially involving social media and mobile,
which has shown signs of improvement, offset and we note the success of offerings like
somewhat by what we view as European Facebook Live.
uncertainties related to the June 2016 Brexit
U.S. online retail sales increased 15% in
leave vote. We also have questions about pricing
2015, 15% in 2016 and 18% in 2017,
for mobile advertising and see great potential
according to the Department of Commerce.
for video.
We see growth around the mid-teens level for
We note that in September 2018, the major 2018 and 2019. We think users are attracted
components in this sub-industry -- Alphabet and to Internet retail offerings in large part due to
Facebook -- will be moved within the Global factors that include a generally substantial
Industry Classification Standard (GICS) selection of products, 24/7/365 store access
(owned and operated by S&P Dow Jones Indices and associated convenience of home delivery,
and MSCI) to a new sector called Communication as well as a compelling value proposition.
Services, which will also include major According to Forrester Research, an
communications and media companies. The independent technology and market research
Internet Software & Services sub-industry will company, improving initiatives across
be discontinued. multiple channels, including physical and
U.S. online advertising revenues rose 20% in online stores, better merchandising, more
2015, 22% in 2016 and 21% in 2017, customized offerings and increasingly
according to the IAB Internet Revenue Report, sophisticated marketing efforts, have helped
and CFRA projects increases of 18% for 2018 drive considerable segment growth.
and 16% for 2019. (IAB stands for Year to date through June 30, 2018, the S&P
Interactive Advertising Bureau.) Corporations 1500 Internet Software & Services index rose
commit larger percentages of advertising budgets 8.3% versus a 2.0% gain in the S&P 1500. In
to digital formats as people spend more time 2017 and 2016, the index rose 40.0% and
online and on mobile devices, especially as 5.2% compared with increases in the S&P
compared with consumption of other media. 1500 of 18.8% and 10.6%. NOTE: All Sector & Sub-Industry information is based on the
Moreover, Internet and mobile marketing offers Global Industry Classification Standard (GICS).
/Scott Kessler
notable targeting and data-focused Past performance is not an indication of future performance
return-on-investment capabilities. Mobile has and should not be relied upon as such.
also been driving volumes, accounting for more Source: S&P Global Market Intelligence
than half of U.S. digital advertising sales
beginning in 2016.
We also think the advent and growing adoption
of technologies, such as powerful
Internet-enabled smartphones and tablets, are
positive for interactive advertising, notably

Sub-Industry: Internet Software & Services Peer Group*: Internet Software & Services
Recent 30-Day 1-Year Fair Return
Stock Stock Stk. Mkt. Price Price P/E Value Yield on Equity LTD to
Peer Group Symbol Exchange Currency Price ($) Cap. (M $) Chg. (%) Chg. (%) Ratio Calc. ($) (%) (%) Cap (%)

Alibaba Group Holding Limited BABA NYSE USD 180.65 464,619 -4.6 5.2 53 188.41 Nil 16.2 21.3
Alphabet Inc. GOOG.L NasdaqGS USD 1,256.3 868,903 0.3 35.0 54 1,200.3 Nil 8.7 2.5
Altaba Inc. AABA NasdaqGS USD 70.84 42,894 -4.4 9.8 3 NA Nil 47.3 2.1
Baidu, Inc. BIDU NasdaqGS USD 228.61 80,038 -10.4 1.4 21 330.94 Nil 16.0 20.6
Facebook, Inc. FB NasdaqGS USD 177.46 512,366 1.5 6.7 14 262.99 Nil 23.9 NA
NetEase, Inc. NTES NasdaqGS USD 211.78 27,813 -20.1 -20.8 27 111.98 0.9 25.4 NA
Spotify Technology S.A. SPOT NYSE USD 194.69 35,001 4.5 NM NM NA Nil NM 79.8
Tencent Holdings Limited TCEH.Y OTCPK USD 45.99 434,666 -3.2 9.5 36 NA 0.2 31.3 27.3
Twitter, Inc. TWTR NYSE USD 35.89 27,095 5.2 115.6 NM 21.60 Nil -2.2 23.8
Yahoo Japan Corporation YAHO.Y OTCPK USD 6.844 19,483 -3.6 -27.5 16 NA 2.4 12.7 14.5
eBay Inc. EBAY NasdaqGS USD 34.58 34,219 2.3 -0.3 NM NA Nil -10.9 51.1

*For Peer Groups with more than 10 companies or stocks, selection of issues is based on market capitalization.
NA-Not Available NM-Not Meaningful.
Note: Peers are selected based on Global Industry Classification Standards and market capitalization. The peer group list includes companies with similar characteristics, but may not include all the companies within the same
industry and/or that engage in the same line of business.

Redistribution or reproduction is prohibited without prior written permission. Copyright © 2018 CFRA. 4
Stock Report | August 27, 2018 | NYSE Symbol: BABA
Alibaba Group Holding Limited
Analyst Research Notes and other Company News

August 24, 2018 of 1.2. Applying these multiples and averaging the outputs results in our target. We
08:07 am ET... CFRA REITERATES STRONG BUY OPINION ON ADSS OF ALIBABA lower our per-ADS profit estimates for FY 19 to $6.57 from $6.75 and FY 20 to
GROUP HOLDING LIMITED (BABA 172.23*****): We trim our 12-month target by $8.35 from $8.58, as BABA aggressively invests for growth. Revenues rose 61%,
$5 to $211. Peers have a median forward P/E of 30.3X and a P/E-to-growth ratio well above our expectations, driven by a 56% gain from China Commerce Retail.
of 1.4. Applying those metrics to BABA and averaging the outputs results in our Cloud Computing revenues more than doubled. However, the Cloud Computing and
target. We lower our per-ADS profit forecasts for FY 19 (Mar.) to $5.69 from Digital Media & Entertainment areas are generating negative EBITA and we see
$6.57 and FY 20 to $7.81 from $8.35, reflecting a decline in Chinese yuan significant spending related to Lazada (southeast Asia marketplaces) and Cainiao
compared with the U.S. dollar. Non-GAAP earnings were $1.22 vs. a reported $1. (logistics). We think BABA should continue to invest for growth, as the company has
17, $0.02 below the S&P Capital IQ consensus. Revenues rose 61%, with gains been delivering strong revenue gains. We are constructive on BABA's efforts to
of 47% from China Commerce Retail, 93% from Cloud Computing , and 46% from expand outside China, especially via Lazada. We see BABA's PEG of 0.9 as
Digital Media and Entertainment (7%). BABA is investing aggressively for attractive. /Scott Kessler
growth, despite U.S. tariffs and a potential trade war, and we note it is very
focused on China (we estimate 85-90% of revenues are derived from China) and February 01, 2018
consumption and investment in the country account for more than 90% of GDP 02:57 pm ET... CFRA UPGRADES OPINION ON ADSS OF ALIBABA GROUP HOLDING
growth. We acknowledge macroeconomic risks, but see BABA as significantly LIMITED TO BUY FROM HOLD (BABA 204.29****): We raise our 12-month target
undervalued, especially given its growth profile. /Scott Kessler by $35 to $232. Peers have a median forward P/E of 28.2X and P/E-to-growth of
1.3. Using these and averaging the outputs results in our target. We trim our
August 23, 2018 FY 18 (March) profit per ADS estimate by $0.14 to $5.31 and raise our FY 19
12:08 pm ET... CFRA REITERATES STRONG BUY OPINION ON ADSS OF ALIBABA and FY 20 forecasts by $0.17 to $6.75 and $0.12 to $8.58. BABA posts
GROUP HOLDINGS LIMITED (BABA 177.85*****): Revenues rose 61%, reflecting normalized Dec-Q earnings of $1.69 vs. $1.32, $0.03 over the S&P Capital
gains of 47% from the China Commerce Retail segment (accounting for 67% of IQ consensus. Dec-Q revenue rose 56%, with gains of 57% from Core Commerce
revenues), 93% from Cloud Computing (6%) and 46% from Digital Media and and
Entertainment (7%). China Commerce Retail experienced increases of 24% in 104% from Cloud Computing. BABA also took a 33% stake in Ant Financial. We now
annual active consumers (largely reflecting growth in "lower tier see BABA as attractive. /Scott Kessler
cities") and 20% in mobile monthly active users. BABA posts non-GAAP
profits per ADS of $1.22 vs. a reported $1.17, $0.02 below the S&P November 02, 2017
Capital IQ consensus, and we note a significant decline in the Chinese yuan 04:31 pm ET... CFRA REITERATES HOLD OPINION ON ADSS OF ALIBABA GROUP
against the U.S. dollar over the past four months or so. We have noted strong HOLDING LIMITED (BABA 184.81***): We raise our 12-month target by $12 to
growth in the core retail operations, from the more emerging cloud and digital $197. Peers have a median forward P/E of 32.3X and a P/E-to-growth of 1.4.
media units, and from some other areas such as international retail, local (most Applying these multiples and averaging the outputs results in our target. We
notably online food delivery) and logistics. BABA continues to invest raise our per-ADS profit estimates for FY 18 (March) to $5.45 from $4.92, FY
aggressively in a number of areas to drive growth and scale, and we think the 19 to $6.58 from $6.25, and FY 20 to $8.46 from $7.95. BABA posts non-GAAP
company is executing well, despite some margin pressures. /Scott Kessler Sep-Q earnings of $1.29 vs. $0.79, $0.26 above the S&P Capital IQ
consensus. Revenues rose 61%, driven by a 64% gain from China Commerce Retail
August 20, 2018 (72% of the total). Gross margin narrowed on M&A and revenue mix. We see
09:34 am ET... CFRA ADDS ALIBABA GROUP HOLDING LTD. TO ITS TOP-10 BABA as fully valued. /Scott Kessler
PORTFOLIO (BABA 172.78*****): Our 12-month target price of $216 assumes the
shares of this leading Chinese provider of e-commerce services trade at 32.9X
our FY 19 (Mar.) per-ADS estimate of $6.57 and at 25.9X our FY 20 per-ADS
estimate of $8.35. Although our view is tempered by potential weakness in the
Chinese economy and currency (potentially exacerbated by trade tensions), we
view the shares attractively valued following a recent pullback. We expect BABA
to produce revenue growth of 41% in FY 19 and 30% in FY 20, reflecting expected
gains in internet/mobile penetration, digital commerce in China and in cloud
offerings (which we see as a notable growth opportunity). BABA replaces
Broadcom Inc. (AVGO 210 *****) in the Top-10 Portfolio. Cathy Seifert

August 14, 2018

03:00 pm ET... CFRA UPGRADES OPINION ON ADSS OF ALIBABA GROUP HOLDING
TO STRONG BUY FROM BUY (BABA 177.68*****): We see notable upside to our
12-month target of $216. BABA has sold off in recent months, down 17% over
just the last two months alone, we think largely reflecting concerns on tariffs
and a potential trade war involving the U.S. impacting the Chinese economy and
currency, as well as Alibaba's operating and financial performance. We see
continuing progress with its core China retail offerings, driven by mobile.
Additionally, we are optimistic about the company's e-commerce efforts in
Southeast Asia, with cloud offerings, and in areas such as payments (indirect
through affiliate Ant Financial) and media/content. Despite significant market
leadership, BABA trades at notable discounts to peers, based on our median
forward P/E and P/E-to-growth analysis. BABA is set to report June-quarter
results Thursday, August 23, and even though we expect to see indications of
pressures related to U.S. tariffs and the Chinese economy and currency, we think
the ADSs largely reflect those risks. /Scott Kessler

May 04, 2018

02:00 pm ET... CFRA REITERATES BUY OPINION ON ADSS OF ALIBABA GROUP
HOLDING LIMITED (BABA 182.45****): We lower our 12-month target price to
$216 from $232, reflecting our lower per-ADS profit estimate for FY 19 (Mar.
). Global peers have a median forward P/E of 26.3X and a P/E-to-growth (PEG)

Note: Research notes reflect CFRA's published opinions and analysis on the stock at the time the note was published. The note reflects the views of the equity analyst as of the date and time
indicated in the note, and may not reflect CFRA's current view on the company.
Redistribution or reproduction is prohibited without prior written permission. Copyright © 2018 CFRA. 5
Stock Report | August 27, 2018 | NYSE Symbol: BABA
Alibaba Group Holding Limited
Analysts' Recommendations Wall Street Consensus Opinion

Monthly Average Trend Buy Buy/Hold Hold Weak Hold Sell BABA Ticker BUY
B BH H WH S

Wall Street Consensus vs. Performance

For fiscal year 2019, analysts estimate that BABA will earn
USD $5.76. For the 1st quarter of fiscal year 2019, BABA
announced earnings per share of USD $0.52, representing
9% of the total revenue estimate. For fiscal year 2020,
analysts estimate that BABA's earnings per share will grow
by 34% to USD $7.70.

No. of % of Total 1 Mo.Prior 3 Mos.Prior

Recommendations
Buy 33 70 35 35
Buy/Hold 12 26 12 12
Hold 1 2 1 2
Weak Hold 0 0 0 0
Sell 0 0 0 0
No Opinion 1 2 1 1
Total 47 100 49 50
Wall Street Consensus Estimates

Estimates 2018 2019 2020 2018 Actual (Normalized Diluted) $20.40

Fiscal Years Avg Est. High Est Low Est. # of Est. Est. P/E
2020 7.70 9.24 5.83 40 23.4
2019 5.76 6.89 4.91 41 31.4
2020 vs. 2019 34% 34% 19% -2% -25%

Q2'20 1.78 1.88 1.73 7 NM

Q2'19 1.22 1.32 1.05 22 NM
Q2'20 vs. Q2'19 46% 42% 65% -68% NA

Forecasts are not reliable indicator of future performance.

Note: A company's earnings outlook plays a major part in any investment decision. S&P Global Market Intelligence organizes the earnings estimates of over 2,300 Wall Street analysts, and
provides their consensus of earnings over the next two years, as well as how those earnings estimates have changed over time. Note that the information provided in relation to consensus
estimates is not intended to predict actual results and should not be taken as a reliable indicator of future performance.
Note: For all tables, graphs and charts in this report that do not cite any reference or source, the source is S&P Global Market Intelligence.

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Stock Report | August 27, 2018 | NYSE Symbol: BABA
Alibaba Group Holding Limited
Glossary FY - Fiscal Year
P/E - Price/Earnings
STARS P/NAV - Price to Net Asset Value PEG Ratio - P/E-to-Growth Ratio PV - Present
Since January 1, 1987, CFRA Equity and Fund Research Services, and its Value
predecessor S&P Capital IQ Equity Research has ranked a universe of U.S. R&D - Research & Development ROCE - Return on Capital Employed ROE -
common stocks, ADRs (American Depositary Receipts), and ADSs (American Return on Equity
Depositary Shares) based on a given equity's potential for future performance. ROI - Return on Investment
Similarly, we have ranked Asian and European equities since June 30, 2002. ROIC - Return on Invested Capital
Under proprietary STARS (Stock Appreciation Ranking System), equity analysts ROA - Return on Assets
rank equities according to their individual forecast of an equity's future total SG&A - Selling, General & Administrative Expenses
return potential versus the expected total return of a relevant benchmark (e.g., a SOTP - Sum-of-The-Parts
regional index (S&P Asia 50 Index, S&P Europe 350® Index or S&P 500® Index)), WACC - Weighted Average Cost of Capital
based on a 12-month time horizon. STARS was designed to meet the needs of
Dividends on American Depository Receipts (ADRs) and American Depository
investors looking to put their investment decisions in perspective. Data used to
Shares (ADSs) are net of taxes (paid in the country of origin).
assist in determining the STARS ranking may be the result of the analyst's own
models as well as internal proprietary models resulting from dynamic data Qualitative Risk Assessment
inputs. Reflects an equity analyst's view of a given company's operational risk, or the
risk of a firm's ability to continue as an ongoing concern. The Qualitative Risk
S&P Global Market Intelligence's Quality Ranking
Assessment is a relative ranking to the U.S. STARS universe, and should be
(also known as S&P Capital IQ Earnings & Dividend Rankings) - Growth and
reflective of risk factors related to a company's operations, as opposed to risk
stability of earnings and dividends are deemed key elements in establishing S&P
and volatility measures associated with share prices. For an ETF this reflects on
Global Market Intelligence's earnings and dividend rankings for common stocks,
a capitalization-weighted basis, the average qualitative risk assessment
which are designed to capsulize the nature of this record in a single symbol. It
assigned to holdings of the fund.
should be noted, however, that the process also takes into consideration certain
adjustments and modifications deemed desirable in establishing such rankings. STARS Ranking system and definition:
The final score for each stock is measured against a scoring matrix determined 5-STARS (Strong Buy):
by analysis of the scores of a large and representative sample of stocks. The Total return is expected to outperform the total return of a relevant benchmark,
range of scores in the array of this sample has been aligned with the following by a notable margin over the coming 12 months, with shares rising in price on an
ladder of rankings: absolute basis.
A+ Highest B Below Average 4-STARS (Buy):
A High B- Lower Total return is expected to outperform the total return of a relevant benchmark
A- Above Average C Lowest over the coming 12 months, with shares rising in price on an absolute basis.
B+ Average D In Reorganization 3-STARS (Hold):
NR Not Ranked Total return is expected to closely approximate the total return of a relevant
EPS Estimates benchmark over the coming 12 months, with shares generally rising in price on
CFRA's earnings per share (EPS) estimates reflect analyst projections of future an absolute basis.
EPS from continuing operations, and generally exclude various items that are 2-STARS (Sell):
viewed as special, non-recurring, or extraordinary. Also, EPS estimates reflect Total return is expected to underperform the total return of a relevant
either forecasts of equity analysts; or, the consensus (average) EPS estimate, benchmark over the coming 12 months, and the share price is not anticipated to
which are independently compiled by S&P Global Market Intelligence, a data show a gain.
provider to CFRA. Among the items typically excluded from EPS estimates are 1-STAR (Strong Sell):
asset sale gains; impairment, restructuring or merger-related charges; legal and Total return is expected to underperform the total return of a relevant
insurance settlements; in process research and development expenses; gains or benchmark by a notable margin over the coming 12 months, with shares falling
losses on the extinguishment of debt; the cumulative effect of accounting in price on an absolute basis.
changes; and earnings related to operations that have been classified by the Relevant benchmarks:
company as discontinued. The inclusion of some items, such as stock option In North America, the relevant benchmark is the S&P 500 Index, in Europe and in
expense and recurring types of other charges, may vary, and depend on such Asia, the relevant benchmarks are the S&P Europe 350 Index and the S&P Asia
factors as industry practice, analyst judgment, and the extent to which some 50 Index, respectively.
types of data is disclosed by companies.
12-Month Target Price
The equity analyst's projection of the market price a given security will command
12 months hence, based on a combination of intrinsic, relative, and private
market valuation metrics, including Fair Value.
CFRA Equity Research
CFRA Equity Research is produced and distributed by Accounting Research &
Analytics, LLC d/b/a CFRA ("CFRA US"; together with its affiliates and
subsidiaries, "CFRA"). Certain research is produced and distributed by CFRA MY
Sdn Bhd (Company No. 683377-A) (formerly known as Standard & Poor's
Malaysia Sdn Bhd) ("CFRA Malaysia"). Certain research is distributed by CFRA UK
Limited ("CFRA UK"). CFRA UK and CFRA Malaysia are wholly-owned subsidiaries
of CFRA US.
Abbreviations Used in Equity Research Reports
CAGR - Compound Annual Growth Rate
CAPEX - Capital Expenditures
CY - Calendar Year
DCF - Discounted Cash Flow
DDM - Dividend Discount Model
EBIT - Earnings Before Interest and Taxes
EBITDA - Earnings Before Interest, Taxes, Depreciation & Amortization
EPS - Earnings Per Share
EV - Enterprise Value
FCF - Free Cash Flow
FFO - Funds From Operations
Redistribution or reproduction is prohibited without prior written permission. Copyright © 2018 CFRA. 7
Stock Report | August 27, 2018 | NYSE Symbol: BABA
Alibaba Group Holding Limited
Disclosures No content (including ratings, credit-related analyses and data, valuations, model, software
or other application or output therefrom) or any part thereof (Content) may be modified,
S&P GLOBAL™ is used under license. The owner of this trademark is S&P Global Inc. or its reverse engineered, reproduced or distributed in any form by any means, or stored in a
affiliate, which are not affiliated with CFRA Research or the author of this content. database or retrieval system, without the prior written permission of CFRA. The Content shall
Stocks are ranked in accordance with the following ranking methodologies: not be used for any unlawful or unauthorized purposes. CFRA and any third-party providers,
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STARS Stock Reports: accuracy, completeness, timeliness or availability of the Content.
Qualitative STARS recommendations are determined and assigned by equity analysts. For
reports containing STARS recommendations refer to the Glossary section of the report for Past performance is not necessarily indicative of future results.
detailed methodology and the definition of STARS rankings. This document may contain forward-looking statements or forecasts; such forecasts are
not a reliable indicator of future performance.
Quantitative Stock Reports:
Quantitative recommendations are determined by ranking a universe of common stocks This report is not intended to, and does not, constitute an offer or solicitation to buy and sell
based on 5 measures or model categories: Valuation, Quality, Growth, Street Sentiment, and securities or engage in any investment activity. This report is for informational purposes
Price Momentum. In the U.S., a sixth sub-category for Financial Health will also be displayed. only. Recommendations in this report are not made with respect to any particular investor or
Percentile scores are used to compare each company to all other companies in the same type of investor. Securities, financial instruments or strategies mentioned herein may not be
universe for each model category. The five (six) model category scores are then weighted suitable for all investors and this material is not intended for any specific investor and does
and rolled up into a single percentile ranking for that company. For reports containing not take into account an investor's particular investment objectives, financial situations or
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methodology and the definition of Quantitative rankings. it is suitable for your particular circumstances and, if necessary, seek professional advice.
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The methodologies used in STARS Stock Reports and Quantitative Stock Reports research reports, including exchange-traded investments whose investment objective is to
(collectively, the "Research Reports") reflect different criteria, assumptions and analytical substantially replicate the returns of a proprietary index of CFRA. In cases where CFRA is
methods and may have differing recommendations. The methodologies and data used to paid fees that are tied to the amount of assets invested in a fund or the volume of trading
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ranking methodologies for the same issuer. However, in the event that different however, no part of CFRA's compensation for services is tied to any recommendation or
methodologies or data are used on the analysis of an issuer, the methodologies may lead to rating. Additional information on a subject company may be available upon request.
different views or recommendations on the issuer, which may at times result in CFRA's financial data provider is S&P Global Market Intelligence. THIS DOCUMENT CONTAINS
contradicting assessments of an issuer. CFRA reserves the right to alter, replace or vary COPYRIGHTED AND TRADE SECRET MATERIAL DISTRIBUTED UNDER LICENSE FROM S&P
models, methodologies or assumptions from time to time and without notice to clients. GLOBAL MARKET INTELLIGENCE. FOR RECIPIENT'S INTERNAL USE ONLY.
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive
STARS Stock Reports:
property of MSCI, Inc. and S&P Global Market Intelligence. GICS is a service mark of MSCI and
Global STARS Distribution as of June 30, 2018
S&P Global Market Intelligence and has been licensed for use by CFRA.
Ranking North America Europe Asia Global
Other Disclaimers and Notices
Buy 39.1% 31.9% 37.3% 36.1% Certain information in this report is provided by S&P Global, Inc. and/or its affiliates and
Hold 54.6% 53.6% 50.6% 52.9% subsidiaries (collectively "S&P Global"). Such information is subject to the following
disclaimers and notices: "Copyright © 2018, S&P Global Market Intelligence (and its affiliates
Sell 6.3% 14.5% 12.1% 11.0% as applicable). All rights reserved. Nothing contained herein is investment advice and a
Total 100.0% 100.0% 100.0% 100.0% reference to a particular investment or security, a credit rating or any observation
concerning a security or investment provided by S&P Global is not a recommendation to buy,
Analyst Certification: sell or hold such investment or security or make any other investment decisions. This may
STARS Stock Reports are prepared by the equity research analysts of CFRA and its contain information obtained from third parties, including ratings from credit ratings
affiliates and subsidiaries. Quantitative Stock Reports are prepared by CFRA. All of the agencies. Reproduction and distribution of S&P Global's information and third party content
views expressed in STARS Stock Reports accurately reflect the research analyst's in any form is prohibited except with the prior written permission of S&P Global or the
personal views regarding any and all of the subject securities or issuers; all of the views related third party, as applicable. Neither S&P Global nor its third party providers guarantee
expressed in the Quantitative Stock Reports accurately reflect the output of CFRA's the accuracy, completeness, timeliness or availability of any information, including ratings,
algorithms and programs. Analysts generally update STARS Stock Reports at least four and are not responsible for any errors or omissions (negligent or otherwise), regardless of
times each year. Quantitative Stock Reports are generally updated weekly. No part of the cause, or for the results obtained from the use of such information or content. S&P
analyst, CFRA, CFRA affiliate, or CFRA subsidiary compensation was, is, or will be directly GLOBAL AND ITS THIRD PARTY CONTENT PROVIDERS GIVE NO EXPRESS OR IMPLIED
or indirectly related to the specific recommendations or views expressed in any Stock WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR
Report. FITNESS FOR A PARTICULAR PURPOSE OR USE AND ALL S&P INFORMATION IS PROVIDED ON
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Stock Report | August 27, 2018 | NYSE Symbol: BABA
Alibaba Group Holding Limited
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