Discounted Cashflow Method (DCF) Forecasting Revenue (Most Likely Case)

China E-Commerce (mn RMB)

+50,20%
261,935
+70,22%
+51,80%
4 Segments Alibaba 174,391
+54,40%
Revenue (Avg 2010-2013) +56,60% 114,882
+62,90%
+86,53% 74,405
2,55% +106,27% +104,01% 47,513
2,04% 29,167
3,716 7,665 15,637

Closing Closing Closing Closing (2013 E) 2014 2015 2016 2017 2018
24.74%
(2010 E) (2011 E) (2012 E)

Source (% Growth)

106 104

70.67% 33 28 87
CAGR
21
58
52 49 47 45
China Commerce Cloud/Computing/Infra 28 22
73 76 19 17 15
PREMIUM
International Commerce Others 65

30 30 30 30 30

2011 2012 2013 2014 2015 2016 2017 2018

Annual growth rate of China's e-commerce market from 2009 to 2013 with a forecast until 2017 (Statista) + Plus 30%
addition due to immense market share of Alibaba

12
 Discounted Cashflow Method (DCF) Forecasting Revenue (Most Likely Case)

Cloud Computing & Infrastructure (mn RMB)

+47,93%
4,535
+53,91%
+29,10%
4 Segments Alibaba +28,92% 3,066
+65,38%
Revenue (Avg 2010-2013) 2,375
+71,35% 1,842
+195,14% +21,18% +26,21% 1,114
2,55%
2,04% 515 650
425
144

Closing Closing Closing Closing (2013 E) 2014 2015 2016 2017 2018
24.74%
(2010 E) (2011 E) (2012 E)

Source

70.67%

Market size of software-as-a-service (SaaS)

China Commerce Cloud/Computing/Infra cloud market in China from 2013 to 2021 with
International Commerce Others an estimate until 2024 (Statista)

12
 Discounted Cashflow Method (DCF) Forecasting Revenue (Most Likely Case)

International E-Commerce (mn RMB)

+24,61%
+19,09% +22,61% 10,603
+20,61% 8,509
4 Segments Alibaba +16,61%
+18,61%
6,940
Revenue (Avg 2010-2013) +10,49% 5,754
+31,03% +9,67% 4,851
3,765 4,160
3,433
2,55% 2,620
2,04%

Closing Closing Closing Closing (2013 E) 2014 2015 2016 2017 2018
24.74%
(2010 E) (2011 E) (2012 E)
With further acquisition abroad, there will be 2% annual growth since 2014

Cloud Computing & Infrastructure (mn RMB)

+100,00%
70.67%
17,280
+75,73%

+100,00%
8,640
China Commerce Cloud/Computing/Infra +100,00%
International Commerce Others +100,00% 4,320
+100,00% +400,00% +100,00%
-71,58% 2,160
380 540 1,080
190 108
Closing Closing Closing Closing (2013 E) 2014 2015 2016 2017 2018

(2010 E) (2011 E) (2012 E)

Others revenue are predicted escalate 100% each year due to massif business diversification.

12
 Discounted Cashflow Method (DCF) Forecasting Cost of Goods Sold

Total Forecasted Alibaba Revenue

% Growth
Closing Closing Closing Closing 2014 2015 2016 2017 2018
Description Metric 2011 2012 2013 2014 2015 2016 2017 2018
(2010 E) (2011 E) (2012 E) (2013 E) Forecast Forecast Forecast Forecast Forecast

Revenue Total mn RMB 6.670 11.903 20.025 34.517 53.099 79.575 117.944 173.341 254.757 178% 168% 172% 154% 150% 148% 147% 147%

China Commerce mn RMB 3.716 7.665 15.637 29.167 46.055 69.819 104.309 153.126 222.339 206% 204% 187% 158% 152% 149% 147% 145%

International Commerce mn RMB 2.620 3.433 3.765 4.160 4.851 5.754 6.940 8.509 10.603 131% 110% 110% 117% 119% 121% 123% 125%

Cloud/Computing/Infra mn RMB 144 425 515 650 1.114 1.842 2.375 3.066 4.535 295% 121% 126% 171% 165% 129% 129% 148%

Others mn RMB 190 380 108 540 1.080 2.160 4.320 8.640 17.280 200% 28% 500% 200% 200% 200% 200% 200%

Cost of Revenue Alibaba

Closing Closing Closing Closing 2014 2015 2016 2017 2018
Description Metric
(2010 E) (2011 E) (2012 E) (2013 E) Forecast Forecast Forecast Forecast Forecast

Revenue Total mn RMB 6.670 11.903 20.025 34.517 53.099 79.575 117.944 173.341 254.757

Cost of Revenue mn RMB (1.634) (3.497) (6.554) (9.719) (15.482) (23.997) (36.748) (55.741) (84.470)
% Revenue % 24% 29% 33% 28% 29% 30% 31% 32% 33%

Cost of goods sold escalate 1% (Inflation Assumption) with efficiency honored

12
 Discounted Cashflow Method (DCF) Forecasting Expenses (Most Likely Case)
Product Development Expenses (mm RMB) Sales & Marketing Expenses (mm RMB)

+52,08%
+58,00%
+20,79%
+56,00% +28,00%
+48,98%
+22,00%
+54,00% +15,66% +26,00%
+29,55%
+20,00%
+52,00% 32,480 +24,00% 10,578
+40,49%
+35,07% +18,15% 8,264
+50,00% 20,557 -3,04% 6,559
+81,67% 5,289
13,178 3,613 4,336
8,557 2,335 3,154 3,058
2,897 3,753 5,630
1,135 2,062

Closing Closing Closing Closing 2014 2015 2016 2017 2018 Closing Closing Closing Closing 2014 2015 2016 2017 2018
(2013 E) (2013 E)
(2010 E) (2011 E) (2012 E) (2010 E) (2011 E) (2012 E)
Assumption R&D Cost Based on 4 years historical 150% with additional 2% each year Assumption S&M Cost based on 4 years historical 120% with additional 2% each year

General & Administration Expenses (mm RMB) Amortization of Intangible Asset Expenses (mm RMB)
+30,59%
+5,99%
+29,45%
+24,00% +28,00% +8,78%
+30,66% +9,92% +9,92%
+22,00% +26,00% +7,64% +9,92% +9,92%
+28,25% +9,92% -16,13% +9,92%
8,458 190 209
+20,00% 6,608 173
144 155 143 157
+72,40% 5,245 131 130
3,467 4,229
2,211 2,889
1,000 1,724

Closing Closing Closing Closing 2014 2015 2016 2017 2018 Closing Closing Closing Closing 2014 2015 2016 2017 2018
(2013 E) (2013 E)
(2010 E) (2011 E) (2012 E) (2010 E) (2011 E) (2012 E)
Assumption G&ACost Based on 4 years historical 120% with additional 2% each year Assumption Amortization based on 4 years historical 10% with additional 2% each year

12
 Discounted Cashflow Method (DCF) Forecasting Expenses (Most Likely Case)
Impairment Expenses (mm RMB) Yahoo TIPLA Expenses (mm RMB)

-22,23%
-48,85%

-100,00%
1,308 +29,63% 3,487

<% out of 0> 0,00% 0,00% 0,00% 0,00% 0,00%

135 175 175 175 175 175 175
0
Closing Closing Closing Closing 2014 2015 2016 2017 2018 Closing Closing Closing Closing 2014 2015 2016 2017 2018
(2013 E) (2013 E)
(2010 E) (2011 E) (2012 E) (2010 E) (2011 E) (2012 E)
Assumption Impairment Cost Based on 2013 expenses and expected exists annualy One time charge only in 2013

Closing Closing Closing Closing 2014 2015 2016 2017 2018 2010 7,084
5,909 2011 8,456
201214,047
2013 13,75018,40825,32935,79451,900
2014 2015 2016 2017 2018
Description Metric
(2010 E) (2011 E) (2012 E) (2013 E) Forecast Forecast Forecast Forecast Forecast

G&A & Marketing Exp mn RMB (5.909) (7.084) (8.456) (14.047) (13.750) (18.408) (25.329) (35.794) (51.900)

Product development expenses mn RMB (1.135) (2.062) (2.897) (3.753) (5.630) (8.557) (13.178) (20.557) (32.480)

Sales and marketing expenses mn RMB (2.335) (3.154) (3.058) (3.613) (4.336) (5.289) (6.559) (8.264) (10.578)
General and administrative
expenses mn RMB (1.000) (1.724) (2.211) (2.889) (3.467) (4.229) (5.245) (6.608) (8.458)
+31,21%
Amortization of intangible assets mn RMB (131) (144) (155) (130) (143) (157) (173) (190) (209)
Impairment of goodwill and
intangible assets mn RMB (1.308) — (135) (175) (175) (175) (175) (175) (175)

Yahoo TIPLA amendment payment mn RMB — — — (3.487) 0 0 0 0 0

12
 Discounted Cashflow Method (DCF) Forecasting Income (Most Likely Case)

Closing Closing Closing Closing 2014 2015 2016 2017 2018

Description Metric
(2010 E) (2011 E) (2012 E) (2013 E) Forecast Forecast Forecast Forecast Forecast
Revenue Total mn RMB 6.670 11.903 20.025 34.517 53.099 79.575 117.944 173.341 254.757
Cost of Revenue mn RMB (1.634) (3.497) (6.554) (9.719) (15.482) (23.997) (36.748) (55.741) (84.470)
G&A & Marketing Exp mn RMB (5.909) (7.084) (8.456) (14.047) (13.750) (18.408) (25.329) (35.794) (51.900)
EBIT mn RMB (873) 1.322 5.015 10.751 23.867 37.169 55.867 81.805 118.387
Interest and other non-operating income (loss) mn RMB 584 613 259 (639) - - - - -
EBT mn RMB (289) 1.935 5.274 10.112 23.867 37.169 55.867 81.805 118.387
Tax mn RMB (214) (327) (867) (1.463) (4.081) (6.356) (9.553) (13.989) (20.244)
Net Income mn RMB (503) 1.608 4.407 8.649 19.786 30.813 46.314 67.816 98.143

By adding Revenue, Cost of Revenue, G&A Expenses we get the Earning Before Interest and Tax, then using given data of interest expenses and other income (here we assume
there will an equilibrium of interest and other income in the forecast hence we don’t get sufficient data from exhibit). Alibaba Group Holdings Ltd ADR's operated at median
effective tax rate of 17.1% from fiscal years ending 2014 (Finbox.com). Adding EBT and Tax thus we get Net Income.

Net Income Alibaba (mm RMB)

+44,72%
98,143

+79,92% +46,43%
67,816
+50,30%
46,314
+55,73%
+128,77% 30,813
+96,26% 19,786
+174,07%
8,649
1,608 4,407
-503

Closing (2010 E) Closing (2011 E) Closing (2012 E) Closing (2013 E) 2014 2015 2016 2017 2018

12
 Discounted Cashflow Method (DCF) Forecasting Cashflow (Most Likely Case)

Closing Closing Closing Closing 2014 2015 2016 2017 2018

Description Metric
(2010 E) (2011 E) (2012 E) (2013 E) Forecast Forecast Forecast Forecast Forecast
Additional Info
CAPEX mn RMB - - 2.168 2.503 3.004 3.604 4.325 5.190 6.228

Total Property, Goodwill, and intagible asset mm RMB 13.184 13.751 14.254 15.436 18.440 22.044 26.369 31.559 37.788
Property and equipment mm RMB 1.666 1.905 2.463 3.808
Goodwill and intangible assets mm RMB 11.518 11.846 11.791 11.628

Depreciation mm RMB 715 805 962 1.150 1.375 1.646 1.971

Assumption straight line depreciation based on historical data
Working Capital mm RMB 16.148 19.167 4.908 5.399 5.939 6.533 7.186
Assumption increases 10% each year due to an increase of operating cost and an increase in liabilities

Source
 Discounted Cashflow Method (DCF) Forecasting Cashflow – US Case (Most Likely Case)

Closing Closing Closing Closing 2014 2015 2016 2017 2018

Description Metric
(2010 E) (2011 E) (2012 E) (2013 E) Forecast Forecast Forecast Forecast Forecast
Net Income mn RMB (503) 1.608 4.407 8.649 19.786 30.813 46.314 67.816 98.143

Additional Info
CAPEX mn RMB - - 2.168 2.503 3.004 3.604 4.325 5.190 6.228
Depreciation mm RMB 715 805 962 1.150 1.375 1.646 1.971
Working Capital mm RMB 16.148 19.167 4.908 5.399 5.939 6.533 7.186
DCF Method US

Net Income mm RMB 19.786 30.813 46.314 67.816 98.143

+Depre mm RMB 962 1.150 1.375 1.646 1.971
-Capex mm RMB 3.004 3.604 4.325 5.190 6.228
-Workin Capital mm RMB 4.908 5.399 5.939 6.533 7.186
FCF mm RMB 12.836 22.960 37.425 57.740 86.699
Terminal Value mm RMB 1.421.960
FCF+TV mm RMB 12.836 22.960 37.425 57.740 1.508.660
NPV FCF+TV mm RMB 1.119.509
Net Debt mm RMB (4.776)
Equity Value mm RMB 1.114.733
Assumption
US WACC 8,22%
#shares outstanding Shares 2.321.114.237 HK WACC 9,19%
Long Term Growth 2%

Price per Share RMB/Share 480

Exchange Rate RMB/USD 6,16
Price per Share USD/Share 77,96
 Discounted Cashflow Method (DCF) Forecasting Cashflow – HK Case (Most Likely Case)
Closing Closing Closing Closing 2014 2015 2016 2017 2018
Description Metric
(2010 E) (2011 E) (2012 E) (2013 E) Forecast Forecast Forecast Forecast Forecast
Net Income mn RMB (503) 1.608 4.407 8.649 19.786 30.813 46.314 67.816 98.143

Additional Info
CAPEX mn RMB - - 2.168 2.503 3.004 3.604 4.325 5.190 6.228
Depreciation mm RMB 715 805 962 1.150 1.375 1.646 1.971
Working Capital mm RMB 16.148 19.167 4.908 5.399 5.939 6.533 7.186
DCF Method HK

Net Income mm RMB 19.786 30.813 46.314 67.816 98.143

+Depre mm RMB 962 1.150 1.375 1.646 1.971
-Capex mm RMB 3.004 3.604 4.325 5.190 6.228
-Workin Capital mm RMB 4.908 5.399 5.939 6.533 7.186
FCF mm RMB 12.836 22.960 37.425 57.740 86.699
Terminal Value mm RMB 1.230.196
FCF+TV mm RMB 12.836 22.960 37.425 57.740 1.316.895
NPV FCF+TV mm RMB 948.913
Net Debt mm RMB (4.776)
Equity Value mm RMB 944.137
Assumption
US WACC 8,22%
#shares outstanding Shares 2.321.114.237 HK WACC 9,19%
Long Term Growth 2%

Price per Share RMB/Share 407

Exchange Rate RMB/USD 6,16
Price per Share USD/Share 66,03
 Discounted Cashflow Method (DCF) DCF Multiple Scenario

We also apply the same method

Premium (%) 35
%
190
2.0 Worst

with 3 different parameters

30 180

25 170
Worst Case 1.5
160
Most Likely
150 Best Case
1.0 Most Likely
140
Best
130
120 0.5

110
100 0.0 %
Worst Case Most Likely Best Case 2011 2012 2013 2014 2015 2016 2017 2018 0.0 0.5 1.0 1.5 2.0

CAGR PREMIUM ALIBABA CHINA COMMERCE Operational Expenses Escalation Cost of Revenue

Case US (USD/Share) HK (USD/Share)

The outcome
Best Case 104,60 88,47

Most Likely 77,96 66,03

Worst Case 58,54 49,66