1. Investment Overview
Alibaba (Ticker: BABA (NASDAQ))
“Connecting China, The Internet and Soon The World”
1 of 6
“Confidential”
Note: For Equity Syndicate Use Only
Columbus Advisors Group
8/5/14
rcoleman
Investment Rationale/Valuation Assessment
The results of our probability-weighted “DCF” analysis values BABA at $91/ADS,
+44% above the mid-point.
We expect the ADS’s to price at the “high-end of the range and possibly above (a
delicate balance given the Facebook experience…). Assuming “normal” market
conditions, we believe BABA will trade at “fair value” within 3-6 months. We would
assign an "above-average" economic moat to BABA given its “visionary” and passionate”
founder, its competitive position (including BABA’s “healthy” level of respect for the
competition….”) in the industry and its strong free cash flow generation. We hold our
views despite the obvious concerns re: corporate governance, organizational structure
and the competitive intensity in the space. Other names such as Baidu, Tencent and
Vipshop, provide great examples of companies that have executed (despite such),
producing attractive returns. Further, we do not expect the issues surrounding Alipay or
the media investment to derail the shares. Finally, we could be witnessing the making of
a “hero” for the little guy. If there is a concern it’s the technicals1
(certain indices won’t
participate and ESG funds unlikely to participate…) and the trade wars between the U.S.
and China.
China has historically built and protected champions under the theory that a few large
competitors are easier to police, than multiple smaller concerns. While that could
change in the future, BABA will likely spread it wings West. Moving from an “export-led”
economy to one of “consumption” should also serve BABA well. Historically BABA has
experienced solid financial performance. Though revenue growth is expected to
moderate given the law of large numbers (a fact discounted in our model).
Creating Value
Keys to creating long-term value for shareholders are the equity support provided by
long-only accounts (large indices restricted from holding shares), response to rising
competition, investors discounting probability of trade wars (China’s recent targeting of
Technology and Industrial concerns…), mobile monetization, product authenticity,
capital allocation (there is capacity for a dividend…levered would be just fine)
and, the management of regulatory risk, both US and China (see below for more
details).
Recent performance in Chinese equities has been mixed vs. the broad S&P indices.
1
BABA has assigned a 6% position for “Friends and Family,” supporting his views on looking out for the
“little guy”

2. Investment Overview
Alibaba (Ticker: BABA (NASDAQ))
“Connecting China, The Internet and Soon The World”
2 of 6
“Confidential”
Note: For Equity Syndicate Use Only
Columbus Advisors Group
8/5/14
rcoleman
Near-term outperformance could be mitigated by “negative” sentiment towards
auditing/accounting and corporate governance related to China-based operations.
Financial Model Results
Our approach - We employed a “DCF” model to value BABA.
- We modeled three years, sensitizing our “base case” results.
- Key variables include: 1) discount rate, 2) revenue growth, 3) margins and 4)
capital intensity.
- Upon completing the scenario analysis, we calculated an “expected value” or
“probability-weighted” price target.
BABA comfortably produces a growing level of discretionary cash. Given the low level of
debt, the company’s cost of capital is quite onerous. We believe that the company will
tap the “public debt” markets to not only reduce its WACC, but also to access an
alternative source of financing (establishing a credit rating – likely “A-“ or
better2
…the average “A-rated” credit is placing “intermediate” paper at a 2.89%
yield). We view the latter as prudent as BABA “optimizes” its capital structure on a
“global” stage.
While BABA has debt (largely bank debt) on its balance sheet, its cash and equivalents
put the company in a “net cash” position. A dividend is not expected at this time, but
clearly the company has dividend capacity.
Earnings Quality (Average) – Barter transactions and swings in “non-cash” items are a
cause for concern.
Historical Cash Flow Production - Historically comfortably free cash flow positive, low
capital intensity supports such.
Why We Like the Offering
- Valuation – The initial price range is well within our probability-weighted target;
- Scale/Target Market/Platform – BABA is the largest online and mobile
commerce company in the world in terms of GMV (Gross Merchandise Volume…).
Asset light business model;
2
BABA employ’s an asset securitization program to supplement is cash flow generation (S-1)

3. Investment Overview
Alibaba (Ticker: BABA (NASDAQ))
“Connecting China, The Internet and Soon The World”
3 of 6
“Confidential”
Note: For Equity Syndicate Use Only
Columbus Advisors Group
8/5/14
rcoleman
- Visibility/Profitability/Granularity – Solid double-digit revenue growth and
cash flow generation. BABA’s service offering is the “life-line” for individuals and
SMB daily;
- Trends – Monetization of traffic on mobile platform; China’s Internet penetration
level;
- Financial Risk/Free Cash Flow – Net cash position3
and solid FCF yields
throughout our forecast. Low capital intensity provides the basis for solid and
sustainable free cash flow production;
- Sponsors – Softbank a visionary organization and “strategic” investor;
- Management – Competent management. Jack and his deemed did an
“excellent” job delivery the company and its vision at the IPO lunch. In China,
Jack Ma is the equivalent of a “rock star” in the U.S.
Earnings / Cash flow Vulnerabilities
Vulnerability Probability Impact
Key Man Risk – Jack Ma Low High
Security Breaches/Identity Theft Risk Average High
Working Capital Management Risk (includes factoring receivables) Average High
Corporate Gov.4
/VIE/Conflicts-of-interest/Cayman Domiciled5
Average High
Regulatory Risk – PRC (China considering tax for on-line services) Average High
Accounting6
/Audit Requirements Risk Average High
Integration and Investment Risk High Average
Competition/Execution (Holding Co. Structure) Risk High Average
Other Commentary:
Regulation/Corporate Governance/VIE Structure – Under the PRC, foreign shareholders
have “rights” to the earnings stream vs. equity ownership in assets based in China
(hence “VIE” or “Variable Interest Entity” structure – Technology and Communications
related assets in particular…). Further, if infractions or missteps occur, the PRC has the
option of stripping valuable assets from Alibaba shareholders, resulting in a significant
impairment of equity value.
Accounting7
– China and the US are in public disagreement re: the provision (and
3
Alibaba has access to an $8B libor-based credit facility which could be fully drawn at any time, exposing the
company to “repricing” risk (mitigated by good cash flow)
4
Partnership controls the Board vote as opposed to “traditional” independent directors (S-1)
5
The Cayman Islands has a less developed body of securities laws than the US and provides significantly less
protection to investors (S-1)
6
As a “foreign private issuer,” Alibaba is not required under the Exchange Act to file periodic reports and
financials with the same frequency and promptness as SEC registered entities (S-1)
7
Note that certain PRC companies enjoy preferential tax-treatment and Alibaba is no exception, the
companies effective tax rate was 9.9% as of 12/31/13

4. Investment Overview
Alibaba (Ticker: BABA (NASDAQ))
“Connecting China, The Internet and Soon The World”
4 of 6
“Confidential”
Note: For Equity Syndicate Use Only
Columbus Advisors Group
8/5/14
rcoleman
review) of “China-based” CPA affiliates, of US accounting firms working papers, by US
regulators.
Business Summary
BABA is the largest online and mobile commerce company in the world in terms of gross
merchandise volume in 2013, according to the IDC GMV (Gross Merchandise Value)
Report. BABA operates its marketplaces as a platform for third parties, and does not
engage in direct sales, compete with merchants or hold inventory.
China has some 618MM Internet users, more than twice the U.S. An estimated 53MM
Chinese logged onto the web for first time, in 2013. Though less than 50% have web
access, supporting significant upside for BABA.
Key June 2014 metrics (year/year)
+46% revenue
+26% operating income
+60% adjusted net income
+74% free cash flow
Key Shareholders (pro-forma ownership)
- Soft-bank (32.4% - Not selling any shares)
- Yahoo (16.3% - Selling 140MM shares or $5B in value)
- Jack Ma (7.8%)

5. Investment Overview
Alibaba (Ticker: BABA (NASDAQ))
“Connecting China, The Internet and Soon The World”
5 of 6
“Confidential”
Note: For Equity Syndicate Use Only
Columbus Advisors Group
8/5/14
rcoleman
Comps and Related Performance
Performance Performance
Thru 8/21/14 Thru 9/10/14
L3 Months Last Month
China E-commerce/Search
TCEHY -6.87% 15.10%
BIDU 2.60% 27.25%
CMCM 11.62% 91.61%
JD -0.04% 41.20%
JMEI -21.76% 37.68%
VIPS 10.84% 27.65%
QIHU -14.15% -1.72%
US e-commerce/social media
EBAY -5.83% 8.02%
FB 5.98% 27.75%
The Cloud/Big Data
NOW 13.16% 10.64%
CRM 11.50% 9.60%
DATA 21.13% N/A
Big Retail
WMT 2.46% N/A
AMZN 4.59% 10.41%

6. Investment Overview
Alibaba (Ticker: BABA (NASDAQ))
“Connecting China, The Internet and Soon The World”
6 of 6
“Confidential”
Note: For Equity Syndicate Use Only
Columbus Advisors Group
8/5/14
rcoleman
The Mobile Evolution