Company Profile

Alibaba Group Holding Ltd Company is a Chinese multinational online company. Specializing in e-commerce, retail, internet and technology. Founded by Jack Ma on 4 April 1999 in Hangzhou, Zhejiang. Alibaba is a public company and traded as NYSE: BABA.

 

Alibaba Group Holding Ltd ADR (BABA N) Extended Graph Analysis

 

1. BABA CASH FLOWS

	2015	2016	2017	2018	2019	2020
Net cash provided by operating activities	41,217,000,000	56,836,000,000	80,326,000,000	125,171,000,000	150,975,000,000	196,996,000,000
Net cash used for investing activities	-53,454,000,000	-42,831,000,000	-78,364,000,000	-83,890,000,000	-151,060,000,000	-97,828,000,000
Net cash provided by (used for) financing activities	87,497,000,000	-15,846,000,000	32,914,000,000	20,359,000,000	-7,392,000,000	68,605,000,000
Capital expenditures	-7,705,000,000	-10,845,000,000	-17,546,000,000	-29,836,000,000	-49,643,000,000	-49,643,000,000
Free cash flow	33,512,000,000	45,991,000,000	62,780,000,000	95,335,000,000	101,332,000,000	147,353,000,000
Working capital	102,437,000,000	82,031,000,000	88,745,000,000	121,045,000,000	62,604,000,000	62,604,000,000

Facts:

• Cash provided by operating activities was CNY 196.996 billion in 2020.
• Cash used for investing activities were CNY -97.8 in 2020.
• Net cash provided by financing activities was CNY 68.605 billion in 2020.
• Capital expenditure was CNY -49.6 billion in 2020.
• Free cash flow was CNY 147 billion.
• Working capital was CNY 62.6 billion in 2020.

Explanation

• Cash from operations was increasing year-over-year and has a growth rate of 378 percent in five years.
• Cash from investing activities were purchases of property, plant and equipment, acquisitions and purchases of investments.
• Cash provided by (used for) financing activities were debt repayment and common stock repurchase.
• Capital expenditures were purchases of property, plant and equipment and purchases of intangibles.
• Free cash flow increases year-over-year and has a growth rate of 340% in five years.
• Working capital was erratic in movement in the last five years.

Interpretation

Alibaba was capable and efficient in maintaining a positive cash from operations, free cash flow and working capital in the last five years. 

 

2. BABA BALANCE SHEET

	2015	2016	2017	2018	2019
Total cash	125,999,000,000	115,696,000,000	150,801,000,000	210,210,000,000	203,165,000,000
Current Assets	142,109,000,000	134,070,000,000	182,516,000,000	256,855,000,000	270,273,000,000
Net property, plant and equipment	12,244,000,000	16,505,000,000	24,897,000,000	75,866,000,000	98,449,000,000
Total non-current assets	113,325,000,000	230,380,000,000	324,296,000,000	460,269,000,000	694,803,000,000
Total assets	255,434,000,000	364,450,000,000	506,812,000,000	717,124,000,000	965,076,000,000
Current liabilities	39,672,000,000	52,039,000,000	93,771,000,000	135,810,000,000	207,669,000,000
Non-current liabilities	70,323,000,000	95,424,000,000	134,242,000,000	215,492,000,000	265,150,000,000
Total liabilities	109,995,000,000	147,463,000,000	228,013,000,000	351,302,000,000	472,819,000,000
Retained earnings	24,842,000,000	78,752,000,000	108,558,000,000	172,353,000,000	257,886,000,000
Stockholders equity	145,439,000,000	216,987,000,000	278,799,000,000	365,822,000,000	492,257,000,000

Facts:

• Total cash was CNY 203 billion in 2019.
• Current assets were CNY 270 billion in 2019.
• Net property, plant and equipment was CNY 98 billion in 2019.
• Non-current assets were CNY 695 billion in 2019.
• Total assets were CNY 965 billion in 2019.
• Current liabilities were CNY 208 billion in 2019.
• Non-current liabilities were CNY 265 billion in 2019.
• Total liabilities were CNY 473 billion in 2019.
• Retained earnings were CNY 258 billion in 2019.
• Stockholders equity was CNY 492 billion in 2019.

Explanation

• Cash was increasing year-over-year and has a growth rate of 61% in five years. It represents 21 percent of the total assets.
• Current assets represent 28 percent of total assets and have a growth rate of 90 percent in five years.
• Net property plant and equipment represents 10 percent of total assets. It grew 704 percent in five years.
• Non-current assets was 72 percent of total assets and it grew 513 percent in five years.
• Total assets grew 278 percent in five years.
• Current liabilities represent 44 percent of total liabilities.
• Non-current liabilities represent 56 percent of total liabilities.
• Total liabilities represents 49 percent of total equities and liabilities.
• Retained earnings represent 52 percent of total equities.
• Stockholders equity represents 41 percent of total equities and liabilities.

Interpretation

The balance was strong and in good health. The company was efficient in maintaining a solid balance sheet in the last five years. 

 

3. BABA INCOME AND MARKET

	2015	2016	2017	2018	2019	2020
Revenue	76,204,000,000	101,143,000,000	158,273,000,000	250,266,000,000	376,844,000,000	488,895,000,000
EBIT	23,637,000,000	29,958,000,000	48,055,000,000	70,363,000,000	57,750,000,000	94,306,000,000
Net Income	24,261,000,000	71,460,000,000	43,675,000,000	64,985,000,000	87,886,000,000	172,126,000,000
EBITDA	39,491,000,000	90,115,000,000	76,992,000,000	125,989,000,000	138,491,000,000	212,655,000,000
Market Capitalization	0	1,356,753,374,878	2,601,380,048,653	2,601,380,048,653	3,231,462,292,833	3,231,462,292,833
Intrinsic Value	0	0	5,454,154,281,120	7,219,369,371,316	13,772,141,627,743	12,164,643,972,274

Facts:

• Revenue was CNY 489 billion in 2020.
• EBIT was CNY 94 billion in 2020.
• Net Income was CNY 172 billion in 2020.
• EBITDA was CNY 213 billion in 2020.
• Market capitalization was CNY 3 trillion in trailing twelve months.
• The calculated intrinsic value was CNY 12 trillion in trailing twelve months.

Explanation:

• Revenue increases year-over-year and has grown 542 percent in five years.
• EBIT has a growth of 299 percent in five years.
• Net income grew 609 percent in five years.
• Market capitalization increased year-over-year and grew 138 percent in five years.
• Intrinsic value was over 276 percent against market capitalization, therefore market price was undervalued.

Interpretation

Alibaba was profitable in the last five years. The management was able to generate more than enough revenue for the operation of the business.

 

4. BABA FINANCIAL RATIOS

	2015	2016	2017	2018	2019	2020
Asset turnover (average)	0.42	0.33	0.36	0.4	0.45	0.43
Return on assets %	13.16	23.06	10.03	10.46	10.41	15.37
Return on equity %	27.63	39.43	17.62	19.85	20.42	28.54
Debt/Equity	0.35	0.25	0.28	0.33	0.23	0.16
Return on invested capital %	13.99	11.08	12.13	9.72	9.89	12.16
Interest coverage	12.72	42.86	23.47	29.16	19.54	37.63

Facts:

• Asset turnover was averaging 0.43 in 2020.
• Return on assets was 15.37 percent in 2020.
• Return on equity was 28.54 percent in 2020.
• Debt/Equity ratio was 0.16 in 2020.
• Return on invested capital was 12.16 percent in 2020.
• Interest coverage was 37.63 in 2020.

Explanation

• Asset turnover indicates that for every $1 in asset, the company generates 0.43 CNY.
• Return on assets indicates that the company produces .15 CNY of net income for every CNY invested in assets.
• Return on equity indicates that for every CNY invested in equity, it earns .2854 CNY net income.
• Debt/Equity ratio indicates that for every CNY in equity, the company has .16 CNY in leverage.
• Return on invested capital means the company earns .12 CNY profit for its invested capital.
• Interest coverage means that the company can afford to pay its interest payment 38 times of its current financial obligations.

Interpretation

The financial ratios show that the company is managed very well from its business operations. The company is profitable.

 

5. BABA KEY EXECUTIVE

NAME	TITLE
Sophie Minzhi WU	Chief Customer Officer
Timothy A. Steinert	General counsel and Corporate Secretary
Luyuan Fan	Pres, Alibaba Digital Media and Entertainment
J. Michael Evans	Director and President
Shan Trudy Dai	President Wholesale Marketplaces
Jeff Jianfeng Zhang	Chief Technology Officer and President
Junfang Jessie Zheng	Chief Risk Officer and Chief Platform Governance Officer
Pen-Hung Chris Tung	Chief Marketing Officer
Judy Wenhong Tong	Chief People Officer

Facts:

Alibaba does not reveal the key executive compensation.

 

6. BABA LOBBYING AND CONTRIBUTIONS

Period	USD
2011	100,000
2012	461,000
2013	430,000
2014	450,000
2015	410,000
2016	1,020,000
2017	2,010,000
2018	2,740,000
2019	2,620,000

Facts:

Alibaba has been spending annual lobbying and contributions since 2011. The figures vary  every period. A Note from OpenSecrets is quoted as follows:

NOTE: Figures on this page are calculations by the Center for Responsive Politics based on data from the Senate Office of Public Records. Data for the most recent year was downloaded on January 23, 2020 and includes spending from January 1 – December 31. Prior years include spending from January through December.

Source: OpenSecret.org Center for Responsive Politics

 

7. BABA FINANCIAL STRENGTH

DATA	CNY
Working capital	62,604,000,000
Total assets	965,076,000,000
Sales	488,895,000,000
EBIT	94,306,000,000
Market value of equity	3,404,603,312,500
Book value of total liabilities	472,819,000,000
Retained earnings	257,886,000,000

CALCULATION

	Ratio	Score	Result
A – Working Capital / Total Assets	0.06	1.2	0.08
B – Retained Earnings / Total Assets	0.27	1.4	0.37
C – EBIT / Total Assets	0.10	3.3	0.32
D – Market Value of Equity / Book Value of Total Liabilities	7.20	0.6	4.32
E – Sales / Total Assets	0.51	1	0.51
Z-Score			5.60

Formula: Z-Score = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E

Explanation:

Z-Score is a statistical measurement that compares data points from different sets of data to find correlations. This measurement by Dr. Edward Altman is a significant measure in determining the financial strength of the company because it relies on different weighted financial liquidity and profitability metrics to come up with the overall score. This measure indicates the probability of bankruptcy.

Interpretation

Alibaba. has a Z-Score of 5.60. Dr. Altman’s grading scale of 3.0 and above indicates that the company will not declare bankruptcy in near future. In other terms, the company is not close to insolvency. The main factors of this statistical measurement are profitability, liquidity, leverage and efficiency.

Overview

Alibaba Group Holding Ltd ADR has a strong balance sheet and is financially healthy. The income statement shows that the company was profitable and liquid. The stock price of Alibaba was undervalued, therefore, could be a good Buy.

CITATION

https://www.morningstar.com/stocks/xnys/baba/quote

https://www.opensecrets.org/federal-lobbying/clients/summary?cycle=2011&id=D000064488

https://www.alibabagroup.com/en/global/home

Researched and written by Criselda