Alibaba discloses its Hong Kong prospectus： Tmall and Taobao account for more than 60% of revenue

　　On the evening of November 13, Alibaba submitted a listing prospectus to the Hong Kong Stock Exchange. The prospectus shows that the funds raised by Alibaba’s IPO will be mainly used to drive user growth and increase participation, help enterprises achieve digital transformation, improve operational efficiency, and continue to innovate. It mentions specific businesses such as Ele.me, Flying Pig, Youku, and cloud computing technology.

　　Industry experts point out that Alibaba’s return to the Hong Kong stock market not only allows it to develop its business through new fundraising, but also helps to enhance its influence in the Greater China region and promote the development of its business.

　　Alibaba data map, photo by Zhongxin Jingwei

　　Proceeds raised will be used in three ways, mentioning companies such as Ele.me and Youku

　　Regarding the use of the proceeds raised, Alibaba said that the company plans to use the funds from the global sale to promote the execution of the strategy in three areas: driving user growth and increasing engagement, helping enterprises achieve digital transformation, improving operational efficiency, and continuous innovation.

　　Among them, Alibaba specifically mentioned that the company will continue to expand and enhance life services through Ele.me and Flying Pig, and will continue to build digital media and entertainment services through Youku and other content platforms. In addition, cloud computing technology is also a key word that Alibaba has mentioned many times in its fundraising purposes.

　　However, the specific issuance plan has not been disclosed in the prospectus this time. According to previous media reports, Alibaba Group plans to issue 500 million new ordinary shares through the global sale and list them on the main board of the Hong Kong Stock Exchange. The issuance includes 500 million ordinary shares and an overallotment share that can issue up to 75 million additional ordinary shares. It is expected to be priced as early as November 20, Hong Kong time. The company’s fundraising amount may be between 100-15 billion US dollars, and the price range is calculated at a 4% discount to the US stock price, around 180 US dollars per share.

　　Ma Yun holds 6.1% of the shares, and the company implements a different rights structure for the same shares

　　In addition, the prospectus also disclosed Alibaba’s shareholding structure, with SoftBank holding 25.8%, Ma Yun holding 6.1%, Cai Chongxin holding 2.0%, other directors and senior management holding 0.9%, and other public shareholders holding 65.2%.

　　In addition, Alibaba also talked about the company’s partnership system in the prospectus. According to the prospectus, in July 2010, Alibaba officially established the Alibaba Partnership, which currently has 38 members.

　　According to the disclosure, the members of the organization only have a single class of shares, and each share corresponds to one voting right, but according to the Articles of Association, Alibaba Partners has the exclusive right to nominate (or in limited cases, great men) a simple majority of the board members. These rights are classified under different voting rights structures under the Hong Kong Listing Rules, so Alibaba is considered a company with different share rights structures.

　　In the second quarter, more than 60% of Alibaba’s revenue came from Tmall and Taobao.

　　On the evening of November 13, the prospectus disclosed by Alibaba in Hong Kong stocks shows that in the fiscal year 2019 (April 1, 2018 – March 31, 2019), the company achieved a total revenue of 376.844 billion yuan and a net profit of 80.234 billion yuan. In addition, from April 1, 2019 to June 30, 2019, Alibaba achieved a total operating income of 114.924 billion yuan and a net profit of 19.122 billion yuan.

　　In addition to disclosing financial data, Alibaba also showed its commercial version in the prospectus. At present, Alibaba’s main business includes core business, cloud computing, digital media and entertainment, and innovation business. Among them, core business is Alibaba’s main source of income. A total of 323.40 billion yuan in fiscal year 2019, accounting for 85.82% of total revenue.

　　In the core business, China’s retail business, dominated by Taobao and Tmall, generates the highest revenue. According to the financial report, during the three months from April 1, 2019 to June 30, 2019, approximately 66% of Alibaba’s revenue came from China’s retail business.

　　According to the prospectus, the core business can be divided into six specific business directions, namely China retail business (mainly Taobao and Tmall), cross-border and global retail business (Tmall overseas, Koala, AliExpress and South East Asia, Turkey, Pakistan and other countries and regions of the e-commerce platform), China wholesale business (1688.com and retail), cross-border and global wholesale business (alibaba.com), logistics service business (Cainiao network), life service business (Ele.me, word of mouth, flying pig).

　　In addition to its core business, Alibaba’s business also includes cloud computing (Alibaba Cloud), digital media and entertainment (Youku, UC Browser, Alibaba Pictures), and innovation (Autonavi, DingTalk, Tmall Genie).

　　Ali’s commercial version, the picture is taken from Alibaba’s prospectus

　　It is worth noting that in the prospectus, Alibaba also stated that the company has held a total of 33% shares in Ant Financial since September 2019. In addition, since June 30, 2019, Alibaba has made or plans to make equity investments in a total of 24 companies, with a total amount of 38.529 billion yuan.

　　Expert: Alibaba’s return to Hong Kong for listing will enhance the company’s influence

　　Yang Delong, managing director and chief economist of Qianhai Open Source Fund, pointed out to China New York Matrix that Alibaba’s return to the Hong Kong stock market has three major benefits, one is to make up for the regret of not being able to list on the Hong Kong Stock Exchange in the past, and the other is to achieve new financing. Finally, because Alibaba’s main revenue and profits come from China, listing on the Hong Kong Stock Exchange is conducive to further expanding Ali’s influence in Greater China and promoting its business growth.

　　In addition, for the possible impact of Alibaba’s listing on the market, Yang Delong believes that according to the current news, Alibaba’s listing on the Hong Kong Stock Exchange will raise 100-15 billion US dollars, which will become the largest fundraising in the history of the Hong Kong Stock Exchange. Therefore, in the short term, it may indeed bring pressure on the Hong Kong stock market to divert funds.

　　"But we can’t just see the role of capital diversion brought by Alibaba’s Hong Kong stock listing. As a representative of the new economy, Alibaba provides new investment targets for Hong Kong stock investors, which helps to attract some investors to invest, thus stimulating the active level of the Hong Kong stock market. In addition, with Alibaba’s return to Hong Kong stocks, it will sooner or later be included in the targets of Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, which also provides a new opportunity for mainland investors, and may also bring new incremental funds to the Hong Kong stock market." Yang Delong said. (China-Singapore Jingwei APP)

　　(The views in this article are for reference only and do not constitute investment advice. Investment is risky, and caution is required when entering the market.)