If you have critics or don't agree would love to hear it in the comments. This is from a long-term investing view, if you have a different approach that is fine.

This is a short version of the write-ups I myself write. In this write up I do not discuss VIE structure (with valuation I take into account you don't own the assets), but it is personal if you want to take that risk.

Alibaba – Write Up

1. Business Model:

Alibaba is a diversified company. Its largest segment is core commerce, which is selling products directly to consumers. In the core commerce segment, the business is very similar to Amazon. In this segment, Alibaba operates the websites Taobao, Tmall, and Alibaba.com, among others. In addition, the not yet profitable segment, cloud computing, is experiencing strong growth. This segment has a lot of potentials and, due to the effect of the economy of scale, it is planned to make good profits in the future.

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Sector: Consumer Cyclical Industry: Internet Retail

1. Category (Peter Lynch):

Fast Grower:

Alibaba is still a fast grower with an average growth of 25% per year (17,41 % revenue growth last year which is still great/fast). There will always be a moment when this growth will slow down and we take this into account in our conservative valuation. Outside of this, Alibaba is of course mainly active in China, where economic growth, and especially the growth of the middle class, is expected.

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1. Financial Position/ Profitability

Alibaba's financial position is very strong. With a Debt/Equity ratio of only 0.65 at the time of writing, it has a very healthy balance sheet for a “Fast Grower”. A current ratio of 1.65 which I myself find always nice to view (I use https://www.financialstockdata.com/, but there are a lot of sites for this) In addition, Alibaba's net profit margins have been around 20% in recent years and around 15% this year (due to “Tech Chinese Crackdown”). In short, despite the government's intervention last year, still has a strong financial position and profitability, especially for a growth company.

1. Management

The management has recently started to buy back shares. In previous quarterly reports, it was reported that a buyback program of 15 billion is being made available. However, since 2014, shares have increased by 25%, so shareholders have been 'diluted' since the IPO. The share buyback is a big plus especially at this time as the share price is cheap at the time of writing (see valuation in point 6). Management, therefore, buys back shares cheaply, as a result of which you, as owner, get more of the company in your hands. In the long term, this yields returns.

Moat: Competitive advantage

Network Effects

The major competitive advantage that Alibaba has is the network effect. Suppliers and consumers (within core commerce) are both customers for BABA. Because there are a lot of customers and suppliers at BABA, customers and suppliers are quicker to choose BABA sites.

Switching Costs

Besides the network effect, Alibaba has built an ecosystem around its customers and average customer purchases have been increasing. Because of this ecosystem, it is harder for customers to switch.

1. Geschatte Intrinsieke Waarde

The following estimated net asset values are based on a Discounted Cash Flow (DCF) model, in which we assume conservative growth rates for the Free Cash Flow. Despite the conservative assumptions, we still have a large safety margin (minimum 30%). Because I can not add pictures here I explain what I have used an extra high discount rate of 13 percent for the risks and as a point to show it is undervalued. And about 14, 11, 7 percent growth rates in the good, normal and bad cases. I say about it because I use the growth rate for the first 5 years and the next 5 years after that.

Do not forget DCF's you have a lot of freedom in what you choose, that is why they can differ a lot and that is why I always do it conservatively, it gives you an idea what you should pay for a company or when it is a bit too much and that is great. But the number is not exact. You can see it more as eyeballing.

If you have any questions about what I use and do for my research, or critics or feedback feel free to put them in the comments.