This question is not easy to answer. As the most valuable technology company in Asia, BABA ranks only behind Apple Inc, Amazon.Com Inc, Microsoft Corp and Alphabet Inc-CL C, even in the global technology market. How much room for imagination can you have with such a large volume? There is no doubt that investors in heavy positions of BABA are thinking about it.

On September 28th, at BABA's 2020 Global Investor Conference (hereinafter referred to as "Investor Day"), BABA CFO Wu Wei saidAccording to the classification and summation valuation method, the market does not give due value to many business sectors in the group's overall business, whether it is new business in the core business, cloud computing, or shareholding in the Ant Group. and the value of shares in the invested company, which are not included in BABA's current market capitalization.

The implication is that the market has seriously underestimated the value created by BABA and the value of BABA itself.

BABA gave a good reason: BABA's core trading market business in the business sector made a profit (adjusted EBITA) of $29 billion over the past year, which should be worth $725 billion, even if the market gave the company a valuation multiple of 25 times the same period last year, which is close to BABA's current total market capitalization.

You know, this does not include rookies, new retail, local life, Lazada, Tmall International, Aliyun, Ant shares, a series of strategic investment companies, and so on. And almost every one of these businesses whose valuations are not included is a market leader.

In the context of better performance, BABA is seeking the correct valuation of the market. On the rise of investors, BABA further released several data that had not been released in the previous financial report to support the growth potential.

The first is the user level.

BABA announcedIn the past 12 months to June 30, 1 billion global AAC (Annual active consumers）；Among them, there are more than 800 million annual active consumers in the Chinese market and 200 million in overseas markets.

The number of active users increased in 140 million, an increase of 16.4%. This is the report card handed over by BABA at the level of the entire digital economy.

Compared with BABA's own goal, there is still a lot of room for growth in the consumer base. BABA believes that China has an estimated 1.2 billion consumer users (1.4 billion people get after excluding people over 80 and children under 10), but the current size of Chinese consumers is still more than 800m, and there is still potential for growth.

Wu Wei revealed thatBABA's penetration into China's developed areas is about 90 per cent, which is very high; in less developed areas, it is less than half, which means there is still potential for further penetration.

In the underdeveloped areas, the market sank, and BABA also laid out the layout. Jiang Fan, president of Taobao, Tmall and BABA, said on Investor Day that most of the new users in China's retail market come from the sinking market, with more than 70 percent coming from fourth-and fifth-tier cities.

The special version of Taobao, launched for the sinking market, reached 55 million MAU in August. In March this year, the app was only officially launched.

The second is the trading face.

Take Taobao Tmall, for example. Data over the past 12 months show that BABA has shown amazing resilience even after an epidemic occurred in the first half of the year.

Although Tmall online was affected in the first quarter of the relatively serious epidemic in China, Tmall online physical transactions began to rebound strongly from April to the first quarter of fiscal year 2021 (that is, the second quarter of 2020). Tmall's online physical transactions have returned to the pre-epidemic level, reaching 27%.

It is worth mentioning that not only Tmall's overall transaction scale far exceeds the growth rate of China's retail market, Tmall's several core categories, clothing, fast sales, and consumer electronics, are also significantly ahead of China's entire retail level.

Taobao has also seen a rapid rebound after the outbreak, with GMV growth of about 20 per cent in August, not only higher than before the epidemic, but also basically the fastest in the past year.

This eventually led to BABA's continued growth on GMV.

As of June 30, the total transaction volume of BABA's digital economy (GMV) reached 7.3 trillion yuan, exceeding 1 trillion US dollars. If you look at the net appreciation, it has a net increase of 900 billion yuan in just 12 months.

What is the concept of this number? Wu Wei put this figure into the total retail sales of consumer goods in China:In 2015, BABA's share reached 10%; today, even though the total consumption plate of the whole society is getting bigger, BABA's share has substantially expanded to 18%.

Combined with AAC user data, the average ARPU of annual active consumers on BABA's platform is 9000 yuan. It is equivalent to the average monthly income of Shenzhen residents.

This shows that although BABA has a large user plate, the user quality, including the transaction data created, belongs to the absolute top echelon.

Not only that, in BABA's retail platform, the retention rate of 190 million high-income groups is 98%; another 550 million consumers spend less than 7000 yuan in the whole year, including those who spend less than 2000 yuan a year. These are likely to be new consumers in the first or second year of BABA's platform, and their retention rate on the platform is about 67%. The retention rate of groups with annual consumption between 2000 and 7000 yuan is 96%, which is also very high.

BABA also released another picture showing the changes in the transactions of new users. Among them, the average consumption of BABA new users on the platform in the first year is 2500 yuan, and by the fifth year, their consumption will climb to 10000 yuan.

Apart from the ARPU value, they placed 30 orders in the first year, but increased to 93 in the fifth year. The number of items purchased increased from 7 in the first year to 19 in the fifth year.

From this set of data, we can see how the value of BABA platform is reflected in the user's transaction data step by step.

Third, on the part of merchants

BABA disclosed that there are about 3.9 million paying merchants in the Chinese retail market, and Aliyun has more than 3 million paying customers. BABA Digital economy platform provides diversified services for more than 60% of China's A-share listed companies.

A figure worth mentioning separately is the proportion of Aliyun's services for A-share listed companies.

Ali Yun revealedAliyun's customers accounted for 57% of all A-share listed companies in 2018; by 2020, it had reached 60%.The background of this growth is the rapid growth of Chinese listed companies in the past two years, and it is clear that Aliyun has outperformed the entire A-share market in this dimension.

The number of merchants served by BABA is not only increasing, but also the value provided and paid by BABA is increasing. The transition of the realization rate reflects this.

BABA's cash rate was about 2.5 per cent at IPO in 2014 and 3.3 per cent by June 2017. As of the June quarter, the overall realization rate had further risen to 4.5 per cent.

As for the change in this key data, Wu Wei stressed that it is not because of the increase in fees, but because it provides a wider range of value for businesses. BABA believes that the real driving force of revenue growth comes from creating value for customers and meeting their various business and efficiency needs.

It is worth mentioning that, as an important tool for businesses, Taobao Live, which has been widely concerned by the outside world, has also achieved rapid growth. BABA disclosed that in the past 12 months, the transaction volume of live streaming on Taobao has exceeded 300 billion, and the number of users in the studio has also increased by 160% compared with the same period last year. At the same time, merchants are more active in participating in live streaming than before, and have maintained a year-on-year growth rate of 220% of merchants participating in live broadcasting.

In addition to publishing new data and decisions on the above three areas at the group level, BABA also released some core data for each business as of June.

Online turnover of Hema accounted for 65%, and same-store sales growth climbed to 32% in the June quarter.

The volume of parcels handled by rookie bundles and rookie posts on the rookie network has increased by 110% in the past 12 months.

Overseas business Lazada has active consumers in 80 million, and the number of orders increased by more than 100% over the same period last year.

The local life service has 2.5 million active consumers, ele.me and word-of-mouth services in 290 million

Aliyun has more than 3 million paying enterprise customers, and its revenue increased by 60% in the 12 months to June compared with the same period last year.

Youku's losses have narrowed further in the past 12 months, and the number of paying users has continued to expand.

Among these businesses, what is particularly noteworthy are Aliyun and Cainiao: Aliyun will be profitable in fiscal year 2021, and Cainiao's cash flow of operating activities will become regular in fiscal year 2021.

This means that these two innovative businesses will enter a new stage after years of investment.

As the bottom of BABA's entire infrastructure, Aliyun, which has been founded for more than 10 years, has long been regarded as an example of BABA's continuous technological innovation and ultimately promoting the entire industry.

On the investor day, BABA said that Aliyun's cloud computing core capabilities are still improving, such as in network security, in high-performance networks, in databases and other core cloud products.

This makes Ali Yun's position in the industry gradually stable. According to IDC, Aliyun ranked first in the domestic public cloud market as of the first quarter of 2020.

User fees are also rising at the same time. At present, Aliyun has more than 3 million paying users, and the consumption of major customers on the cloud is also increasing year by year. Since 2018, the average income per customer (ARPU) has reached a compound annual growth rate of 40%.

This will eventually lead to a profit for Aliyun in fiscal year 2021.

BABA also said that China's cloud computing market has huge growth potential, and Aliyun will reap huge dividends from it.

Rookie is another example of BABA's long-term growth through long-term innovation and resource investment.

Cainiao has been promoting the digital upgrading of the express logistics industry. Four years ago, Cainiao launched a digital package solution based on electronic noodles. So far, this solution has reached a penetration rate of 80 to 90 percent and has almost become an industry standard.

Wan Lin, president of Cainiao, said that on this basis, Cainiao is still further upgrading the ability of the entire electronic noodle to use more advanced IoT technology for the next generation.

To this end, Cainiao has been in the entire express logistics industry for a comprehensive layout.

Among them, as Cainiao's AI+IOT-based digital package management center, Cainiao post stations have set up more than 80, 000 nationwide as of July 31; as of June 30, the number of packages at Cainiao post stations has increased by 110% compared with the same period last year.

Cainiao's digital crowdsourcing platform, Cainiao, ushered in a 70% year-on-year growth as of June 30.

In addition, rookies are also actively positioned in foreign supply chains and global logistics networks. In the end, Cainiao achieved 54 per cent year-on-year revenue growth in the first quarter of fiscal 2021 (the second quarter of 2020) and narrowed its overall loss by a further 35 per cent in the 12 months to June 30.

There is a saying in BABA that we call tracked development, that is, we will always work for today, invest for tomorrow, and hatch for the day after tomorrow. We usually spend 8-10 years to incubate, train and help a new business grow, "said Zhang Yong, chairman of BABA's board of directors. The new milestone of Ali Yun and Cainiao reflects the result of BABA's continuous innovation and long-term investment.

Wu Wei stressed that BABA's future-oriented investment and layout have enabled the company to achieve multi-engine growth, and the new business will become the main driver of BABA's income growth. New retail and direct business accounts for 18% of total revenue, rookie 5%, local living services 5%, and cloud computing has increased to 8% of total revenue. BABA's overall income structure has changed significantly, which highlights BABA's ability to serve consumers and businesses more systematically as a digital economy.

The last section that fully shows the value of BABA is BABA's investment.

Wu Wei disclosed on Investor Daily that as of June 30, net cash flow was $36 billion and the total value of strategic investments was $45 billion. These are measured in terms of fair value. Excluding ants, BABA's portfolio is worth $45 billion based on the publicly traded value of the invested company.

BABA divides his investment strategy into three parts:

The first is to invest around the core strategic business.For example, Ant, Cainiao, Alibaba Health Information Technology and BABA have respectively made additional investments in the past year, increasing their shareholdings in these companies.

The second is to strengthen the core business through investment.Such as getting new users and improving the user experience. BABA said the acquisition of koalas is to consolidate BABA's leading position in cross-border e-commerce and to invest in express delivery services to enhance consumers' logistics experience.

The third is to invest in new areas that may play an important role in BABA's long-term development.For example, invest in the electric car industry, including XPeng Inc.; also invest in the real estate industry, as well as NetEase, Inc Music Cloud.

The continuous increase of the three pieces of investment is constantly helping BABA strengthen his moat. In particular, Ant Financial Services Group, who is about to appear on the market, is very likely to bring a greater increase in value for BABA's investment plate.

In addition to analyzing the current intrinsic value of BABA Group, BABA also provides investors with forward-looking guidance on the future.

Wu Wei disclosed for the first time that BABA has spent more than 100 billion yuan on technology and research and development every year in recent years.

The scale of such technology investment occupies an absolute leading position in the industry, which also shows BABA's distinct attribute of a technology company. The continuous increase in technology investment has become a solid support for driving the long-term value growth of BABA, and it is also deepening BABA's commercial moat.