Friday, June 23, 2017

Finding inner peace in Dharamsala..... and thoughts on the Alibaba 20F....

Well, the overwhelming response to my last post was "hey...we want to see some pictures!"

As you all have hopefully come to know, I try to give my readers what they want....so without further ado, I've posted a few pictures, categorized by topic which, I believe, will give you a thumbnail sketch of what it might be like to be an exiled Tibetan living in Northern India, as seen through the eyes of an Ohio Insurance Salesman.  Sounds like a Pulitzer-worthy plot in the making to me...... 


Wildlife

The pictures below illustrate the abundance of animal life indigenous to Dharamsala.  Everywhere you turn there are Cats (on hot tin roofs), horses, donkeys, oxen, cows, sheep and the ever present and mischievous "Himalayan Squirrels" (aka monkeys).  These creatures are everywhere, seamlessly living alongside humans, fully integrated into the daily life of the populous, with their apparent, sole earthly purpose being to obstruct traffic as much as possible.
    

Food


The food was as flavorful as it was interesting.  The emphasis was on vegetarian cuisine with non-veg options, generally lacking the size and heft of a typical US serving.  Meat just isn't that big of a deal. Since Dharamsala often plays host to Americans, Europeans and other tourists and world travelers, the menus vary with sometimes odd, unexpected combinations and fusions showing an international flare.  German, French Italian, Indian and Tibetan dishes are relatively common on the same menu. As you might suspect, good Mexican is hard to find.  One of our dinners consisted of several main dishes,   Thukpa, Chow Chow, Biryani and Yak meatball marinara over linguine.  Yummmm...

Alcohol, unfortunately, is just not all that popular. Although there are lots of King Fisher and Taj Mahal beer signs and billboards, oddly enough, the only beer we could locate consistently was Tuborg, a Danish beer.  I also noted that "English Wine" is very popular.  The varietals clinging to the Dover Cliffs in the fog must be spectacular, a hidden treasure....who knew?  When I asked a shopkeeper about a particular bottle, hoping for some insight from our presumed Tibetan Sommalier, he said, in broken English..."it's made from grapes....I think...".  All in all, the food was as flavorful (and sometimes spectacular) as it was economical.  A very nice dinner for two, including wine/drinks would cost roughly US$25.  Breakfast for two, Indian, Tibetan or US/European, eggs, rice, pancakes, potatoes, coffee, etc. would cost about $5.00....again for two people.  



Culture....without "Revolution" ....


Note the Dalai Lama's business card.  My version of the story is that we were "that close" to getting an audience, but we were bumped by Nancy Pelosi's delegation. My wife says that HHDL had no intention of meeting with us and they were just humoring me.  Of course, I like my version of the story better.  The pictures to the left are from the Dalai Lama's residence/temple, the Tibetan Museum describing the plight of the dislocated Tibetan Government and the English churches (St. John's, etc.) and monuments still in existence documenting, literally in stone, the days of British rule circa mid-1800's. There's also a picture of a cricket match (bottom middle) between Buddhist Monks.  As far as I could tell, the bald monks in the maroon and saffron robes were beating the other bald monks in maroon and saffron robes by a small margin.  They were apparently several days into the match with no end in sight.  

Commerce

India is an incredible, thriving, cauldron of all types of  commercial devices (sometimes ill-advised) woven into a tapestry of business activity.  Some of my favorite examples are Kumar Capital, a global enterprise marketing mutual funds, retirement plans and insurance, operating out of a roadside stand.  (I believe they also sell Samosas.)  The Executive Palace, "a nice place to stay - committed to corporate people".    We often stumbled upon food stands in the middle of nowhere, along steep rocky trails, where the proprietor would have to climb up several thousand feet every day, carrying the days inventory replenishment on his back.   Businesses are often combined to offer synergistic marketing/retail opportunities.  "Scooter Repair", "Beauty Parlor" and "Fresh Goat Meat Emporium" operating out of the same retail space would not be uncommon.


Note the young man delivering several refrigerators by bicycle below.  I'm not sure if he's calling for directions or quitting his job....my guess would be the latter.  Also note that Buddhist Monks are apparently huge Cleveland Cavaliers fans based on the display in this little shop in McLeaod Ganj.  I didn't see any Warriors memorabilia anywhere.  Apparently the Dalai Lama is a big fan of Lebron James.  Big hitter the Lama.....so we got that going for us.






































Also note the two guys on the scooter above either delivering, or stealing, several thousand pairs of Hanes underwear.  Most likely India's E-Commerce ecosystem in action.



The Airport isn't exactly state of the art.....but the view is much nicer than the tarmac at Newark.

Finally.....my favorite....they even have a Blooming Dales!




Anyway, the people of India, Tibet and China are the hardest working, most industrious souls I've ever encountered.  On our hike up Triund Hill, I met a man who was working on the trail, installing fence posts and building rock walls by hand, chipping away at the Himalayas with his sledge and chisel one swing at a time, just to cut a piece of rock that would fit in the wall or support the fence post.....a virtuoso with a sledge hammer.  He was probably about 60 years old and he made the hike up to this particular job site at about 8,000 ft. every day, carrying his sledge and chisel.  He had been doing this work for years and presumably was paid only a few Rupees a day to do it.  Speaking as an American employer, I have to say that I'd most likely have a hard time keeping this position filled.

Now for some Real Fun!

In my last post I made some bold predictions re: Alibaba's year end numbers just prior to the Investor call, presentation and release of the 6-k.  So let's see how I did:

  1. Based on past projections, I predicted GMV would come in at 4.1 Trillion RMB. (US$600 Billion) The actual came in at only 3.7 Trillion RMB (US$547 Billion).  I was way off here. They only had 22% YOY growth in GMV.  I guess I was overly optimistic.  My obvious error in thinking, was, I presumed that when you are "just makin' shit up" that the ratios would hold and the numbers would, of course, be awesome! That just wasn't the case here.
  2. I predicted Revenue would come in at US$22 Billion (3.5% of GMV).  I was pretty close here. Actual came in at $22.9 Billion, a 56% YOY increase.  This also explains where I went wrong with the GMV figure.  Revenue suddenly jumped to 4.2% of GMV!  Even though their GMV growth has slowed substantially, I didn't take into account the enormous, surprise growth in transaction profitability.  You would think that GMV and revenue growth in this "law of large numbers" business would track like they were on rails, but oddly, they are way off.  Again....I missed that badly.  My bad.
  3. I also predicted Share Based Compensation (SBC) would come in at 12% of Revenue or $2.5 Billion. Again, I nailed that one on an absolute basis, actual came in at $2.6 Billion (but only 10% of revenue, again due to the huge profitability up-tick).   
  4. I predicted that "Questionable Assets" (Goodwill, Intangibles, Investment in Investees & Land Use Rights, etc.) would approach $47 Billion (75% of the Balance Sheet). Again, here I was way off.  I had assumed that the Alibaba Finance Department would work the same accounting magic they did last year (a $7 Billion write-up/revaluation) and conjure up some "deemed disposal" gains and valuation write ups.  Although Questionable Assets came in at a respectable US$43.0 Billion, up from US$32.6 Billion last year (...and roughly US$0.0 Billion in 2014 just three short years ago), they comprised only 58% of the Balance Sheet.  Sadly, the Alibaba Finance Department has clearly fallen down on the job.  If I were a shareholder I'd be up in arms, clamoring to claw back some of their share-based compensation in light of their inability to calculate sufficient fake write ups.  It's inconceivable to me that these so-called professionals can't even come up with a few billion in fake gains when the chips are down.  My God, the whole world is watching and these neophyte bookkeepers have run out of ways to goose earnings?   Fire 'em all. Complacency is the handmaiden of incompetence.
Not bad for a start.....but wait....there's more!

Now that the 20F has been issued (Filed Thursday 6/15/17), it's time to really dig into the slimy underbelly of this business. I spent the last couple of evenings leafing  through the 323 pages of mostly irrelevant, incomprehensible, made-up-crap that comprises this filing.  I have to say, that some of the information presented is actually financial-comedy gold.  To digress, I really miss the family photos and heart-warming Horatio-Alger-esque storytelling that was seamlessly woven into the IPO filing.  But on the plus side, unlike the IPO, I couldn't find any obvious math mistakes, disappearing shareholder's equity or typos.... so it looks like they actually took some time to proof this years 20-F masterpiece.  Kudos!

Consolidated Operating Units

This line appears inconspicuously on page 111 of the filing.

"We conduct our business operations across approximately 630 subsidiaries and other consolidated entities."

Here's the same reference from page 102 of the 2016 20-F. 

"We conduct our business operations across approximately 330 subsidiaries and other consolidated entities." 

I'm actually hoping this is a typo.  Did they really open/start/buy/staff one new, material, consolidated business entity nearly every day during FY 2017?  How and why would they do something like this? I'm aghast.  On the other hand, knowing how Alibaba's accounting team works, it could just be another typo.  It's difficult to produce 300 pages of drivel and get it grammatically and mathematically correct, so I'll cut 'em some slack.

When you combine the above with the next statement from pg 183 we see another incredible growth spurt.

"As of March 31, 2015, 2016 and 2017, we had a total of 34,985, 36,446 and 50,097 full-time employees, respectively. Substantially all of our employees are based in China."

The footnote indicates that the 40% growth in FTE's occurred due to the Lazada and Youku Tudou acquisitions.  Even if each of the 300 newly created businesses had only 50 employees each, that would increase head count by 15,000.  So apparently, these 300 new businesses had relatively few employees (if any).  My guess would be that these "fly-under-the-radar" businesses were created solely to transfer cash (shareholder equity) to insiders, launder money and/or get cash out of the PRC.  Of course, this is only a theory, I'm not directly accusing anyone of any wrongdoing here.


Audit Fees 

I've long opined that even the best Auditors have absolutely no prayer of catching a well conceived fraud (Enron, World-Con, etc.). They usually aren't staffed to catch it, they rely on management's (usually fraudulent) representations and have little or no real contractual liability or incentive to put forth the effort to figure it out.  Moreover, many foreign auditors operate as independent franchises of a well recognized name (PWC, E&Y, et al.).....very much like a McDonald's or Burger King operator. You can sue the restaurant operator out of business....but the franchiser walks away unscathed.  When you add incentives like impunity from US Prosecution, Civil Penalties and SEC & NYSE Sanctions, it's easy to see how the auditors rubber stamp machine might kick into high gear for the right fee structure.  Why spend time, effort and money verifying internal controls, sampling transactions or challenging the adequacy or accuracy of management representations if there's no penalty for failing to do so? Besides, if you get too curious you might just get fired and lose your fat audit fee.  Someone else is ready willing and able to step in and do what they are told.....so why rock the boat?    

Speaking of fees Alibaba's Audit & Audit Related Fees were $8.2 Million FYE 2017 compared to $6.8 Million last year.  To me, this seems like a paltry sum to audit an international juggernaut, growing at 50% a year, with tens of billions of transactions through more than 600 operating (300 of them are brand new) subsidiaries and related parties, scattered all over the globe from mainland China to the Caribbean. By comparison, Amazon's and Apple's Audit and Audit Related fees were $16.4 Million and $14.2 Million Respectively.  As I've said over the years, the PWC HK Audit staff is about the same size as is required to audit a large US car dealership.  (i.e. AutoNation's Audit Fees were $3.2 Million last year....with no foreign transactions or travel.)  Either the Alibaba/PWC auditors are so efficient that they can audit an arguably much more complex, far a-flung business in half of the time, or the Hong Kong office is working at a deep discount. A third possibility is that they're just collecting a fee to write their opinion letter and don't do much work at all.  In any case, Jack, as always, is getting an incredible deal!


The SEC Investigation - p 201



Pending SEC Inquiry

In early 2016, the SEC informed us that it was initiating an investigation into whether there have been any violations of the federal securities laws. The SEC has requested that we voluntarily provide it with documents and information relating to, among other things: our consolidation policies and practices (including our accounting for Cainiao Network as an equity method investee), our policies and practices applicable to related party transactions in general, and our reporting of operating data from Singles Day. We are voluntarily disclosing this SEC request for information and cooperating with the SEC and, through our legal counsel, have been providing the SEC with requested documents and information. The SEC advised us that the initiation of a request for information should not be construed as an indication by the SEC or its staff that any violation of the federal securities laws has occurred.

Here's the verbatim footnote from the 2016 20F - pg 188

Pending SEC Inquiry

Earlier this year, the SEC informed us that it was initiating an investigation into whether there have been any violations of the federal securities laws. The SEC has requested that we voluntarily provide it with documents and information relating to, among other things: our consolidation policies and practices (including our accounting for Cainiao Network as an equity method investee), our policies and practices applicable to related party transactions in general, and our reporting of operating data from Singles Day. We are voluntarily disclosing this SEC request for information and cooperating with the SEC and, through our legal counsel, have been providing the SEC with requested documents and information. The SEC advised us that the initiation of a request for information should not be construed as an indication by the SEC or its staff that any violation of the federal securities laws has occurred.


Cut and paste? Really? No additional details? Couldn't they have at least changed the wording?

I might proffer that the SEC, not unlike the little boy caught with is hand in the cookie jar, has fully grasped the gravity of its epic regulatory screw-up and is frantically looking for a politically acceptable, relatively painless way to get out of this mess.  The SEC is loaded with really smart people.  I'd find it difficult to believe that nobody over there sees what I'm seeing.  Most likely, they are in full "what did we know and when did we know it?....gotta save our jobs....who's gonna take the fall for this?..." mode.



Investees


I've always enjoyed the term "Investees".  It perfectly describes the "thing" that an investor invests in. Investors, of course, invest in Investees in pursuit of earnings.   Regarding Alibaba's Investee performance thus far, as they have piled up losses at a staggering and accelerating clip, losing US$730 Million in FYE 2017, these businesses look more like losers than Investees.





Alibaba Pictures - Carrying Value vs Stock Price

The footnote on page 160 describes how and why the company is maintaining a carrying value for their 49.5% interest in Alibaba Pictures that's US$2.1 Billion greater than the market value of the stock.  Management lists several bullet points as to why they are not "marking to market", as would be required by US GAAP.  


As of March 31, 2017, the carrying value of our investment in Alibaba Pictures was RMB30,102 million (US$4,373 million) and the difference between the market value and the carrying value amounted to RMB14,487 million (US$2,105 million)........We believe that the decline in market price of Alibaba Pictures is primarily due to its loss position and limited awareness among investors of its long term business prospects. After assessing relevant positive and negative evidence, and considering that we have both the ability and intent to hold this investment, we determined that the decline in market value against its carrying amount was not "other-than-temporary."

Feel free to read the  bullet points and footnote, but I'll paraphrase here using the Dick Fuld Bankerspeak Translator (BST):


  • We used GAAP ASC 810 to write it up in 2015, but we don't think ASC 810 applies now that it's lost value...interestingly, the only time we've ever followed GAAP in these financial statements is when it allowed us to book this huge gain!
  • Hey...the stock price will come back.....it's early!  Give it time!
  • Alibaba Pictures is a Market Leader....our executives know Tom Cruise personally....it's worth more because it is!
  • Things are looking up!...we hired some new guys to run this money-sucking mess...
  • We hired an expert to value the business....and after he cashed our check he said that our valuation is spot on!
  • Finally.....drum roll.......other Investors just don't get it!....they are morons!
Now, here's what happened....back in 2014 we bought this goofy little movie company for about US$700 million, then, like we always do, we issued more shares to a few of our cronies, with some quid-pro quo stop loss guarantees that we may have forgotten to mention to our auditors and accidentally left out of the two 20-F's we issued since the deal.  Once we issued the shares at the inflated/fake price we were able to write up the value of this POS to US$4.3 Billion and book a US$3.6 Billion GAIN!  AWESOME!.......unfortunately when we de-consolidated, the haters bailed on the stock (HK:1060) and drove the price back down, probably because of the huge losses this dog keeps posting. Today it's a penny stock trading at about US 18 cents a share in Hong Kong.  For this years 20-F our pain-in-the-ass auditors really wanted to write this pig down,....jeeeezzzusss....so we had to increase their fees a few hundred grand and talked them into just burying this footnote on page 160 where nobody but some a-hole insurance agent from Ohio will see it.  

As a former auditor, I can recall many a client meeting where management argued passionately that pallets of dust-covered, obsolete, inventory would be flying off the shelves someday soon, and the rat infested, semi-vacant warehouse this junk was stored in was actually cleverly disguised prime real-estate that they were just holding onto for investment purposes until they could unlock its inherent intrinsic value that, for some reason, only they could see.   

The point is that as of 3/31/17 there is a locked-in US$2.1 Billion loss that should have hit the income statement, but it didn't.   (FASB Accounting Standards Update - 2016-01)  Apparently, the only thing that kept this loss from hitting the bottom line was PWC's lack of testicular fortitude. 




















Note the spike in April of 2015 when they set the value of this Investee.  It hasn't come near that price in two years.  The decline doesn't look all that temporary to me.


Alibaba Health....more of the same

Let's take a minute to examine the nearly unreadable Note 4(h) on pg. F-47.  This note is a masterpiece in that it randomly switches between topics, buzz-words, currencies and accolades without actually disclosing anything relevant.  Here's an example of what we have to work with:

Such control is important for the Company to execute its digital and data-driven healthcare strategy through Alibaba Health as its flagship vehicle in this sector, indirectly benefiting all shareholders including Yunfeng economically. 

Poetic, isn't it?  So now, just for fun, let's run the nearly unreadable Note 4(h) pg. F-47 through the BST and see what we get:

In April of 2014, we (Alibaba and Yunfeng...Jack's piggy bank) decided to jump into the Health Care Technology arena by purchasing a chunk of Citic 21CN, even though we knew nothing about healthcare, for about US$100 million, changing the name of the business to Alibaba Health Information Technology, Inc. (HKG: 0241) The company thumped along at about 5.00 HKD per share until the spring of 2015, when we did a couple of those quid-pro-quo, guaranteed, stop-loss deals which drove the share price up over 10.00 HKD.  

With opportunity staring us right in face, in July of 2015 we concocted a plan where Yunfeng unilaterally and irrevocably gave up it's voting rights so we could exercise "control" and consolidate this mess on our balance sheet.  Just like Alibaba Pictures, we were able to value our 38% share of this dog at US$2.8 Billion booking a gain of US$ 2.7 Billion based on the share value traded on the Hong Kong Stock Exchange.  We are financial wizards!

Fast forward to March 31st 2017 and we note that that the $2.8 Billion Carrying Value is a tad higher than the US$1.4 Billion market value of the stock.  We locked another US$1.4 Billion gain on the balance sheet forever and the auditors didn't even make us footnote this one or rationalize why we didn't book a huge asset impairment.       

Hmmmm.....I think I'm starting to see a pattern here. Yunfeng Capital (Jack's Piggy Bank) is described on pg. 197 of the filing. Yunfeng is a sort of hybrid private equity, hedge fund, money management company which invests the life savings of hard working, naive Chinese people in whatever boondoggle Jack thinks might boost Alibaba's fake asset values. Yunfeng has been involved as a partner in nearly all of the acquisitions made by Alibaba over the last few years. Koubei, Youku Tudou, Alibaba Health, Alibaba Pictures, Pony Media, YTO Express, Huayi Brothers, etc. Oddly enough, nobody seems concerned that Yunfeng, controlled by Jack, is continually participating in these deals. Of course there are lots of other usual suspects, more than willing to take some "off the books" guarantees to take a seemingly odd position or two in some occasional Jack Ma financial theatrics. Various Sovereign Wealth Funds, Softbank, Silver Lake, CDH Investments, Yunfeng Capital and Primavera (veggie pasta) Capital, et al. all seem to be willing conspirators if the price is right. Could you imagine the uproar if Warren Buffett, Jamie Dimon, Jeff Bezos or Elon Musk announced that they were setting up investment funds which would siphon shareholder capital away from their respective companies solely to pump up the fake values of boondoggle investees and book the resulting fake valuation gains? (Of course, I'm not directly accusing anyone of any wrongdoing here......I'm just making a few observations based on this particular 20-F)




















Again, note the spike in April of 2015.  Looks familiar?.

"Arms Length" Transactions



Now let's take a few minutes to discuss how Alibaba expertly shifts cost from their balance sheet by 1.) billing services to affiliates; and 2.) Negotiating below market rates for transaction processing (Alipay).  Let's examine the schedule and footnotes on page F-89.





Let's take footnotes i, ii, iv and v .....one at a time.....

Footnote i....

(i) In 2011, the Company entered into an Intellectual Property License and Software Technology Services Agreement with Alipay whereby the Company licenses certain intellectual property and provides certain software technology services to Alipay in exchange for a royalty fee and software technology services fee in an amount equal to the costs incurred by the Company in providing the software technology services plus 49.9% of the consolidated pre-tax income of Alipay and its subsidiaries (Note 4(b)), effective from December 2011. In 2014, the Intellectual Property License and Software Technology Services Agreement was terminated and the Company entered into the amended Alipay IPLA with Ant Financial Services. Under the amended Alipay IPLA, the Company receives the Profit Share Payments amounting to the sum of an expense reimbursement plus 37.5% of the consolidated pre-tax income of Ant Financial Services, subject to certain adjustments (Note 4(b)), effective from August 2014.

Royalty fee and software technology services fee under the Intellectual Property License and Software Technology Services Agreement and the Profit Share Payments were recognized in consolidated income statements, net of the costs incurred for the provision of the software technology services reimbursed by Alipay. The amounts reimbursed by Ant Financial Services to the Company were RMB486 million, RMB274 million and RMB245 million for the years ended March 31, 2015, 2016 and 2017, respectively.


I hope you didn't bother to read all of that, but if you did, I know what you are thinking......why do they write like that? What the hell are they jabbering about? If you have the stomach for it, feel free to read the above referenced "Note 4(b)" as well since it's critical to understanding what they are doing . With the aid of our patented, Dick Fuld Banker Speak Translator (BST) here's what they are actually saying:


"We had to get costs off of our P&L so we came up with this cockamamie Profit Share Agreement with all sorts of undefined, undisclosed offsets so nobody can actually figure out how profitable Alipay & Ant actually are (or aren't). The combined income/credit we received was 2.086 Billion RMB this year, but we won't disclose how much of it is the 37.5% Profit Share and how much of it was reimbursed Expenses or 'other' as defined in Note 4(b) ....That way we can book whatever level of net income we feel like...When we've pissed away all of our cash and we need to do another funding round, we'll do the Alipay IPO. But then we'll have to come up with yet another place to keep all of the financial crap associated with this swamp.... Like they say, when you're selling your farm, make sure the cow shit is in the back of the barn."

Now let's take a look at footnote ii, the SME

(ii).....The Company entered into software system use and service agreements with Ant Financial Services in 2014. In calendar years 2015 to 2017, the Company received or will receive the SME Annual Fee equal to 2.5% of the average daily book balance of the micro loans made by Ant Financial Services and its affiliates. In calendar years 2018 to 2021, the Company will receive the SME Annual Fee equal to the amount paid for the calendar year 2017 (Note 4(b)).

From the above we can calculate that the Average Daily Book Balance of Micro Loans made by Ant Financial and Affiliates rose from US$ 523 Million (90/.025/6.88) to US$ 4.924 Billion (847/.025/6.88) in just two years. I'm sure the quality of these loans is AAA+.... rock solid.

Footnote iv.....

(iv).......The Company also has other commercial arrangements, treasury management arrangements and cost sharing arrangements with Ant Financial Services, its subsidiaries and affiliates as well as Koubei on various sales and marketing, cloud computing, treasury management and other administrative services.

(BST) Translation of Footnote iv: "Again, we need to goose earnings so we bill out commissions, cloud computing fees, Treasury Management Services and other fees to our affiliates. It works great! We can move costs out of our business at will!  In FY 2017 we billed out 1.294 Billion RMB (US$ 188 Million) in fees. It's really weird that only two years ago, none of our affiliates needed any of these services...but now they do! Awesome!"

Footnote v....

(v)......The Company and Alipay, among others, entered into a commercial agreement in 2011 whereby the Company receives payment processing services in exchange for a Payment Processing Fee (Note 4(b)), which was recognized in cost of revenue.


The law of large numbers seems to be more of a guideline than a law when it comes to this footnote. If we calculate the ratio of processing fees to GMV we see a significant decrease from 0.17% of GMV in 2015 & 2016 down to 0.15% in FY 2017.



As an aside, less than 2 tenths of a penny on the dollar would seem to be a really tiny processing fee. Paypal for example, collects roughly 5 tenths of a penny on every dollar of GMV.  Again, Alibaba management seems to have negotiated an amazing deal!  Somehow they managed to get Alipay to process billions of transactions presumably below their cost....boosting earnings by the same amount!...genius!

The schedule on pg F-89 illustrates, as much as any other, the relentless effort that Alibaba Management will put forth to shift costs (through agreements, fees, shared services, etc.) to other off-balance-sheet, controlled/related businesses and minimize major expenses (processing fees) solely to dress up the financial statements and paint a picture of a flourishing business when nothing could be further from the truth.

Significant equity transactions, restructuring transactions, mergers and acquisitions and equity investments 

The above heading is actually one "roll off your tongue" topic under Note 4.  Note 4(c thru ae) describes all of the unique deals, structures and devices Alibaba has used to build its e-commerce ecosystem over the last few years. According to the footnote the company spent US$33.9 Billion purchasing portions of 28 separate businesses along with an undetermined number of "other" businesses as described in footnote "m".  The general modus operandi with these transactions is to purchase shares in step transactions, revaluing the previously purchased shares as new funding becomes available at higher per share price.  These magic machinations have produced gains of US$7.3 Billion since the IPO.

As John Laing puts it, these gains are "forever locked in amber on the balance sheet".

Although the company has booked huge valuation gains on these businesses they are, without exception, as far as is recorded in the financial statements, all losing boat loads of money.  We can presume that if any of these quixotic adventures were actually making money and had legitimate earnings that it would be trumpeted from the highest mount.

Again referencing the the schedule on page 142, we see the summary data describing the company's share of losses incurred at Koubei, Youku Tudou, Cainiao Network and "others" totaling US$730 Million in the last year, nearly tripling the losses incurred in FYE 2016.


Continuing the theme, on Note 13, Schedule F-82 below we see that for the first time since the IPO the company has deemed its investments to be "Significant" under CFR Rule 4-08 (g) of Regulation S-X. Interestingly, as far as I can tell, this is the first and only time that Alibaba Management has ever referenced the US Code of Federal Regulations in any of their filings. We note that these Investees, in aggregate lost 6.743 Billion RMB (US$1 Billion). The Operating Loss was actually worse at a 9.071 Billion RMB, the difference is most likely due to more "gains on deemed disposal" accounting magic.

We also see that the Aggregate Balance Sheet for these Investees has ballooned from virtually nothing prior to the IPO to 260.744 Billion RMB (137,900 + 122,844) or roughly US$37.8 Billion. That's a ton of money losing assets to acquire in just three (3) short years. I wonder if they are all properly valued? The accountants for all of these little consolidated businesses wouldn't have the political clout or authority to overstate asset values like Alibaba has been able to do with Alibaba Pictures (HK:1060) and Alibaba Health (HK:0241) .....would they?







When we look at the Schedule in Note 13 Below, we see that the company is recording their share of the aggregate loss at 30.7% (2,074/6,741).  So since the company is a 30.7% owner of the aggregate businesses, we conclude that 30.7 % of the book value is equal to 47,589 Million RMB.  ((137,900 + 122,844 - 93,354 - 12,375) x .307)  I find it really interesting that somehow, if we examine column two, the "Equity Method" column on Note 13, Alibaba seems to be carrying these money losing, newly-created businesses on the books at nearly double their book value.  (84,964/47589 = 180%). Not unheard of, but a detailed explanation/analysis might be nice.  


















What we have here:

  • Aggregate Assets for these Businesses is about US$38 Billion (137,900 + 122,844)/6.88. increasing nearly four fold from the prior years value. 
  • The combined operating losses amounted to US$1.3 Billion , up from roughly zero prior to the IPO. 
  • The Net Loss for these businesses was roughly US$1 Billion, including a "below the line" accounting/valuation profit of $300 million that has come to be a trademark of Jack Ma run businesses. 
Management Comments on the Above:
"As of March 31, 2017, the aggregate carrying amount and market value of the equity method investments that are publicly traded amounted to RMB 67,767 million and RMB 67,793 million, respectively."

BST Interpretation - We chose not to provide a simple schedule comparing carrying value to market value as of year end, by ticker symbol because that would make it too easy for you to follow and probably really piss you off. Instead, we buried snippets of information within the bowels of these 300 plus pages so that it would take a forensic accountant a few days to get some idea as to what the hell is going on here. Oddly, we know that the carrying value of Alibaba Pictures and Alibaba Health is US$3 Billion higher than their market value, so we must own a bunch of other publicly traded equity method securities that have appreciated, and we are carrying them on the books at US$3 Billion below market to make up the difference (67,767 vs 67,793)....but, because we are really ultra-conservative, we aren't going to tell you what these securities are.  There are also RMB 17,197 in non-publicly traded, equity method investments (84,964 - 67,767) which we're not even going to talk about.

"As of March 31, 2016 and 2017, the cost method investments with an aggregate carrying amount of RMB 9,223 million and RMB 17,273 million have appreciated in value and the Company estimated the fair value to be approximately RMB25,639 million and RMB46,351 million, respectively. As of the same dates, for certain other cost method investments with carrying amounts of RMB 24,041 million and RMB 18,131 million, the Company identified no events or changes in circumstances that may have a significant adverse effect on the fair value of the investments and determined that it is not practicable to estimate their fair values, respectively."


BST Interpretation - Note the "March 2017 Carrying Value" items highlighted in Red above don't match the schedule (103,171 vs 120,368), so there's still 17,197 non-publicly traded equity method investments MIA, probably just another typo, but lets move on. So we have roughly $US 17.5 Billion of "Investees" carrying value on the books and we've already determined that US$3 Billion should have been written off (Alibaba Pictures @ US$2 Billion and Alibaba Health @ US$1 Billion) because these businesses are carried on our books at a value well above the publicly traded stock price . And now we also want you to believe that the remaining businesses, losing hundreds of millions of dollars a year have actually gained tremendous value since we bought them, (RMB 46,351 - RMB 17,723).....or put another way, roughly US$7.3 Billion as evidenced by the above "Gain on sale and deemed....yada...yada..." ....Finally, OF COURSE we haven't identified any "adverse events"....like with Alibaba Pictures and Alibaba Health, even when Mr. Market tanks their stock more than 60% for over two years that's no cause for alarm.....all is well.


Alibaba Shareholders......taking it up the Wasu.....

I've discussed this a bit in prior posts (June of 2016 for example), but to me, the loan guarantee to Simon Xie is the poster child for corporate self-dealing. Here's the language from the 20-F.
Note F61 - Pledge for the Benefit of and Loan Arrangement with a Related Party

In May 2015, we entered into a pledge with a financial institution in the PRC in connection with certain wealth management products with an aggregate principal amount of RMB7.3 billion we invested in to secure an RMB6.9 billion financing provided by this financial institution to Simon Xie, one of our founders and an equity holder in certain of our variable interest entities, to finance the minority investment by a PRC limited partnership in Wasu, a company listed on the Shenzhen Stock Exchange and engaged in the business of digital media broadcasting and distribution in China. In addition, we entered into a loan agreement for a principal amount of up to RMB2.0 billion with Simon Xie in April 2015 to finance the repayment by Simon of the interest under the financing. These arrangements strengthen our strategic business arrangements with Wasu to enhance our entertainment strategy. Our loan to Simon will be made at an interest rate equal to SHIBOR as specified by us from time to time and is repayable in five years. The loan is secured by a pledge of Simon's limited partnership interest in the PRC limited partnership. As of March 31, 2017, the balance of this loan was RMB749 million (US$109 million). We have entered into strategic cooperation agreements with a major shareholder of Wasu in order to enhance our capabilities and influence in the entertainment sector in China. A company controlled by Jack Ma serves as one of the general partners of the PRC limited partnership. Yuzhu Shi, the founder, chairman and a principal shareholder of Giant Interactive, a China-based online game company that was previously listed on the New York Stock Exchange, and who is also an entrepreneur with significant experience in and knowledge of the media industry in China, serves as the other general partner. Jack, through his control of one of the general partners, and Mr. Shi, as the other general partner and the executive partner, jointly control this PRC limited partnership. The interest of the general partner controlled by Jack in the limited partnership is limited to the return of its RMB10,000 contributed capital.


BST Interpretation - "Ok...here's what we did.....the SEC came down on us pretty hard in their 8/12/2014 Correspondence telling us that if we make a billion dollar loan directly to Simon Xie, Jacks buddy and former director, to start a partnership (Hangzhou Yunxi Investment Partnership Enterprise L.P.) with Jack, to bail out Wasu, that we would be in violation of US Securities Law. The other partner, Yuzhu Shi, who was run out of the NYSE in a flurry of lawsuits after screwing over US Shareholders with his sham Giant Interactive stock swindle was, problematic as well. Shit....back to the drawing board. So we called a banker friend (which we won't disclose in the filing) and bought a bunch of his dog-shit WMP's that he wanted to get off their books. He said he could use the WMP's as collateral and loan the money we paid him to Simon. The banker had collateral and Simon got the loan. Problem solved! But....oh crap.....Wasu is losing so much money that it can't pay Simon to service the bank debt, so we had to set up a RMB 2.0 Billion credit line to Simon so he could pay the interest on the loan.....he's only used about a third of it (RMB 749 Million) so we should be ok for another year or so before it hits the fan. To be honest this is turning into a bit of a cluster fudge (this is a typo) because when we did the deal the Wasu stock was trading at HK$45+ and now it's bumping along at about a third of that value and has been for quite a while. So we'll be hitting the bricks looking for more funding (sucker money) soon." 




























Buddy ....can you spare a dime.....

20-F - page 32 - We have issued an aggregate of US$8.0 billion unsecured senior notes. We have also entered into a five-year term loan facility of US$4.0 billion. In addition, in April 2017, we replaced our US$3.0 billion revolving credit facility with a new US$5.15 billion revolving credit facility. 

Note F-19


If you recall, the IPO was initially accelerated because Alibaba had maxed out their bank credit lines (US$ 8 Billion) and they had to raise funds.  The US Banks wanted out. Alibaba could have started siphoning/borrowing money from Ant Financial and other controlled Money Market Funds, but that might cause a few raised eyebrows from Chinese regulators.  Thanks goodness that the ever creative US Investment Bankers, knights in shining armor riding to the rescue, concocted the IPO which got them off the financial hook for the future bad loans and generated some huge underwriting fees to boot ....effectively killing two Pandas with one well placed stone.

Now they've gone and done it again.  Although the credit facilities haven't been fully drawn down yet, you can bet that the money will be spent soon.  Financial planners will tell you that once you start using cash advances from one credit card to make the minimum payments on your other credit cards that it rarely ends well.   


All that said......

During the Investor call Joe Tsai marveled at the rise of Chinese consumerism, where shoppers all throughout Asia are apparently spending most of their waking hours on their smart phones ordering FMCGs to be delivered near instantly by bicycles and tuk-tuks weaving their way relentlessly through clogged, nearly impassable roads and city streets. Alibaba customers were spending a big chunk of their US$8,000 per capita GDP on Alibaba's e-Commerce ecosystem. According to the Alibaba management team, the dawn of a new era has arrived. 

Oddly, Tencent management claims that the same people are spending all of their waking hours on WeChat and related video game apps......apparently, the Chinese people no longer sleep and work or have any sort of personal life.....they are on their phones.

Now let's get back to reality. Here are my own personal observations. As I've said many times, the Indian, Chinese, South Korean, Japanese, et al. people are some of the most industrious, hardest working people on the planet. (I understand that North Koreans are really industrious as well, but it's generally not of their own volition....forced labor doesn't count.) Again, this is my own personal observation, feel free to quibble, but it won't alter what I've observed with my very own eyes.

That said, to be painfully blunt, when compared to the US and Europe, half of the people in Asia don't have a pot to pee in or a window to throw it out of. It's sad, but this is reality. They spend much of their day trying to survive, putting roofs over their heads and chow-chow in the pot....not shopping for deals on their phones. The reality is that the eCommerce ecosystem that Jack, Joe, Daniel & Maggie are selling investors is actually decades away, yet they've got the world believing that it's a way of life today, and should be reflected in their share price.






Note that nobody in the above picture is using a smart phone.  Below, we see an obvious and all too familiar contrast in lifestyle.



After reviewing this 20-F, the above commentary references only what leaps off the page at me after spending a couple of hours paging through it. I'm sure if I spent a few more weeks combing through this nonsensical fairy tale, that I would find even more typos, things that don't match, are incomplete or that I absolutely hate about these financial statements. I honestly don't know how anyone could conclude that Alibaba is a solid, well managed business, yet the stock price keeps rising. How can everyone not see what I see?

Most of the problems, as described above, surround valuation and incomplete disclosure. There are so many things they could do to fully disclose the accurate, complete financial condition of this business, but they choose not to do them. For example, the inclusion of audited financial statements for Ant/Alipay and affiliates would be a nice start.  
This 20-F is the equivalent of a teenager replying "out" when you ask where he/she is going.  I've always felt that Financial statements should directly, completely and openly answer investor questions before we have to ask them. "We don't disclose those numbers" or "we don't manage the business that way" are simply unacceptable, inadequate responses. When an investor asks "how many coats did you sell?" the answer should be "2,537,426"....not...."let's see....it was cold out....so we must have sold lots of coats!" 

What is something worth? You'll always find people who want to pay millions for Elvis's surf board or Mick Jagger's underwear. That's fine, but this is not that. The issue with Alibaba is that everything represented in this 20-F refers to financial assets.  Financial assets are not artwork, cult memorabilia or Babe Ruth's rookie card.  The valuation of financial assets MUST be based on expected future earnings of all of these Investees. Unfortunately, based solely on the scant "real" financial information presented in this tome, it's starting to look like Jack, Joe, Daniel & Maggie couldn't pick the winner of a one horse race without first tinkering with the appearance of the pony.

The obvious elephant in the room is, of course, what happens when Jack's dream comes crashing back to earth?  Right now there's about $380 Billion tied up in Alibaba Market Cap. $50 Billion in Altaba (....what's left of Yahoo!), $60 Billion in Ant (...per Bloomberg Reports😊), $90 Billion in Softbank, $38 Billion in "off the books" Alibaba "Investees", etc., etc. and all of the associated bank loans and leverage attached to same.  The financial tentacles of this vampire squid now reach perilously around the globe.

There is no question in my mind that this has now become the greatest financial cluster fudge (there's that typo again) in history. Even though this company is ubiquitous throughout China, there is very little, if anything other than a full scale bail-out by the Chinese Government that would make this business a viable going concern.

Finally, given the above, I have absolutely no choice but to reduce my long term price target for BABA from $6.00 per share down to the dreaded Blutarsky value. "Mr Ma,.....your business is worth zero, point, zero"

.....shit....seven years of college down the toilet.....

Additional Reading


Apple Proxy pg 50 - Audit & Audit Related Fees - $14,190,500.

Amazon Proxy - pg 12 - Audit & Audit Related Fees - $16,360,000

Alibaba 2016 FYE 20-F pg 203 - Audit & Audit Related Fees - $6.8 Million

AutoNation 2016 - Audit & Audit Related Fees pg 44 - $3.2 Million

Monday, May 1, 2017

Greetings from Dharamsala.....

....paradise on earth....here's the view of the Himalayas from our hotel room balcony....spectacular.



The occasional monkey assault on our luggage was a little irritating (Travelers Tip: Don't leave your hotel balcony door open unless you don't mind a room full of monkeys.  Who would have known that the ninth floor was monkey accessible?.....this wasn't mentioned on Trip Advisor...just sayin'...)

Anyway, Dharamsala is the epicenter of the most beautiful, mostly-unspoiled, Himalayan wilderness and natural beauty you can imagine.  The people are wonderful and the air is, in the words of the great philosopher and part time con artist, Masayoshi Son, generally "filled with happiness".  With the exception of occasional, white-knuckle taxi rides on hairpin, one lane, cliff side roads, dodging cows, sheep, pedestrians, tuk-tuks and every type of vehicle immaginable, we're experiencing the history, beauty and serenity of Dharamsala in all of its subtle, peaceful splendor. We enjoyed a wonderful hike to Triund hill  earlier today, about 9,000 feet in elevation.  You can see Triund in the photo above, it's at the tippy-top of the ridge just below the snow capped peak  The only time I'm ever at that altitude someone is usually telling me to secure my tray table under the threat of federal prison.  Anyway, Triund is a beautiful, spiritual place where we pondered the meaning of our existence, why we are here ...and whether the Cavs can repeat as NBA Champs.  (We get ESPNABC/TNT at the hotel but the games are on before breakfast....and my wife requests that I don't "yell at the TV" so early in the morning, as the Buddhist Monks might find it unsettling.)

If all goes according to plan, we will have the chance to meet with the Dalai Lama soon.  I've been corresponding with his office trying to request an audience and we've been told that we may be able to swing by in the near future.  His office is aware of this blog and my take on the oddities of China's financial shenanigans.   As you might suspect, I'm highly interested in his take on whole mess. With any luck, I'll be able to use my Dick Fuld Banker Speak Translator to interpret what his holiness is really saying.  There is, of course, the chance, if we're able to speak with HHDL (His Holiness Dalai Lama) that we'll be forever banned from the Chinese mainland, like Lady Gaga, but being the risk seekers that we are, we're more than willing to take that chance.    Stay tuned.

If you are, like most folks, a little sketchy on Tibetan history, its exiled government in Dharamsala, Tibet's relationship with China and particularly the role of the Dalai Lama in same, I can highly recommend this very well done, informational and entertaining HBO/Youtube video (complete with a Dalai Lama interview in Dharamsala) from that renowned religious historian, John Oliver.  Personally, if I were John, I would have left out the references to Willem Dafoe's genitals, as an unnecessary tangential diversion, but that's just me.  As a humble blogger who can certainly appreciate both HHDL's and John's message and point of view, really, who am I to judge?

In any case, since we're in India right now and and wi-fi access can be a bit unpredictable, I'm fearful that I'll be off the grid next week when Alibaba releases its always entertaining and hilarious year end financial statements.

In the spirit of truth and enlightenment that I hope to achieve here in Dharamsala, I'm compelled to pre-announce what I believe will be the framework of Alibaba's Investor Call, Press Release and the Financial Statements.

Here's what Alibaba Management is going to say.... 

There's really no magic here.  I'm not a prophet or soothsayer.  When you are just "makin' shit up", as we say in the accounting trade, it's relatively easy to hit your numbers, consequently making the fake numbers released, even more predictable.

GMV - I've long maintained that the GMV figures (which Alibaba now only publishes annually) are fiction.  My guess is that they will announce a 30% YOY increase, coming in at just under 4.1 Trillion RMB or about US$600 Billion.   (Last years GMV was 3.092 Trillion RMB or US$485 Billion).  Interestingly, according to the NBS, total on-line sales of physical goods for all businesses in China totaled 4.4 Trillion RMB during the same period.  Alibaba GMV, according to their fake numbers, will now account for roughly 95% of all merchandise sold on-line in China over the same period.  Note that JD.com, VIPshop, 58.com and virtually every US listed Chinese e-tailer have published (and continue to publish) GMV figures which, in aggregate, exceed the total on-line sales of physical goods in China by an ever-increasing differential.  This is, of course, ridiculous.

Revenue - Revenue, based on prior pie-in-the-sky guidance, should come in somewhere around 152 Billion RMB (US$22 Billion).  Prior year Revenue was 101 Billion RMB, or US$15.7 Billion.  Of course, unlike every other publicly traded company, there will continue to be no detailed breakdown as to how this revenue is generated.  The bulk of this incredible growth continues to be reported as one big "blob" of "China Marketplace, misrepresented as organic growth when in all actuality, it's "purchased" revenue from the spate of nonsensical, money-sucking acquisitions since the IPO.



















Of course Net Income and Profit Margins should continue to bounce between "Unpredictably Huge" and "Amazingly-Bigly-Tremendous".  There really is no discernible relationship between operating metrics, transaction volume and Net Income.  Net Income, as in past years/quarters, will be completely dependent on the write-ups and increased valuations of their "Investments in Investees". Daniel and Maggie will produce some silly schedule describing the incredible valuation increases (and their share of same) with commensurate "Gains on Deemed Disposals" where applicable, for Alibaba Health, Alibaba Pictures, Ant Financial, Cainiao Network, Weibo, Koubei, InTime, Lozada, et al.  As in the past, these surprise valuations will be calculated, verified and meticulously documented by Bloomberg press releases.  This makes perfect sense.  Why bother issuing financial statements and real metrics for these consolidated boondoggles, when you can get away with issuing an unverified press release?

Questionable Assets -  I fully expect "Questionable Assets" (Investment Securities, Investments in Equity Investees, Land Use Rights, Intangible Assets and Goodwill) to come close to 75% of the Balance Sheet, topping out at roughly $47 Billion.  These money-sucking "Assets", which will have to be written down or off at some point were only 40% of the Balance Sheet at $10.5 Billion on June 30th, 2014, prior to the IPO.  The relentless conversion of cash to financial vapor has and will continue at an alarming pace.

Share Based Compensation -  Alibaba employees, affiliate employees, family members, political cronies and Caribbean Shell companies will have received another roughly $2.5 Billion + in real SBC, about 12% of fake revenue, in the last year. Maggie, Joe or Daniel will, of course, make some silly statement explaining how this isn't actually "dilutive" and is truly necessary to retain all of the talent required to grow their "ecosystem", during the Investor Call.

Lack of Enthusiasm

Finally, you'd think that with metrics like this, there would be a feeding frenzy of investors swarming to snap up Alibaba stock.  Let's take a look at the average daily volume for March & April, the two months leading up to the year end financial statement release, since the IPO.

2015 - March/April 16.9 million shares/day
2016 - March/April 10.4 million shares/day
2017 - March/April  8.9  million shares/day

Interestingly, rather than a feeding frenzy, the exact opposite seems to be happening. Volume is declining substantially, to about half of what it was two years ago during the same period.  Even more interesting is that the stock price continues to increase on rapidly declining volume.

April 30 2015 - $81.29
April 29 2016 - $76.94
April 28 2017 - $115.00

I've pondered this phenomenon before in prior posts.  One possibility is that investors are holding this stock, are extremely bullish and in it for the long haul, effectively reducing active float/volume.

The other, more probable explanation of the volume decrease is that the smart/big money has abandoned this trade long ago.  What we're most likely seeing is pie-in-the-sky retail optimists trading with Chinese Government sponsored Caribbean Shell Companies.  These shells are apparently charged with the responsibility of, and sufficiently funded, to support the stock price and collateral value of these shares.

Also note that the short Interest in Alibaba has now declined to 13% of float. Presumably, shares have been gobbled up to cover. Let the squeeze begin!.  To put that in perspective Tesla's short ratio to float bumps around at 25%.  Amazon's has declined to 1% over the years, destroying the shorts, as they've proven that unfettered expansion coupled with losing money over the long haul is indeed a sustainable business model.

So as investors, we must ask ourselves, is the Alibaba valuation more like Tesla or Amazon?....or perhaps Valeant?  I guess we'll see....

Will Alibaba management once again come through and hit their (fake) GMV, Revenue, "Questionable Asset" Levels and SBC Target as I've suggested?  Is it possible they actually blow by these Targets and report something really amazing?  We all know that nothing bad ever happens on the Mainland.  Everything is sunshine, lollipops and rainbows.  Honesty and integrity are the mainstay of China's political and financial systems....ask any Tibetan what they think about the integrity of the Chinese leadership and you'll get an earfull....at least from those who have chosen not to self-immolate, sticking it out in exile.

Finally, based on the above, as well as my analysis of every quarterly Investor call since the IPO (links below), I'm revising my long term price target on Alibaba from $7/share down to $6/share.

Hope to hear from you once I'm back in the States....

Namaste'

Alibaba Quarterly Analysis:

9/30/14 Q2 - My Posts Re: Alibaba on Laura Logan's CBS News Page....Enjoy!
12/31/14 Q3 - Once upon a time...
3/31/15 Year End - Alibaba....a year in review
6/30/15 Q1 - Alibaba....the odyssey continues...
9/30/15/ Q2 - One of these things is not like the others...
12/31/15 Q3 - Oh what a tangled web we weave....

3/31/16 Year End - It's Like Deja Vu...All over again...
6/30/16 Q1 - Really, how silly can these numbers get...
9/30/16 Q2 - Just when I think....
12/31/16 Q3 - 20 Seconds of Magic



Additional Reading:

Relationship with the Chinese Dalai Lama "Replacement"
https://www.washingtonpost.com/world/asia_pacific/china-pushes-its-panchen-lama-into-spotlight-in-preparation-for-post-dalai-era/2016/09/25/7c28ac20-7f5e-11e6-ad0e-ab0d12c779b1_story.html?utm_term=.6535b9b7a113

Dalai Lama's Retirement message
https://www.dalailama.com/the-dalai-lama/biography-and-daily-life/retirement/message-to-14th-assembly

Chinese Hardliners have "parts of their brains missing"
https://www.yahoo.com/news/dalai-lama-says-chinese-hardliners-parts-brain-missing-104711121.html?soc_src=social-sh&soc_trk=tw

John Oliver - Dalai Lama Interview
https://www.youtube.com/watch?v=bLY45o6rHm0

NBS Q1 2017 - On-line retail of physical goods - $1.067T RMB
http://www.stats.gov.cn/english/PressRelease/201704/t20170417_1484966.html

NBS 2016 YE On-line retail of physical goods - $4,194T RMB
http://www.stats.gov.cn/english/PressRelease/201701/t20170120_1455922.html

NBS Q1 2016 On-line retail of physical goods - $.824T RMB
http://www.stats.gov.cn/english/PressRelease/201604/t20160415_1343971.html

Baba percent of float is 13% as of 4/30/17.