BDA-老虎基金阿里巴巴蚂蚁金服业务研究报告EN-2015 12 31

BDAReportonAntFinancialDecember31,2015ForTigerGlobalManagement©BDA20152TableofContentsExecutiveSummaryAntFinancial’sCoreBusinessesAlipayAntMicroLoanAntFortuneAntFinancial’sEmergingBusinessesZhongAnInsuranceExecutiveSummary(1/8):AntFinancialcoversvarioustypesoffinancialservicesthroughitsownbusinesslinessuchasAlipay,AntMicroLoanandAntFortune,aswellasitsjoint-stockcompany,ZhongAnInsurance3Self-OwnedBusinessesJoint-StockCompanyAlipayAntMicroLoanAntFortuneEmergingBusinessesBusinessTypeLaunchTimeProductOnlinepaymentplatformMoneymarketfundCreditloantoTaobao/TmallorAlibabaB2BmerchantsNon-cashcreditLoantoconsumersFixedincomewealthmanagementproductsPublicfundsalesIndividualcreditsystemFinancialcloudservice(PaaS)Propertyinsurancesuchasmotorinsuranceandtravelinsurance,etc.LifeinsuranceproductsAlipay(Payment)YuErBaoAntMicroLoanHuaBeiZhaoCaiBaoAntFortunePublicFundSesameCreditAntFinancialCloudPropertyInsuranceLifeInsuranceBusinessLinesCashcreditloantoconsumersJieBeiSource:CompanyInfo,BDAresearchandanalysisDec.2004ZhongAnInsuranceJun.2013Early2014Aug.2015Apr.2014Jan.2015Apr.2015Apr.2015Nov.2013Sep.2013N/AExecutiveSummary(2/8):Foritsowncorebusinesses,webelievethattheaddressableonlinemarketsarehuge,especiallyfortheAlipaybusiness4AlipayAntMicroLoanAntFortuneAlipay(Payment)YuErBaoAntMicroLoan(ToMerchant)HuaBeiZhaoCaiBaoAntFortunePublicFundTotalMarketSize(RMBTN)OnlinePenetration91+13%2591085+12%209732+14%N/A144+20%232+9%+17%2022F24112015E201415%8%7%60%39%36%201410%20%2015E2022F5%N/A(OnlyavailabletomerchantwithinAlibaba’secosystem,thustheaddressablemarketisalreadytheonlinemarket)N/A(OnlyavailableintransactionsscenariosthroughAlipay,thustheaddressablemarketisalreadytheonlinemarket)N/A(OnlyavailabletoYuErBaousers,thustheaddressablemarketisalreadytheonlinemarket)Source:BDAresearchandanalysisAddressableMarketTaobao/TmallandAlibabaB2BmerchantsPaymentmarketMonetaryfundmarketTransactionvaluethroughAlipayYuErBaoNon-MMFpublicfundmarketThird-partysalesagentsaremostlyonlinesalesagentsExecutiveSummary(3/8):AntFinancialhasthestrongestcompetencyforthepaymentbusinessandmoderatecompetencyforthepublicfundbusiness;theotherbusinessesareonlyprovidedwithinitsownecosystem5AlipayAntMicroLoanAntFortuneAlipay(Payment)YuErBaoAntMicroLoan(ToMerchant)HuaBeiZhaoCaiBaoAntFortunePublicFundAntFinancial’sCompetitivenessAntFinancial’sLong-termMarketShareAlipayhasalreadybecomethedominantplayeronPC,throughitisfacedwithcompetitionfromWeChatPaymentonmobilePCpayment:estimatedtobe45%in2022Mobilepayment:estimatedtobe51%in2022Estimatedtobe27%in2022N/A(nocompetitorasitispenetratingmerchantswithinAlibaba’secosystem)Expectedtopenetrate6.4%ofgreatTaobao’sGMV,and42%ofAlibaba’sB2BpaidmembersN/A(nocompetitorasitispenetratingGMVthroughAlipay)Expectedtopenetrate22%ofAlipay’stotaltransaction(excludingnon-consumingscenarios)N/A(nocompetitorasitispenetratingYuErBao’susers)Expectedtopenetrate30%ofYuErBao’stransactionvalueEstimatedtobe15%

in2022MMFproductsarehomogeneous,thusYuErBao’sdominantpositionwillbedilutedbynewentrants,yetitwillstilltakeameaningfulsharethankstoitslargeuserbaseN/AN/AN/AAntFortuneisleveragingtheresourcesofFund123,whichhaslimitedpresenceinpublicfundsales,andAlipay’suserbasewillbringlimitedboosttoitsmarketshareinfundsalesSource:BDAresearchandanalysisStrongWeakCompetitiveness:ExecutiveSummary(4/8):AntFinancialgeneratesrevenuemainlythroughcommissionsorinterestforitscorebusinesses,withHuaBeibeingthemostlucrativemonetizationtoolasitchargesbothmerchantsandconsumers6AlipayAntMicroLoanAntFortuneAlipay(Payment)YuErBaoAntMicroLoan(ToMerchant)HuaBeiZhaoCaiBaoAntFortunePublicFundMonetizationModelGrossTakeRateNetTakeRateCommissionchargedtomerchantsCommission,custodyfeesandadministrationfeeschargedtoconsumersInterestchargedtomerchantsCommissionchargedtomerchantsInstallmentinterestfromconsumersCommissionchargedtoconsumersCommission,custodyfeesandadministrationfeeschargedtoconsumers0.23%ofGMV0.11%ofGMV0.42%ofGMV0.27%ofGMV0.10%ofGMV0.10%ofGMV0.35%ofGMV0.2%ofGMV1%ofGMV0.43%ofGMV16%ofinstallmentbalance4.6%ofinstallmentbalanceTaobaomerchants:1.9%ofloanoriginationB2Bmerchants:13%ofloanoriginationTaobaomerchants:0.9%ofloanoriginationB2Bmerchants:~0%ofloanoriginationSource:BDAresearchandanalysisExecutiveSummary(5/8):Lookingforward,AntFinancialwillseerobustgrowththrough2022intermsofbothrevenue(4.9x)andprofits(4.6x),mainlydrivenbytheincreasingonlinepenetration7AlipayAntMicroLoanAntFortuneAlipay(Payment)YuErBaoAntMicroLoan(ToMerchant)HuaBeiZhaoCaiBao1AntFortunePublicFundRevenue(RMBBN)N/AN/A2022F2015EN/A2014N/AGrossProfit(RMBBN)N/AN/A2022F2015EN/A2014N/AGrowthDriverNote：1.AsZhaoCaiBaoproductsarepurchasedwithusersYuErBao’sbalance,thereisactuallynopaymentcostforZhaoCaiBao.OnlinepenetrationinvariousscenariosOnlinePenetrationofMMFGrowthofthegreatTaobaoGMVHuaBei’spenetrationinAlipay’stransactionscenariosZhaoCaiBao’spenetrationinYuErBaousersPenetrationofthird-partysalesofnon-MMFpublicfundmarketSource:BDAresearchandanalysisExecutiveSummary(6/8):Specifically,HuaBeiwillbearevenueboosterasitchargesahighercommissiontomerchantsthanAlipaydoes(1%vs.0.23%),anditscontributiontototalAlipaytransactionwillgrowto22%in202282021F2022F0%2020F19%100%78%81%13.722%11.910.216%84%2019F8.713%87%2018F7.310%90%2017F6.07%93%2016F4.95%95%2015E3.91%99%20143.1PaymentTransactionValuethroughAlipay1,2014-2022FUnit:RMBTN0.23%1%AverageCommissionRatein2022Non-HuaBeiTransactionValue1HuaBeiTransactionValueNote:1.ExcludingB2B,creditcardrepayment,moneymarketfundandmoneytransferamongconsumers,astheyarenotaddressablescenariosforHuaBeiSource:BDAresearchandanalysisExecutiveSummary(7/8):AntFinancial’ssesamecreditandcloudbusinessesarebothatearlystageandrequirealongperiodoftimetoeducatethemarketbeforetheyreachmaturity9SesameCredit(LaunchedinJan2015)AntFinancialCloud(LaunchedinOct2015)BusinessDescriptionHighlightsAnindividualcreditratinginstitutionthatprovidescreditinformationbasedonbothAlibaba’suserbehaviordataandexternalcooperativedataprovidersApubliccloudserviceproviderthatleveragesAliyun’sinfrastructuresanddeliverPaaSspecificallytofinancialinstitutionsStatusQuoSource:BDAinterviewsandanalysisStillwaitingforPBoC’slicense;notmonetizedyetMainlyappliedininternalscenariossuchassupportingHuaBeiandJieBeiThird-partydata’scontributionisstillminorBulkofthebusinessiscontributedbyrelatedpartysuchasMyBankandZhongAnInsuranceExternalcustomersarecautiousaboututilizingitspubliccloudserviceBeforeacquiringthelicense,AliiscautiousaboutmassivepromotionsandmonetizationIntheshortterm,SesameCreditwillfocusonitsbrandestablishmentanddatabaseexpansion,andthevisibilityofitsmonetizationpotentialisstilllowatpresentGenerallySpeaking,financialinstitutionsarehighlyconcernedaboutusingpubliccloudservice,mainlybecausetheyworryaboutthesecurityoftheircorebusinessdataCurrentlythefinancialcloudserviceisstillinitsearlystage,anditwilltakealongtimeforAntFinancialCloudtoeducatethemarketbeforeitcangeneratematerialrevenueExecutiveSummary(8/8):ZhongAnisfocusingonpropertyinsuranceandisexpectedtoexpandtolifeinsuranceaswell;thoughitcanleverageitsstakeholders’resources,wethinkitspotentialislimitedduetoitsweakknow-howintraditionalinsurance10MotorInsuranceShippingReturnInsuranceMerchantPerformanceInsuranceTravelInsurancePropertyInsuranceLifeInsuranceDuetoitslackofofflineteams,ZhongAnwillcooperatewithPingAnforclaimsettlementsBytakingadvantageofPingAn,ZhongAnmayhaverelativelystrongcompetitivenessinthissectorDuetodataleakageconcerns,itishardforZhongAntoseekcooperationwithotherplatformsbesidesAliPenetrationhasalreadyreachedaplateau;meanwhileAliisintroducingmorecompetitioninthissectorWithoutproductbarriers,ZhongAncanonlygrabsomemarketsharethroughitsadvantageinCtrip’sstakeAlihasabsolutecontrolovermerchants,andbygoingagainsttheinterestsofAli,ZhongAnwillnotseefurtherpenetrationonAli’smerchantsZhongAnislikelytobegrantedalifeinsurancelicenseinthecomingyears,sincetheCIRCislooseninglifeinsurancelicenseissuingunderWTO’spressureofopentheinsurancemarketHowever,mostindustryexpertsexpectthatZhongAnwillgetalicensein2016attheearliest,sincethecompanyisyoung.Internally,theCIRC1

hasalsobeendebatingwhetherornotthebusinessmodelofanonlinelifeinsurancecompanyisfeasible.Besidesassistancefromitsshareholderbackground,ZhongAndoesnotappeartohaveotheruniquecompetitiveadvantagesSectorswithnon-replicableadvantages:

ZhongAnhascompetitiveadvantagesinsomesectors,broughtonbyitsshareholders.Assuch,wedon’texpecttheshareholderstoyieldabnormalprofitstoZhongAnSectorswithoutnon-replicableadvantages:ZhongAnhastocompetewithitspeersinthesesectors.Duetoitsyoungageandimmatureproducts,wedon’tseeanyreasontoexpectthatthecompanywillearnabnormallyhighprofitsBDACommentsonZhongAn’sInsuranceProductsLimitedPotentialNote:1.ReferstoChinaPacificInsuranceCompanySource:BDAinterviewsandanalysis11TableofContentsExecutiveSummaryAntFinancial’sCoreBusinessesAlipayAntMicroLoanAntFortuneAntFinancial’sEmergingBusinessesZhongAnInsuranceAlipay’srevenueisexpectedtoreachRMB61BNin2022,representingaCAGRof18%,withpaymentbusinessaccountingfor78%oftotalrevenue12CAGR:+18%MoneyMarketFundPayment2020F46.827%73%71%2019F40.129%28.72018F34.134%32%66%68%2017F2016F23.836%64%2015E19.539%61%201415.640%60%2021F2022F53.861.125%75%22%78%RevenueofAlipay,2014-2022FUnit:RMBBN22%9%Source:BDAresearchandanalysisCAGR(2015E-2022F)…whilethegrossprofitofAlipayisexpectedtoreachRMB31BNin2022,withpaymentbusinesscontributingthebulkaswell1314.344%56%2016F11.847%53%2015E50%72%9.6CAGR:+18%MoneyMarketFund59%2017F50%20147.753%47%2021F2022F27.431.231%69%28%Payment2020F23.734%66%2019F20.237%63%2018F17.141%GrossProfitofAlipay,2014-2022FUnit:RMBBNCAGR(2015E-2022F)25%9%Source:BDAresearchandanalysis14PaymentAgenda15OnlinePaymentMarketSizeCompetitiveLandscapeAlipay’sEconomicsOnlinepaymentturnoverinChinahasbeengrowingrapidly,andisexpectedtomaintainagrowthrateofaround24%intheforeseeablefuture16+24%2022F37.62021F32.12020F27.02019F22.32018F18.12017F14.42016F11.22015E8.520146.3OnlinePaymentTurnoverSource:BDAresearchandanalysisChina’sOnlinePaymentTurnover,2014–2022FOnlinePenetrationUnit:RMBBNE-commerce,CreditCardRepaymentandB2BwillcontinuetoaccountformajorsharesofChina’sonlinepaymentturnover172016F42%4%2015E43%3%201444%6%2018F40%5%2020F

38%6%2019F

39%2022F38%6%E-commerceCreditCardRePaymentServiceB2BOthersTelecomandUtilityPaymentTravel2021F1%1%2%2017F38%40%6%5%3%2%2%2%3%2%2%BreakdownofOnlinePaymentTurnoverbyIndustry,2014–2022FSource:iResearch,BDAresearchandanalysisMobileonlinepaymentturnoverhaslargelyexpandedandapproachedto39%oftotalonlinepaymentin2015;itsshareisexpectedtocontinuetogrowstablyandreacharound55%in202218OnlinePaymentinChina:BreakdownofMobilePaymentandPCPayment,2014–2022FSource:BDAresearchandanalysisMobilePaymentPCPayment2020F51%2019F49%2018F47%2017F45%2016F43%2015E39%201427%2021F2022F53%55%Agenda19OnlinePaymentMarketSizeCompetitiveLandscapeAlipay’sEconomicsMostonlinetransactionssupportmultiplepaymentmethods,withAlipaystillbeingthemostcommonlyadoptedthird-partypaymentmethod,followedbyTenpay(1/2)20E-CommerceOnlineGame1PCMobileAlipayTenpayUnionpayDebitCardAlipayTenpayUnionpay×√√√×√×√√×√√√×√√√√√√√√√√√×√√×√√×××××√××√√√√√√√×√√√√√√√√√√√√√√JDVIPShopYihaodianDangdangAmazonSuningJumeiMeilishuoMogujieNeteaseGameTencentGame××√√---×√×√---Source:WebsiteinformationNote:1.ThepaymentmethodformobilegamesisidenticalonIOSdevices(onlythroughUnionpayordebitcards),butdependentontheappstoreforAndroiddevices.√√Mostonlinetransactionssupportmultiplepaymentmethods,withAlipaystillbeingthemostcommonlyadoptedthird-partypaymentmethod,followedbyTenpay(2/2)21GroupBuyingTelecomPCMobileAlipayTenpayUnionpayDebitCardAlipayTenpayUnionpay√√√√√√×√√×√√√×√××√√×√√√√√√√√√√√√√√×√√×√√√×√√×√√√×√√√√√√√×√√××√√√√√√×MeituanDianpingNuomiLashouCtripeLongQunarTuniuChinaMobileSource:WebsiteinformationTravelChinaUnicomChinaTelecom√××√√××TotalCount1717122218157××Intermsofmarketshare,AlipayandTenpayarestillthetwoleadingplayersinChina’sonlinepaymentmarket,withacombinedmarketshareofaround70%222%Q1201549%3%46%2%201050%2%OthersChinapay(Unionpay)IPS99Bill2014Chinapnr48%YeepayQ32015Tenpay150%3%3%2%2%201349%3%2%201249%3%3%2%2011Alipay2Note:1.TenpaybelongstoTencentgroup,whichoperatesChina’smostwidelyusedIMtoolQQ.2.Alipay’smarketshareslightlywentdowninrecenttwoyears,mainlyduetothepresurefromTenpay(WeChatPayment)onmobile.Source:iResearch,BDAanalysisOnlinePayment:MarketSharesinTermsofTurnover,2010-Q32015MarketShareEstimation-PCEnd(2015E,2022F)Goingforward,weexpectthemarketshareofAlipaywillremainstableinmosttransactionscenariosonthedesktop…232015E2022FRetailTaobao/Tmall100%100%JD0%0%Others60%60%Service70%70%TravelAirtickets40%40%Hotel50%50%Traintickets50%50%Tourismandothers60%60%Telecom70%70%UtilitiesPayment70%70%Lottery70%70%OnlineGame30%30%B2B20%20%CreditCardRepayment25%25%Source:BDAresearchandanalysisWeexpectthatAlipay’sshareonPConlinepaymentwillremainflatintheforeseeablefuture,asthePCpaymentmarkethasremainedstablethroughoutthepastyearsandapproachedendgameThoughTencentisaggressivelypromotingitsWeChatpayment,itsadvantageinPCpaymentisinsignificant,andthusisunlikelytotakesharefromAlipayonPCMarketShareEstimation-MobileEnd(2015E,2022F)...whileonthemobileend,weexpectAlipaywillfacefiercecompetitionfromWeChatpaymentinserviceandonlinegamesectors,buttakeshareintravel,utilitiesandcreditcardrepaymentsectorsbysqueezingotherplayerstogetherwithWeChat24RevenueofAlipay2015E2022FRetailTaobao/Tmall100%100%JD0%0%Others60%57%MobilePaymentinOfflineScenario45%45%Service55%45%TravelAirTickets28%36%Hotel28%36%TrainTickets28%42%TourismandOthers28%36%Telecom60%63%UtilitiesPayment60%63%Lottery60%63%OnlineGame31%23%B2B20%20%CreditCardRepayment15%54%AlipayisfacingfiercecompetitioninmobilepaymentasTenpayisaggressivelypromotingitsWeChatpaymentbyleverageitshugeWeChatuserbaseSpecifically,WeChatpaymentispenetratinginservicesectorsquicklythroughsubsidy,andisexpectedtofurthertakesharefromAlipayForonlinegame,asTenpayhasdominantadvantageinmobilegamesmarket,weexpectAlipaywillfurtherlosesharetoWeChatpaymentinthefutureForotherpaymentscenarios,AlipayandWeChatarebothexpectedtogainsharebysqueezingothertraditionalplayers,suchasChinaPnRandLakalaSource:BDAresearchandanalysisAgenda25OnlinePaymentMarketSizeCompetitiveLandscapeAlipay’sEconomicsBasedonourestimateonChina’sonlinepaymentmarketandAlipay’smarketshare,weexpectthatAlipay’stransactionturnoverwillenjoyagrowthrateofaround20%intheforeseeablefuture,withmobilepaymentcontributing62%oftotal262022F21.062%38%2021F17.959%41%2020F15.156%44%2019F12.554%46%2018F10.351%49%2017F8.348%52%2016F6.645%55%2015E

5.241%59%20144.024%76%+22%Unit:RMBTNAlipayTransactionTurnoverGrowth,2014-2022FSource:BDAresearchandanalysisMobilePaymentPCPaymentYoYgrowthTransactionsthattakeplacewithinTaobao’secosystemaccountformorethanhalfofthetransactionturnoverinboth2014and201527BreakdownofTransactionTurnoverAs%ofTotalTurnoverBDACommentsIn-AlibabaOff-AlibabaNon-TaobaoE-commerceUtilityPaymentOthers52%5%6%16%TransactiononTaobao/Tmallaccountsforabouthalfofthetotaltransactionvolume,butseesadownwardtrendasothertransactionscenariosaregrowingfastTransactiononothernon-TaobaoE-commerceplatformsismuchsmaller,mainlyduetothesmallermarketsizeofotherE-commerceplayersandrelativelylowerusageofAlipayontheseplatforms.Includingwater,electricityandgaspaymentSource:Companyinformation,BDAinterviewsandanalysisTaobao/TmallTravelMoneyTransferAmongUsers13%3%IncludingmoneytransferamongAlipay’saccountsandbetweenAlipay’accountsandbankaccounts.Includingairtickets,hotel,traintickets,tourism,etc.Includingverticalitems(i.e.lottery,onlinegame,etc.)B2Baswellasservices(i.e.foodservice,entertainment,homeservice,etc.)CreditCardRepayment5%UsersrepaythecreditcardthroughAlipay.20142015E49%6%5%16%12%4%7%Theaveragecommissionratethatmerchantsarechargedgenerallyremainedstablein2015comparedwith201428WehaveexcludedtransactionpaidthroughHuaBeiwhenanalyzingthecommissionsofAlipay,sinceHuaBeichargesamuchdifferentcommissionratetomerchantsThecommissionratevariesaccordingtotheamountoftransactionsmadebymerchants;largescalemerchantsarerewardedwithalowercommissionrate.BDA’sComments1TransactionCommissionsChargedtoMerchantsSource:Companyinformation,BDAinterviewsandanalysisRetailTaobao/TmallmerchantsOthermerchantsService,TravelandTelecomLottery&OnlineGamesUtilityPayments,CreditCardRepaymentandMoneyTransferB2BAverageCommissionsComments0.15%0.5%0.5-0.6%1.5%0.15-0.25%0.05%Taobao/TmallmerchantsaregenerallychargedacommissionratethatjustcoveredAlipay’scost;Alipay’sgrossprofitmainlycomesfromothertransactionscenariosorthroughHuaBeiForservice,travelandtelecommerchants,thecommissionchargeisoftenthesameasfornon-TaobaoecommerceplatformsFormerchantssellingvirtualitems,thecommissionisusuallymuchhigherduetotheirhighermarginanddefaultriskForAlipay,thesetransactionsaremainlytargetedatenhancinguserexperienceratherthangeneratingrevenue,thusthecommissionismerelychargedinordertocoverthecostTheseclientsareusuallypricesensitiveandthetransactionvolumeislargeeachtime,thusthecommissionisdrivendowntoarelativelylowlevelForexternale-commercemerchants,thecommissionrateisusuallyatanormallevelThemajorcostofAlipayisthe0.15%commissionpaidtobanks,whichisstablein2015comparedwith201429Banksarekeentocooperatewithlargeonlinepaymentcompanies,suchasAlipay,whichhavelargerenduserandmerchantbases.Toptieronlinepaymentcompaniescanhelpstimulatetheactivitylevelofbanks’cardholders,therebyenhancingthecashreservesofbanks.Additionally,bankswanttocooperatewithpaymentcompanieswhoseparentcompanieshavelargebankdeposits.AttractingmorecashreservesisakeyKPIforbanks.Onlinepaymentcompaniescanalsotakeadvantageoftheiruserbasestoconductco-brandingactivitieswithbanksandsecurelowercommissionrates,suchaslaunchingco-brandedcreditcards.FactorsImpactingtheCommissionRatePaidtoBanksSource:Companyinformation,BDAinterviewsandanalysisTransactionCommissionsPaidtoBanks2FeesforBanksComments0.15%Accordingtoindustryexperts,Alipayhasthestrongestbargainingpoweramongallpaymentcompanies,andischargedthelowestcommissionratebybanks.Forotherpaymentcompanies,theaveragecommissionrateisaround0.2-0.3%Thecommissionspaidtobanksgenerallyhavenothingtodowiththescenarioofthetransaction.1Note:1.TheB2Bsectorisanexception,asthesetransactionsarelikelytobechargedafixedcommissionforeachsingletransactionduetotheirlargevolume.Therefore,theimpliedcommissionratemaybeaslowas0.03%.AllTransactionScenariosAssuch,weestimateAlipay’srevenueandgrossprofitbymultiplyingthetransactionturnoverwiththegross&netcommissionrate;itsrevenueandgrossprofitwhichwillreachRMB47.4BNandRMB22.5BNin2022respectively30CAGR:+22%2020F2019F2018F2017F2016F2015E20142021F2022FUnit:RMBBNUnit:RMBBNCAGR:+25%2020F2019F2018F2017F2016F2015E20142021F2022FSource:BDAinterviewsandanalysisRevenueofAlipay’sPaymentBusiness,2014-2022FGrossProfitofAlipay’sPaymentBusiness,2014-2022FSpecifically,service,travelandcreditcardrepaymentwillbethemajorgrowthdriverofAlipay’sgrossrevenue...31BusinessScenariosUnitGrossTakeRate2015EAs%of2022FAs%ofCAGR(15-22)RetailRMBBN4.336%11.424%15%Taobao/TmallRMBBN0.15%3.731%6.814%9%OthersRMBBN0.50%0.54%4.610%36%ServiceRMBBN0.60%1.08%5.812%28%TravelRMBBN1.210%8.418%33%AirticketsRMBBN0.50%0.33%1.02%17%HotelRMBBN0.50%0.21%0.72%24%TrainticketsRMBBN0.50%0.22%0.71%19%TourismandothersRMBBN0.50%0.54%6.013%45%TelecomRMBBN0.50%1.411%2.86%11%UtilitiesPaymentRMBBN0.20%0.65%1.53%16%LotteryRMBBN1.50%1.09%3.17%17%OnlineGameRMBBN1.50%0.65%0.72%3%B2BRMBBN0.05%0.11%0.61%22%CreditCardRepaymentRMBBN0.25%0.98%9.921%41%MoneyTransferAmongUsersRMBBN0.15%1.08%3.37%19%TotalRMBBN12.0100%47.4100%22%RevenueofAlipay(2015E,2022F)Source:BDAinterviewsandanalysis…aswellasofthegrossprofitofAlipay32BusinessScenariosUnitNetTakeRate2015EAs%of2022FAs%ofCAGR(15-22)RetailRMBBN0.48%3.214%36%Taobao/TmallRMBBN0.00%0.00%0.00%-

OthersRMBBN0.35%0.48%3.214%36%ServiceRMBBN0.37%0.613%3.516%28%TravelRMBBN0.817%5.926%33%AirticketsRMBBN0.35%0.25%0.73%17%HotelRMBBN0.35%0.12%0.52%24%TrainticketsRMBBN0.35%0.13%0.52%19%TourismandothersRMBBN0.35%0.37%4.219%45%TelecomRMBBN0.35%0.920%1.98%10%UtilitiesPaymentRMBBN0.05%0.13%0.42%15%LotteryRMBBN1.35%0.920%2.812%17%OnlineGameRMBBN1.35%0.511%0.63%3%B2BRMBBN0.02%0.11%0.21%22%CreditCardRepaymentRMBBN0.10%0.48%3.918%41%MoneyTransferAmongUsersRMBBN0.00%-0%-0%

-TotalRMBBN4.8100%22.5100%25%GrossProfitofAlipay(2015E,2022F)Source:BDAinterviewsandanalysis33MMFChina’sMMFmarketwillkeepgrowingataCAGRof12%andexceedRMB20TNby2022,withonlinepenetrationclimbingstablyfrom36%to60%3416.654%46%2019F14.951%49%2018F13.348%52%2017F11.945%55%2016F10.45.2~36%~64%43%2021F18.357%58%CAGR:+12%OnlineOffline2022F20.040%42%2015E9.12020F39%61%201460%Source:BDAinterviewsandanalysisChina’sMMFMarketSize,2014–2022FUnit:RMBTNOverallmarketsize:China’sMMFmarketisestimatedtoreachRMB9.1TNin2015intermsoftransactionvalue1TheMMFmarketboomedin2014and2015asinternetconglomeratesandtraditionalfinancialinstitutionspouredintothemarket.However,thegrowthmomentumisunlikelytosustaininthefutureOnlinepenetrationrate:OnlineMMFproductsstartedtoemergein2013andwasboostedin2014and2015WeexpectthattheonlineMMFpenetrationratewillkeepclimbingandachieve~60%in2022Note:1.Thetransactionvalueisusually~2.5xoftheMMFbalance.YuErBao

remainstobetheleadingplayeroftheonlineMMFsector,butitssharewillgraduallydiminishtoaround27%in2022,duetothehomogeneousproductofferingsofitscompetitorsandfiercecompetition353.03.23.22020F2019F30%+19%27%2022F2.340%2017F43%2.62018F+9%2016F2.147%2015E1.850%20141.579%2.834%37%2021FSource:BDAinterviewsandanalysisYuErBao’sGMVandMarketShare,2014–2022FUnit:RMBTNCurrentstatus:YuErBaoiscurrentlytheleadingplayerintheonlineMMFmarketIn2015,YuErBao’sGMVhasslightlygrownbuttheonlineMMFmarkethaswitnessedahugeboost,whichsignificantlydilutedYuErBao’smarketshareFutureprospective:AsonlineMMFproductsarelargelyhomogeneous,YuErBao’sshareisunlikelytobemaintainedatthecurrentlevelinthefutureInthelongrun,whenpurchasingMMFproducts,individualinvestorstendtochoosetheirmostcommonlyusedpaymentchannel,thereforeYuErBao’sshareinthefutureislikelytofollowAlipay’sshareinthethird-partypaymentmarketMarketShareofYuErBaoGMVofYuErBaoWeestimateAlipayandTenpaywillaccount45%oftheMMFproductstogetherin2022asnewentrantswilldilutetheirshares,andAlipaywilltake60%ofthe45%marketshare,i.e.27%YuErBao’sgrosstakerateisaround0.42%,whichconsistsofcustodyfees,salescommissions,and