Intrinsic value of Autohome ADR - ATHM

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$45.62

  Intrinsic Value

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  Value-price divergence*

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$45.62

 
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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of ATHM stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 5.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  72.06
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  862
  5,542
  8,563
  12,806
  18,581
  26,215
  36,039
  48,375
  63,520
  81,735
  103,238
  128,198
  156,734
  188,917
  224,774
  264,295
  307,438
  354,143
  404,333
  457,929
  514,848
  575,017
  638,372
  704,867
  774,469
  847,170
  922,979
  1,001,926
  1,084,067
  1,169,474
  1,258,244
Variable operating expenses, $m
 
  3,102
  4,711
  6,971
  10,046
  14,112
  19,344
  25,914
  33,980
  43,681
  55,133
  68,276
  83,474
  100,614
  119,711
  140,759
  163,736
  188,610
  215,341
  243,885
  274,199
  306,243
  339,986
  375,399
  412,468
  451,188
  491,562
  533,608
  577,354
  622,841
  670,118
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  696
  3,102
  4,711
  6,971
  10,046
  14,112
  19,344
  25,914
  33,980
  43,681
  55,133
  68,276
  83,474
  100,614
  119,711
  140,759
  163,736
  188,610
  215,341
  243,885
  274,199
  306,243
  339,986
  375,399
  412,468
  451,188
  491,562
  533,608
  577,354
  622,841
  670,118
Operating income, $m
  167
  2,440
  3,852
  5,835
  8,535
  12,103
  16,695
  22,461
  29,540
  38,054
  48,105
  59,922
  73,260
  88,303
  105,064
  123,536
  143,702
  165,533
  188,993
  214,044
  240,649
  268,773
  298,387
  329,467
  362,001
  395,983
  431,417
  468,318
  506,712
  546,633
  588,126
EBITDA, $m
  177
  2,597
  4,013
  6,002
  8,708
  12,286
  16,890
  22,671
  29,769
  38,305
  48,383
  60,081
  73,454
  88,537
  105,342
  123,863
  144,082
  165,971
  189,493
  214,611
  241,286
  269,484
  299,176
  330,339
  362,959
  397,031
  432,559
  469,558
  508,053
  548,080
  589,682
Interest expense (income), $m
  0
  0
  53
  129
  236
  383
  576
  825
  1,137
  1,520
  1,981
  2,525
  3,157
  3,879
  4,694
  5,601
  6,602
  7,694
  8,876
  10,146
  11,503
  12,943
  14,466
  16,070
  17,753
  19,514
  21,355
  23,273
  25,271
  27,350
  29,512
Earnings before tax, $m
  181
  2,440
  3,799
  5,706
  8,298
  11,720
  16,119
  21,637
  28,403
  36,534
  46,124
  57,397
  70,103
  84,424
  100,370
  117,935
  137,100
  157,839
  180,117
  203,898
  229,146
  255,830
  283,920
  313,398
  344,248
  376,468
  410,062
  445,045
  481,441
  519,283
  558,614
Tax expense, $m
  5
  659
  1,026
  1,541
  2,240
  3,164
  4,352
  5,842
  7,669
  9,864
  12,453
  15,497
  18,928
  22,794
  27,100
  31,842
  37,017
  42,617
  48,632
  55,052
  61,870
  69,074
  76,659
  84,617
  92,947
  101,646
  110,717
  120,162
  129,989
  140,206
  150,826
Net income, $m
  178
  1,781
  2,774
  4,166
  6,058
  8,556
  11,767
  15,795
  20,734
  26,670
  33,670
  41,900
  51,175
  61,629
  73,270
  86,092
  100,083
  115,222
  131,485
  148,846
  167,277
  186,756
  207,262
  228,780
  251,301
  274,822
  299,345
  324,883
  351,452
  379,076
  407,788

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  828
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  1,359
  5,460
  8,436
  12,617
  18,306
  25,827
  35,507
  47,661
  62,581
  80,527
  101,712
  126,303
  154,418
  186,125
  221,452
  260,389
  302,895
  348,909
  398,358
  451,161
  507,239
  566,519
  628,938
  694,450
  763,024
  834,650
  909,339
  987,120
  1,068,046
  1,152,191
  1,239,649
Adjusted assets (=assets-cash), $m
  531
  5,460
  8,436
  12,617
  18,306
  25,827
  35,507
  47,661
  62,581
  80,527
  101,712
  126,303
  154,418
  186,125
  221,452
  260,389
  302,895
  348,909
  398,358
  451,161
  507,239
  566,519
  628,938
  694,450
  763,024
  834,650
  909,339
  987,120
  1,068,046
  1,152,191
  1,239,649
Revenue / Adjusted assets
  1.623
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
  1.015
Average production assets, $m
  22
  200
  308
  461
  669
  944
  1,297
  1,742
  2,287
  2,942
  3,717
  4,615
  5,642
  6,801
  8,092
  9,515
  11,068
  12,749
  14,556
  16,485
  18,535
  20,701
  22,981
  25,375
  27,881
  30,498
  33,227
  36,069
  39,026
  42,101
  45,297
Working capital, $m
  722
  -571
  -882
  -1,319
  -1,914
  -2,700
  -3,712
  -4,983
  -6,543
  -8,419
  -10,633
  -13,204
  -16,144
  -19,458
  -23,152
  -27,222
  -31,666
  -36,477
  -41,646
  -47,167
  -53,029
  -59,227
  -65,752
  -72,601
  -79,770
  -87,259
  -95,067
  -103,198
  -111,659
  -120,456
  -129,599
Total debt, $m
  4
  1,504
  3,688
  6,757
  10,933
  16,453
  23,558
  32,479
  43,431
  56,603
  72,153
  90,203
  110,839
  134,112
  160,042
  188,621
  219,821
  253,595
  289,891
  328,648
  369,810
  413,321
  459,137
  507,222
  557,556
  610,129
  664,950
  722,042
  781,442
  843,204
  907,398
Total liabilities, $m
  439
  4,008
  6,192
  9,261
  13,437
  18,957
  26,062
  34,983
  45,935
  59,107
  74,657
  92,707
  113,343
  136,616
  162,546
  191,125
  222,325
  256,099
  292,395
  331,152
  372,314
  415,825
  461,641
  509,726
  560,060
  612,633
  667,454
  724,546
  783,946
  845,708
  909,902
Total equity, $m
  920
  1,452
  2,244
  3,356
  4,869
  6,870
  9,445
  12,678
  16,647
  21,420
  27,055
  33,597
  41,075
  49,509
  58,906
  69,263
  80,570
  92,810
  105,963
  120,009
  134,926
  150,694
  167,298
  184,724
  202,964
  222,017
  241,884
  262,574
  284,100
  306,483
  329,747
Total liabilities and equity, $m
  1,359
  5,460
  8,436
  12,617
  18,306
  25,827
  35,507
  47,661
  62,582
  80,527
  101,712
  126,304
  154,418
  186,125
  221,452
  260,388
  302,895
  348,909
  398,358
  451,161
  507,240
  566,519
  628,939
  694,450
  763,024
  834,650
  909,338
  987,120
  1,068,046
  1,152,191
  1,239,649
Debt-to-equity ratio
  0.004
  1.040
  1.640
  2.010
  2.250
  2.390
  2.490
  2.560
  2.610
  2.640
  2.670
  2.680
  2.700
  2.710
  2.720
  2.720
  2.730
  2.730
  2.740
  2.740
  2.740
  2.740
  2.740
  2.750
  2.750
  2.750
  2.750
  2.750
  2.750
  2.750
  2.750
Adjusted equity ratio
  0.181
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  178
  1,781
  2,774
  4,166
  6,058
  8,556
  11,767
  15,795
  20,734
  26,670
  33,670
  41,900
  51,175
  61,629
  73,270
  86,092
  100,083
  115,222
  131,485
  148,846
  167,277
  186,756
  207,262
  228,780
  251,301
  274,822
  299,345
  324,883
  351,452
  379,076
  407,788
Depreciation, amort., depletion, $m
  10
  157
  161
  166
  173
  183
  195
  210
  229
  252
  278
  159
  194
  234
  278
  327
  380
  438
  500
  567
  637
  711
  790
  872
  958
  1,048
  1,142
  1,239
  1,341
  1,447
  1,557
Funds from operations, $m
  259
  1,939
  2,935
  4,332
  6,231
  8,739
  11,962
  16,005
  20,963
  26,921
  33,948
  42,058
  51,369
  61,863
  73,548
  86,419
  100,464
  115,661
  131,986
  149,412
  167,914
  187,467
  208,052
  229,652
  252,259
  275,870
  300,487
  326,122
  352,793
  380,523
  409,345
Change in working capital, $m
  24
  -214
  -311
  -437
  -595
  -786
  -1,012
  -1,271
  -1,560
  -1,876
  -2,215
  -2,571
  -2,939
  -3,315
  -3,693
  -4,071
  -4,444
  -4,811
  -5,170
  -5,520
  -5,863
  -6,197
  -6,526
  -6,849
  -7,169
  -7,488
  -7,808
  -8,132
  -8,460
  -8,797
  -9,143
Cash from operations, $m
  235
  2,165
  3,246
  4,769
  6,826
  9,525
  12,974
  17,276
  22,523
  28,797
  36,163
  44,629
  54,308
  65,178
  77,241
  90,490
  104,907
  120,471
  137,155
  154,932
  173,777
  193,664
  214,577
  236,501
  259,428
  283,358
  308,296
  334,254
  361,253
  389,320
  418,488
Maintenance CAPEX, $m
  0
  -4
  -7
  -11
  -16
  -23
  -32
  -45
  -60
  -79
  -101
  -128
  -159
  -194
  -234
  -278
  -327
  -380
  -438
  -500
  -567
  -637
  -711
  -790
  -872
  -958
  -1,048
  -1,142
  -1,239
  -1,341
  -1,447
New CAPEX, $m
  -13
  -74
  -109
  -153
  -208
  -275
  -354
  -444
  -545
  -656
  -774
  -899
  -1,027
  -1,159
  -1,291
  -1,423
  -1,553
  -1,681
  -1,807
  -1,929
  -2,049
  -2,166
  -2,281
  -2,394
  -2,506
  -2,617
  -2,729
  -2,842
  -2,957
  -3,075
  -3,196
Cash from investing activities, $m
  -74
  -78
  -116
  -164
  -224
  -298
  -386
  -489
  -605
  -735
  -875
  -1,027
  -1,186
  -1,353
  -1,525
  -1,701
  -1,880
  -2,061
  -2,245
  -2,429
  -2,616
  -2,803
  -2,992
  -3,184
  -3,378
  -3,575
  -3,777
  -3,984
  -4,196
  -4,416
  -4,643
Free cash flow, $m
  161
  2,087
  3,130
  4,605
  6,602
  9,227
  12,588
  16,787
  21,918
  28,063
  35,288
  43,603
  53,123
  63,826
  75,717
  88,789
  103,027
  118,409
  134,910
  152,503
  171,161
  190,861
  211,585
  233,318
  256,051
  279,783
  304,518
  330,270
  357,057
  384,904
  413,845
Issuance/(repayment) of debt, $m
  0
  1,504
  2,184
  3,068
  4,176
  5,521
  7,105
  8,921
  10,952
  13,172
  15,550
  18,050
  20,636
  23,273
  25,930
  28,579
  31,199
  33,775
  36,296
  38,758
  41,161
  43,511
  45,816
  48,086
  50,334
  52,574
  54,821
  57,091
  59,400
  61,762
  64,194
Issuance/(repurchase) of shares, $m
  4
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  4
  1,504
  2,184
  3,068
  4,176
  5,521
  7,105
  8,921
  10,952
  13,172
  15,550
  18,050
  20,636
  23,273
  25,930
  28,579
  31,199
  33,775
  36,296
  38,758
  41,161
  43,511
  45,816
  48,086
  50,334
  52,574
  54,821
  57,091
  59,400
  61,762
  64,194
Total cash flow (excl. dividends), $m
  165
  3,591
  5,314
  7,674
  10,778
  14,748
  19,692
  25,708
  32,870
  41,235
  50,838
  61,653
  73,759
  87,099
  101,647
  117,368
  134,227
  152,184
  171,206
  191,260
  212,322
  234,373
  257,401
  281,403
  306,384
  332,356
  359,340
  387,362
  416,457
  446,667
  478,039
Retained Cash Flow (-), $m
  -218
  -544
  -792
  -1,112
  -1,513
  -2,001
  -2,575
  -3,233
  -3,969
  -4,774
  -5,635
  -6,541
  -7,478
  -8,434
  -9,397
  -10,357
  -11,307
  -12,240
  -13,153
  -14,046
  -14,917
  -15,768
  -16,604
  -17,426
  -18,241
  -19,053
  -19,867
  -20,690
  -21,526
  -22,383
  -23,264
Prev. year cash balance distribution, $m
 
  3,943
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  6,989
  4,523
  6,562
  9,265
  12,747
  17,118
  22,475
  28,901
  36,462
  45,203
  55,111
  66,280
  78,665
  92,250
  107,011
  122,920
  139,944
  158,052
  177,215
  197,405
  218,604
  240,797
  263,977
  288,143
  313,304
  339,472
  366,672
  394,930
  424,284
  454,776
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  6,701
  4,141
  5,711
  7,629
  9,881
  12,423
  15,184
  18,064
  20,945
  23,698
  26,172
  28,284
  29,910
  30,970
  31,417
  31,237
  30,450
  29,107
  27,286
  25,084
  22,611
  19,980
  17,301
  14,676
  12,188
  9,904
  7,870
  6,110
  4,631
  3,424
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Autohome Inc. operates as an online destination for automobile consumers in the People’s Republic of China. The company, through its Websites, autohome.com.cn and che168.com, delivers comprehensive, independent, and interactive content to automobile buyers and owners, including professionally produced content that comprises automobile-related articles and reviews, pricing trends in various markets, and photos and video clips; automobile library, which includes a range of specifications covering performance levels, dimensions, powertrains, vehicle bodies, interiors, safety, entertainment systems, and other unique features, as well as manufacturers’ suggested retail prices; new and used automobile listings, and promotional information; and user forums and user generated content. Autohome Inc. also offers advertising services for automakers and dealers; dealer subscription services that allow dealers to market their inventory and services through its Websites; used automobile listings services, which allow used automobile dealers and individuals to market their automobiles for sale on its Websites; and automobile dealer subscription services that enable dealers to establish and maintain online showrooms of automobiles with pricing and promotional information on autohome.com.cn. In addition, it operates Autohome Mall, an online transaction platform that facilitates direct vehicle sales and commission-based services; provides iOS- and Android-based applications to allow its users to access its content; and offers technical and consulting services. The company was formerly known as Sequel Limited and changed its name to Autohome Inc. in October 2011. The company was founded in 2008 and is headquartered in Beijing, the People’s Republic of China. Autohome Inc. operates as a subsidiary of Telstra Holdings Pty Ltd.

FINANCIAL RATIOS  of  Autohome ADR (ATHM)

Valuation Ratios
P/E Ratio 29.6
Price to Sales 6.1
Price to Book 5.7
Price to Tangible Book
Price to Cash Flow 22.4
Price to Free Cash Flow 23.7
Growth Rates
Sales Growth Rate 72.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 13.2%
Financial Strength
Quick Ratio 207
Current Ratio 0.1
LT Debt to Equity 0%
Total Debt to Equity 0.4%
Interest Coverage 0
Management Effectiveness
Return On Assets 14.5%
Ret/ On Assets - 3 Yr. Avg. 15.7%
Return On Total Capital 21.6%
Ret/ On T. Cap. - 3 Yr. Avg. 23.2%
Return On Equity 21.9%
Return On Equity - 3 Yr. Avg. 23.5%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 59.9%
Gross Margin - 3 Yr. Avg. 74.1%
EBITDA Margin 22.2%
EBITDA Margin - 3 Yr. Avg. 35.5%
Operating Margin 19.3%
Oper. Margin - 3 Yr. Avg. 32.1%
Pre-Tax Margin 21%
Pre-Tax Margin - 3 Yr. Avg. 34%
Net Profit Margin 20.6%
Net Profit Margin - 3 Yr. Avg. 28%
Effective Tax Rate 2.8%
Eff/ Tax Rate - 3 Yr. Avg. 15.4%
Payout Ratio 0%

ATHM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ATHM stock intrinsic value calculation we used $3464 million for the last fiscal year's total revenue generated by Autohome ADR. The default revenue input number comes from 2016 income statement of Autohome ADR. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our ATHM stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for ATHM is calculated based on our internal credit rating of Autohome ADR, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Autohome ADR.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of ATHM stock the variable cost ratio is equal to 57.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for ATHM stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Autohome ADR.

Corporate tax rate of 27% is the nominal tax rate for Autohome ADR. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the ATHM stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for ATHM are equal to 3.6%.

Life of production assets of 29.1 years is the average useful life of capital assets used in Autohome ADR operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for ATHM is equal to -10.3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $4851 million for Autohome ADR - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 110.761 million for Autohome ADR is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Autohome ADR at the current share price and the inputted number of shares is $5.1 billion.


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▶ Autohome Inc. Files Its Annual Report on Form 20-F   [Apr-25-17 05:00PM  GlobeNewswire]
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▶ Tiger Pacific Capitals Bets on China Lead to Big Q3   [Nov-07-16 02:34PM  at Insider Monkey]
▶ Autohome Inc. Announces Board Change   [Oct-03-16 06:00AM  GlobeNewswire]
▶ Will Autohome (ATHM) Stock Be Helped by Upgrade?   [Aug-17-16 02:32PM  at TheStreet]
▶ Autohome Inc. Announces Board Change   [06:00AM  GlobeNewswire]
▶ CVR, CVR Refining in Mondays 52-Week Low Club   [Jul-18-16 04:04PM  at 24/7 Wall St.]
▶ Autohome, ImmunoGen Lead Fridays 52-Week Low Club   [Jul-15-16 04:04PM  at 24/7 Wall St.]
▶ [$$] China's used car market: fast and spurious   [Jul-11-16 12:27PM  at Financial Times]
▶ Autohome Inc. Announces Appointment of New Director   [May-31-16 07:00AM  GlobeNewswire]
Stock chart of ATHM Financial statements of ATHM Annual reports of ATHM
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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