Intrinsic value of Baidu ADR - BIDU

Previous Close

$264.52

  Intrinsic Value

$214.24

stock screener

  Rating & Target

hold

-19%

  Value-price divergence*

-107%

Previous close

$264.52

 
Intrinsic value

$214.24

 
Up/down potential

-19%

 
Rating

hold

 
Value-price divergence*

-107%

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

We calculate the intrinsic value of BIDU 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 92.0

 

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, %
  6.28
  14.30
  13.37
  12.53
  11.78
  11.10
  10.49
  9.94
  9.45
  9.00
  8.60
  8.24
  7.92
  7.63
  7.36
  7.13
  6.91
  6.72
  6.55
  6.40
  6.26
  6.13
  6.02
  5.92
  5.82
  5.74
  5.67
  5.60
  5.54
  5.49
  5.44
Revenue, $m
  10,207
  11,667
  13,226
  14,884
  16,637
  18,484
  20,424
  22,454
  24,576
  26,789
  29,093
  31,491
  33,985
  36,577
  39,270
  42,069
  44,978
  48,002
  51,147
  54,418
  57,823
  61,368
  65,060
  68,909
  72,923
  77,110
  81,480
  86,044
  90,811
  95,794
  101,003
Variable operating expenses, $m
 
  9,582
  10,833
  12,163
  13,569
  15,051
  16,607
  18,236
  19,938
  21,713
  23,562
  25,264
  27,264
  29,344
  31,505
  33,750
  36,084
  38,510
  41,033
  43,657
  46,388
  49,232
  52,195
  55,282
  58,502
  61,861
  65,367
  69,029
  72,853
  76,851
  81,030
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
  8,753
  9,582
  10,833
  12,163
  13,569
  15,051
  16,607
  18,236
  19,938
  21,713
  23,562
  25,264
  27,264
  29,344
  31,505
  33,750
  36,084
  38,510
  41,033
  43,657
  46,388
  49,232
  52,195
  55,282
  58,502
  61,861
  65,367
  69,029
  72,853
  76,851
  81,030
Operating income, $m
  1,454
  2,085
  2,394
  2,721
  3,068
  3,433
  3,817
  4,218
  4,638
  5,075
  5,531
  6,227
  6,720
  7,233
  7,766
  8,319
  8,894
  9,492
  10,114
  10,761
  11,434
  12,135
  12,866
  13,627
  14,420
  15,248
  16,113
  17,015
  17,958
  18,943
  19,973
EBITDA, $m
  2,658
  2,788
  3,160
  3,557
  3,976
  4,417
  4,880
  5,365
  5,872
  6,401
  6,952
  7,525
  8,121
  8,740
  9,384
  10,052
  10,748
  11,470
  12,222
  13,003
  13,817
  14,664
  15,546
  16,466
  17,425
  18,425
  19,470
  20,560
  21,699
  22,890
  24,135
Interest expense (income), $m
  161
  175
  232
  294
  359
  429
  502
  579
  659
  743
  831
  922
  1,017
  1,116
  1,219
  1,325
  1,436
  1,552
  1,671
  1,796
  1,926
  2,060
  2,201
  2,347
  2,500
  2,659
  2,825
  2,998
  3,178
  3,367
  3,565
Earnings before tax, $m
  2,099
  1,911
  2,162
  2,428
  2,709
  3,004
  3,315
  3,639
  3,979
  4,332
  4,700
  5,305
  5,703
  6,117
  6,547
  6,994
  7,458
  7,941
  8,443
  8,965
  9,509
  10,075
  10,665
  11,280
  11,921
  12,590
  13,288
  14,018
  14,779
  15,576
  16,409
Tax expense, $m
  421
  516
  584
  655
  731
  811
  895
  983
  1,074
  1,170
  1,269
  1,432
  1,540
  1,652
  1,768
  1,888
  2,014
  2,144
  2,280
  2,421
  2,567
  2,720
  2,879
  3,046
  3,219
  3,399
  3,588
  3,785
  3,990
  4,205
  4,430
Net income, $m
  1,602
  1,395
  1,578
  1,772
  1,977
  2,193
  2,420
  2,657
  2,904
  3,162
  3,431
  3,873
  4,163
  4,465
  4,779
  5,105
  5,444
  5,797
  6,163
  6,545
  6,941
  7,355
  7,785
  8,234
  8,702
  9,191
  9,700
  10,233
  10,789
  11,370
  11,978

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  12,998
  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
  26,330
  15,231
  17,267
  19,431
  21,720
  24,131
  26,663
  29,314
  32,083
  34,972
  37,981
  41,111
  44,367
  47,750
  51,267
  54,921
  58,718
  62,666
  66,771
  71,042
  75,486
  80,114
  84,935
  89,960
  95,199
  100,666
  106,371
  112,329
  118,553
  125,057
  131,858
Adjusted assets (=assets-cash), $m
  13,332
  15,231
  17,267
  19,431
  21,720
  24,131
  26,663
  29,314
  32,083
  34,972
  37,981
  41,111
  44,367
  47,750
  51,267
  54,921
  58,718
  62,666
  66,771
  71,042
  75,486
  80,114
  84,935
  89,960
  95,199
  100,666
  106,371
  112,329
  118,553
  125,057
  131,858
Revenue / Adjusted assets
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
Average production assets, $m
  2,107
  2,403
  2,725
  3,066
  3,427
  3,808
  4,207
  4,626
  5,063
  5,518
  5,993
  6,487
  7,001
  7,535
  8,090
  8,666
  9,266
  9,888
  10,536
  11,210
  11,911
  12,642
  13,402
  14,195
  15,022
  15,885
  16,785
  17,725
  18,707
  19,734
  20,807
Working capital, $m
  7,762
  -4,363
  -4,947
  -5,567
  -6,222
  -6,913
  -7,638
  -8,398
  -9,191
  -10,019
  -10,881
  -11,778
  -12,710
  -13,680
  -14,687
  -15,734
  -16,822
  -17,953
  -19,129
  -20,352
  -21,626
  -22,951
  -24,333
  -25,772
  -27,273
  -28,839
  -30,474
  -32,180
  -33,963
  -35,827
  -37,775
Total debt, $m
  6,404
  6,628
  8,393
  10,270
  12,254
  14,345
  16,540
  18,838
  21,239
  23,744
  26,352
  29,066
  31,889
  34,822
  37,871
  41,039
  44,332
  47,754
  51,314
  55,016
  58,870
  62,882
  67,062
  71,418
  75,961
  80,700
  85,647
  90,812
  96,208
  101,848
  107,744
Total liabilities, $m
  12,981
  13,205
  14,970
  16,847
  18,831
  20,922
  23,117
  25,415
  27,816
  30,321
  32,929
  35,643
  38,466
  41,399
  44,448
  47,616
  50,909
  54,331
  57,891
  61,593
  65,447
  69,459
  73,639
  77,995
  82,538
  87,277
  92,224
  97,389
  102,785
  108,425
  114,321
Total equity, $m
  13,349
  2,026
  2,296
  2,584
  2,889
  3,209
  3,546
  3,899
  4,267
  4,651
  5,051
  5,468
  5,901
  6,351
  6,818
  7,304
  7,810
  8,335
  8,881
  9,449
  10,040
  10,655
  11,296
  11,965
  12,662
  13,389
  14,147
  14,940
  15,767
  16,633
  17,537
Total liabilities and equity, $m
  26,330
  15,231
  17,266
  19,431
  21,720
  24,131
  26,663
  29,314
  32,083
  34,972
  37,980
  41,111
  44,367
  47,750
  51,266
  54,920
  58,719
  62,666
  66,772
  71,042
  75,487
  80,114
  84,935
  89,960
  95,200
  100,666
  106,371
  112,329
  118,552
  125,058
  131,858
Debt-to-equity ratio
  0.480
  3.270
  3.650
  3.970
  4.240
  4.470
  4.660
  4.830
  4.980
  5.100
  5.220
  5.320
  5.400
  5.480
  5.550
  5.620
  5.680
  5.730
  5.780
  5.820
  5.860
  5.900
  5.940
  5.970
  6.000
  6.030
  6.050
  6.080
  6.100
  6.120
  6.140
Adjusted equity ratio
  0.095
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,602
  1,395
  1,578
  1,772
  1,977
  2,193
  2,420
  2,657
  2,904
  3,162
  3,431
  3,873
  4,163
  4,465
  4,779
  5,105
  5,444
  5,797
  6,163
  6,545
  6,941
  7,355
  7,785
  8,234
  8,702
  9,191
  9,700
  10,233
  10,789
  11,370
  11,978
Depreciation, amort., depletion, $m
  1,204
  703
  767
  835
  907
  984
  1,063
  1,147
  1,235
  1,326
  1,421
  1,297
  1,400
  1,507
  1,618
  1,733
  1,853
  1,978
  2,107
  2,242
  2,382
  2,528
  2,680
  2,839
  3,004
  3,177
  3,357
  3,545
  3,741
  3,947
  4,161
Funds from operations, $m
  4,036
  2,097
  2,345
  2,607
  2,885
  3,177
  3,483
  3,804
  4,139
  4,488
  4,852
  5,170
  5,563
  5,972
  6,397
  6,839
  7,297
  7,774
  8,271
  8,787
  9,324
  9,883
  10,466
  11,073
  11,707
  12,367
  13,057
  13,778
  14,530
  15,317
  16,140
Change in working capital, $m
  816
  -546
  -583
  -620
  -656
  -691
  -725
  -759
  -793
  -828
  -862
  -897
  -933
  -969
  -1,007
  -1,047
  -1,088
  -1,131
  -1,176
  -1,223
  -1,273
  -1,326
  -1,381
  -1,439
  -1,501
  -1,566
  -1,634
  -1,707
  -1,783
  -1,863
  -1,948
Cash from operations, $m
  3,220
  2,643
  2,928
  3,227
  3,540
  3,868
  4,209
  4,563
  4,932
  5,316
  5,714
  6,067
  6,496
  6,942
  7,405
  7,885
  8,385
  8,905
  9,447
  10,010
  10,597
  11,209
  11,847
  12,513
  13,208
  13,933
  14,692
  15,485
  16,313
  17,181
  18,088
Maintenance CAPEX, $m
  0
  -421
  -481
  -545
  -613
  -685
  -762
  -841
  -925
  -1,013
  -1,104
  -1,199
  -1,297
  -1,400
  -1,507
  -1,618
  -1,733
  -1,853
  -1,978
  -2,107
  -2,242
  -2,382
  -2,528
  -2,680
  -2,839
  -3,004
  -3,177
  -3,357
  -3,545
  -3,741
  -3,947
New CAPEX, $m
  -1,520
  -297
  -321
  -341
  -361
  -380
  -399
  -418
  -437
  -456
  -475
  -494
  -514
  -534
  -555
  -577
  -599
  -623
  -648
  -674
  -701
  -730
  -761
  -793
  -827
  -863
  -900
  -940
  -982
  -1,026
  -1,073
Cash from investing activities, $m
  -5,195
  -718
  -802
  -886
  -974
  -1,065
  -1,161
  -1,259
  -1,362
  -1,469
  -1,579
  -1,693
  -1,811
  -1,934
  -2,062
  -2,195
  -2,332
  -2,476
  -2,626
  -2,781
  -2,943
  -3,112
  -3,289
  -3,473
  -3,666
  -3,867
  -4,077
  -4,297
  -4,527
  -4,767
  -5,020
Free cash flow, $m
  -1,975
  1,925
  2,126
  2,341
  2,566
  2,802
  3,047
  3,304
  3,570
  3,847
  4,135
  4,374
  4,685
  5,008
  5,343
  5,691
  6,053
  6,429
  6,821
  7,229
  7,654
  8,096
  8,558
  9,039
  9,542
  10,067
  10,615
  11,187
  11,786
  12,413
  13,068
Issuance/(repayment) of debt, $m
  991
  1,641
  1,765
  1,876
  1,984
  2,091
  2,195
  2,298
  2,401
  2,504
  2,608
  2,714
  2,822
  2,934
  3,049
  3,168
  3,293
  3,423
  3,559
  3,703
  3,853
  4,012
  4,180
  4,356
  4,543
  4,739
  4,947
  5,165
  5,396
  5,640
  5,896
Issuance/(repurchase) of shares, $m
  121
  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  
  2,090
  1,641
  1,765
  1,876
  1,984
  2,091
  2,195
  2,298
  2,401
  2,504
  2,608
  2,714
  2,822
  2,934
  3,049
  3,168
  3,293
  3,423
  3,559
  3,703
  3,853
  4,012
  4,180
  4,356
  4,543
  4,739
  4,947
  5,165
  5,396
  5,640
  5,896
Total cash flow (excl. dividends), $m
  136
  3,566
  3,892
  4,217
  4,551
  4,892
  5,242
  5,602
  5,971
  6,352
  6,744
  7,089
  7,507
  7,941
  8,391
  8,859
  9,345
  9,852
  10,380
  10,932
  11,507
  12,109
  12,738
  13,396
  14,084
  14,806
  15,561
  16,353
  17,183
  18,052
  18,964
Retained Cash Flow (-), $m
  -1,738
  -258
  -271
  -288
  -304
  -321
  -337
  -353
  -368
  -384
  -400
  -416
  -433
  -450
  -468
  -486
  -505
  -525
  -546
  -568
  -591
  -616
  -641
  -668
  -697
  -727
  -759
  -792
  -828
  -865
  -904
Prev. year cash balance distribution, $m
 
  11,581
  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
 
  14,889
  3,621
  3,929
  4,246
  4,571
  4,906
  5,249
  5,603
  5,967
  6,344
  6,672
  7,074
  7,491
  7,924
  8,373
  8,840
  9,327
  9,834
  10,364
  10,916
  11,493
  12,096
  12,727
  13,388
  14,079
  14,802
  15,560
  16,355
  17,187
  18,060
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
 
  14,275
  3,315
  3,420
  3,496
  3,543
  3,560
  3,546
  3,502
  3,428
  3,326
  3,169
  3,019
  2,848
  2,660
  2,458
  2,247
  2,029
  1,811
  1,596
  1,387
  1,189
  1,004
  834
  682
  548
  432
  334
  253
  188
  136
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

Baidu, Inc. is a Chinese language Internet search provider. The Company offers a Chinese language search platform on its Baidu.com Website that enables users to find information online, including Webpages, news, images, documents and multimedia files, through links provided on its Website. In addition to serving individual Internet search users, the Company provides a platform for businesses to reach customers. Its business consists of three segments: search services, transaction services and iQiyi. Search services are keyword-based marketing services targeted at and triggered by Internet users' search queries, which mainly include its pay-for-performance (P4P) services and other online marketing services. Its transaction services include Baidu Nuomi, Baidu Takeout Delivery, Baidu Maps, Baidu Connect, Baidu Wallet and others. iQiyi is an online video platform with a content library that includes licensed movies, television series, cartoons, variety shows and other programs.

FINANCIAL RATIOS  of  Baidu ADR (BIDU)

Valuation Ratios
P/E Ratio 5.7
Price to Sales 0.9
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow 2.9
Price to Free Cash Flow 5.4
Growth Rates
Sales Growth Rate 6.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 35.1%
Cap. Spend. - 3 Yr. Gr. Rate 23.3%
Financial Strength
Quick Ratio 9
Current Ratio 0
LT Debt to Equity 37.4%
Total Debt to Equity 48%
Interest Coverage 14
Management Effectiveness
Return On Assets 7.3%
Ret/ On Assets - 3 Yr. Avg. 17%
Return On Total Capital 8.8%
Ret/ On T. Cap. - 3 Yr. Avg. 21.1%
Return On Equity 12.8%
Return On Equity - 3 Yr. Avg. 31%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 50%
Gross Margin - 3 Yr. Avg. 56.7%
EBITDA Margin 33.9%
EBITDA Margin - 3 Yr. Avg. 46.7%
Operating Margin 14.2%
Oper. Margin - 3 Yr. Avg. 19.3%
Pre-Tax Margin 20.6%
Pre-Tax Margin - 3 Yr. Avg. 35.7%
Net Profit Margin 15.7%
Net Profit Margin - 3 Yr. Avg. 30.9%
Effective Tax Rate 20.1%
Eff/ Tax Rate - 3 Yr. Avg. 16.6%
Payout Ratio 0%

BIDU stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BIDU stock intrinsic value calculation we used $10207 million for the last fiscal year's total revenue generated by Baidu ADR. The default revenue input number comes from 2016 income statement of Baidu 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 BIDU stock valuation model: a) initial revenue growth rate of 14.3% 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 BIDU is calculated based on our internal credit rating of Baidu 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 Baidu 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 BIDU stock the variable cost ratio is equal to 82.4%.

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 BIDU 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 Baidu ADR.

Corporate tax rate of 27% is the nominal tax rate for Baidu 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 BIDU 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 BIDU are equal to 20.6%.

Life of production assets of 3.6 years is the average useful life of capital assets used in Baidu 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 BIDU is equal to -37.4%. 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 - $13349 million for Baidu 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 347.816 million for Baidu 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 Baidu ADR at the current share price and the inputted number of shares is $92.0 billion.

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COMPANY NEWS

▶ Is It Smart for Baidu to Invest in AI?   [04:39PM  Barrons.com]
▶ Media Executives Brainstorm How to Fix Fake News   [Oct-18-17 07:44PM  MarketWatch]
▶ Better Buy: Baidu Inc. or Yandex NV?   [12:24PM  Motley Fool]
▶ Top Executives: Driverless Cars Will Change the World   [Oct-17-17 11:50PM  MarketWatch]
▶ [$$] Baidu Plans Fully Self-Driving Bus in China Next Year   [09:01PM  The Wall Street Journal]
▶ Baidu Inc (ADR) (BIDU) Stock Still Has Plenty of Upside   [Oct-16-17 12:55PM  InvestorPlace]
▶ [$$] China seeks dominance of global AI industry   [Oct-15-17 07:47PM  Financial Times]
▶ Sogou, Mobile Search Rival Of Baidu And Alibaba, Files For IPO   [Oct-13-17 10:57AM  Investor's Business Daily]
▶ Baidu President Zhang on AI, Censorship and Trump   [Oct-11-17 02:55PM  Bloomberg Video]
▶ Baidu's U.S. chief: 'AI is the single most important force of our time' (Video)   [Oct-10-17 05:25PM  American City Business Journals]
▶ Baidu's Zhang on Censorship, China, Trump Protectionism   [Oct-09-17 09:45PM  Bloomberg Video]
▶ Will Google's AI Investment in Beijing Bear Fruit?   [Oct-08-17 07:34AM  Motley Fool]
▶ Baidu Wants to IPO the Netflix of China   [Oct-07-17 08:12AM  Motley Fool]
▶ Has AMD Become a Significant Threat to NVIDIA?   [Oct-06-17 08:06PM  Motley Fool]
▶ Is PayPal Holdings, Inc. a Buy?   [Oct-05-17 06:14PM  Motley Fool]
▶ Google's AI is much smarter than Siri   [Oct-04-17 10:51AM  Business Insider]
▶ Behind the Microsoft-Baidu Cloud Partnership   [09:09AM  Market Realist]
▶ Baidu (BIDU) and Autonomous Cars: The Big Picture   [Sep-30-17 09:14AM  InvestorPlace]
▶ Baidu Inc (ADR) (BIDU) Stock Surging on Technology Advances   [Sep-29-17 11:17AM  InvestorPlace]
▶ China's WhatsApp Ban Hurts Facebook but Helps Tencent   [Sep-28-17 08:07PM  Motley Fool]
▶ These 3 Top Chinese Internets Get New, Bullish Coverage   [Sep-27-17 04:13PM  Investor's Business Daily]
▶ Baidu Stock: Next Stop, $282?   [03:39PM  Motley Fool]
▶ How ETF Investors Are Allocating to China   [11:02AM  Investopedia]
▶ Asia Tech Stocks Decline, Tencent Closes Down 1%   [Sep-26-17 08:10PM  Bloomberg Video]
▶ LIVE BLOG: Closing Bell   [04:07PM  TheStreet.com]
▶ LIVE BLOG: Janet Yellen Edition   [01:23PM  TheStreet.com]
▶ This Is No Netflix Original   [01:10AM  Bloomberg]
▶ iQiyi Said to Seek 2018 U.S. IPO   [12:03AM  Bloomberg Video]
▶ China Fines Tencent, Baidu and Weibo   [12:02AM  Bloomberg Video]
▶ Baidu promises to invest $1.5B in self-driving car startups   [Sep-22-17 10:25AM  American City Business Journals]
▶ [$$] Tencent and Guangzhou team up to develop smart cars   [Sep-19-17 06:17AM  Financial Times]
Financial statements of BIDU
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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