Intrinsic value of Bitauto Holdings ADR - BITA

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$29.41

  Intrinsic Value

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  Value-price divergence*

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$29.41

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

We calculate the intrinsic value of BITA 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 2.0

 

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, %
  35.77
  33.10
  30.29
  27.76
  25.48
  23.44
  21.59
  19.93
  18.44
  17.10
  15.89
  14.80
  13.82
  12.94
  12.14
  11.43
  10.79
  10.21
  9.69
  9.22
  8.80
  8.42
  8.07
  7.77
  7.49
  7.24
  7.02
  6.82
  6.63
  6.47
  6.32
Revenue, $m
  835
  5,340
  6,957
  8,889
  11,154
  13,768
  16,741
  20,079
  23,781
  27,847
  32,271
  37,046
  42,165
  47,619
  53,402
  59,505
  65,923
  72,651
  79,688
  87,034
  94,689
  102,659
  110,948
  119,565
  128,522
  137,828
  147,500
  157,553
  168,005
  178,876
  190,187
Variable operating expenses, $m
 
  4,053
  5,281
  6,747
  8,466
  10,450
  12,707
  15,240
  18,050
  21,136
  24,493
  28,118
  32,003
  36,143
  40,532
  45,164
  50,035
  55,142
  60,484
  66,059
  71,869
  77,918
  84,209
  90,750
  97,548
  104,612
  111,953
  119,583
  127,516
  135,767
  144,352
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
  857
  4,053
  5,281
  6,747
  8,466
  10,450
  12,707
  15,240
  18,050
  21,136
  24,493
  28,118
  32,003
  36,143
  40,532
  45,164
  50,035
  55,142
  60,484
  66,059
  71,869
  77,918
  84,209
  90,750
  97,548
  104,612
  111,953
  119,583
  127,516
  135,767
  144,352
Operating income, $m
  -22
  1,287
  1,677
  2,142
  2,688
  3,318
  4,035
  4,839
  5,731
  6,711
  7,777
  8,928
  10,162
  11,476
  12,870
  14,341
  15,887
  17,509
  19,205
  20,975
  22,820
  24,741
  26,738
  28,815
  30,974
  33,217
  35,548
  37,970
  40,489
  43,109
  45,835
EBITDA, $m
  78
  1,336
  1,741
  2,224
  2,791
  3,445
  4,189
  5,024
  5,950
  6,967
  8,074
  9,269
  10,550
  11,914
  13,361
  14,888
  16,494
  18,177
  19,938
  21,776
  23,691
  25,685
  27,759
  29,915
  32,156
  34,485
  36,905
  39,420
  42,035
  44,755
  47,585
Interest expense (income), $m
  19
  0
  32
  71
  117
  171
  234
  305
  385
  474
  571
  677
  792
  915
  1,045
  1,184
  1,330
  1,484
  1,646
  1,814
  1,990
  2,174
  2,365
  2,564
  2,770
  2,985
  3,208
  3,440
  3,681
  3,932
  4,192
Earnings before tax, $m
  -28
  1,287
  1,645
  2,072
  2,571
  3,147
  3,801
  4,534
  5,346
  6,237
  7,206
  8,251
  9,370
  10,562
  11,824
  13,157
  14,557
  16,025
  17,559
  19,161
  20,830
  22,567
  24,373
  26,252
  28,203
  30,232
  32,339
  34,530
  36,808
  39,177
  41,643
Tax expense, $m
  21
  347
  444
  559
  694
  850
  1,026
  1,224
  1,443
  1,684
  1,946
  2,228
  2,530
  2,852
  3,193
  3,552
  3,930
  4,327
  4,741
  5,173
  5,624
  6,093
  6,581
  7,088
  7,615
  8,163
  8,732
  9,323
  9,938
  10,578
  11,244
Net income, $m
  -78
  939
  1,201
  1,512
  1,877
  2,297
  2,775
  3,310
  3,903
  4,553
  5,260
  6,023
  6,840
  7,710
  8,632
  9,604
  10,627
  11,698
  12,818
  13,987
  15,206
  16,474
  17,793
  19,164
  20,588
  22,069
  23,608
  25,207
  26,870
  28,600
  30,399

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  293
  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
  4,331
  13,350
  17,394
  22,222
  27,886
  34,421
  41,853
  50,196
  59,453
  69,617
  80,676
  92,615
  105,412
  119,049
  133,504
  148,762
  164,806
  181,628
  199,221
  217,585
  236,723
  256,646
  277,370
  298,914
  321,304
  344,571
  368,750
  393,883
  420,013
  447,190
  475,469
Adjusted assets (=assets-cash), $m
  4,038
  13,350
  17,394
  22,222
  27,886
  34,421
  41,853
  50,196
  59,453
  69,617
  80,676
  92,615
  105,412
  119,049
  133,504
  148,762
  164,806
  181,628
  199,221
  217,585
  236,723
  256,646
  277,370
  298,914
  321,304
  344,571
  368,750
  393,883
  420,013
  447,190
  475,469
Revenue / Adjusted assets
  0.207
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
Average production assets, $m
  346
  246
  320
  409
  513
  633
  770
  924
  1,094
  1,281
  1,484
  1,704
  1,940
  2,190
  2,456
  2,737
  3,032
  3,342
  3,666
  4,004
  4,356
  4,722
  5,104
  5,500
  5,912
  6,340
  6,785
  7,247
  7,728
  8,228
  8,749
Working capital, $m
  654
  2,670
  3,479
  4,444
  5,577
  6,884
  8,371
  10,039
  11,891
  13,923
  16,135
  18,523
  21,082
  23,810
  26,701
  29,752
  32,961
  36,326
  39,844
  43,517
  47,345
  51,329
  55,474
  59,783
  64,261
  68,914
  73,750
  78,777
  84,003
  89,438
  95,094
Total debt, $m
  1,824
  909
  2,017
  3,340
  4,892
  6,682
  8,719
  11,005
  13,541
  16,326
  19,356
  22,627
  26,134
  29,870
  33,831
  38,012
  42,408
  47,017
  51,838
  56,869
  62,113
  67,572
  73,250
  79,153
  85,288
  91,663
  98,289
  105,175
  112,335
  119,781
  127,529
Total liabilities, $m
  2,950
  3,658
  4,766
  6,089
  7,641
  9,431
  11,468
  13,754
  16,290
  19,075
  22,105
  25,376
  28,883
  32,619
  36,580
  40,761
  45,157
  49,766
  54,587
  59,618
  64,862
  70,321
  75,999
  81,902
  88,037
  94,412
  101,038
  107,924
  115,084
  122,530
  130,278
Total equity, $m
  1,381
  9,692
  12,628
  16,133
  20,245
  24,990
  30,386
  36,442
  43,163
  50,542
  58,571
  67,238
  76,529
  86,429
  96,924
  108,001
  119,649
  131,862
  144,635
  157,966
  171,861
  186,325
  201,371
  217,011
  233,267
  250,158
  267,713
  285,959
  304,929
  324,660
  345,190
Total liabilities and equity, $m
  4,331
  13,350
  17,394
  22,222
  27,886
  34,421
  41,854
  50,196
  59,453
  69,617
  80,676
  92,614
  105,412
  119,048
  133,504
  148,762
  164,806
  181,628
  199,222
  217,584
  236,723
  256,646
  277,370
  298,913
  321,304
  344,570
  368,751
  393,883
  420,013
  447,190
  475,468
Debt-to-equity ratio
  1.321
  0.090
  0.160
  0.210
  0.240
  0.270
  0.290
  0.300
  0.310
  0.320
  0.330
  0.340
  0.340
  0.350
  0.350
  0.350
  0.350
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
Adjusted equity ratio
  0.269
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -78
  939
  1,201
  1,512
  1,877
  2,297
  2,775
  3,310
  3,903
  4,553
  5,260
  6,023
  6,840
  7,710
  8,632
  9,604
  10,627
  11,698
  12,818
  13,987
  15,206
  16,474
  17,793
  19,164
  20,588
  22,069
  23,608
  25,207
  26,870
  28,600
  30,399
Depreciation, amort., depletion, $m
  100
  49
  64
  82
  103
  127
  154
  185
  219
  256
  297
  341
  388
  438
  491
  547
  606
  668
  733
  801
  871
  944
  1,021
  1,100
  1,182
  1,268
  1,357
  1,449
  1,546
  1,646
  1,750
Funds from operations, $m
  72
  989
  1,265
  1,594
  1,980
  2,424
  2,929
  3,494
  4,121
  4,809
  5,557
  6,364
  7,228
  8,148
  9,123
  10,152
  11,233
  12,366
  13,551
  14,788
  16,077
  17,418
  18,813
  20,264
  21,771
  23,337
  24,965
  26,657
  28,416
  30,245
  32,149
Change in working capital, $m
  -4
  664
  809
  966
  1,133
  1,307
  1,486
  1,669
  1,851
  2,033
  2,212
  2,388
  2,560
  2,727
  2,891
  3,051
  3,209
  3,364
  3,519
  3,673
  3,828
  3,985
  4,145
  4,309
  4,478
  4,653
  4,836
  5,026
  5,226
  5,435
  5,656
Cash from operations, $m
  76
  139
  456
  628
  847
  1,117
  1,442
  1,826
  2,270
  2,776
  3,345
  3,976
  4,668
  5,421
  6,232
  7,100
  8,024
  9,002
  10,033
  11,115
  12,249
  13,434
  14,669
  15,955
  17,293
  18,684
  20,129
  21,630
  23,190
  24,810
  26,493
Maintenance CAPEX, $m
  0
  -37
  -49
  -64
  -82
  -103
  -127
  -154
  -185
  -219
  -256
  -297
  -341
  -388
  -438
  -491
  -547
  -606
  -668
  -733
  -801
  -871
  -944
  -1,021
  -1,100
  -1,182
  -1,268
  -1,357
  -1,449
  -1,546
  -1,646
New CAPEX, $m
  -88
  -60
  -74
  -89
  -104
  -120
  -137
  -154
  -170
  -187
  -203
  -220
  -235
  -251
  -266
  -281
  -295
  -310
  -324
  -338
  -352
  -367
  -381
  -396
  -412
  -428
  -445
  -462
  -481
  -500
  -520
Cash from investing activities, $m
  -2,455
  -97
  -123
  -153
  -186
  -223
  -264
  -308
  -355
  -406
  -459
  -517
  -576
  -639
  -704
  -772
  -842
  -916
  -992
  -1,071
  -1,153
  -1,238
  -1,325
  -1,417
  -1,512
  -1,610
  -1,713
  -1,819
  -1,930
  -2,046
  -2,166
Free cash flow, $m
  -2,379
  42
  333
  475
  661
  894
  1,179
  1,518
  1,915
  2,371
  2,885
  3,460
  4,092
  4,782
  5,528
  6,328
  7,181
  8,086
  9,041
  10,044
  11,096
  12,196
  13,343
  14,538
  15,781
  17,073
  18,416
  19,811
  21,259
  22,764
  24,327
Issuance/(repayment) of debt, $m
  1,791
  909
  1,108
  1,323
  1,552
  1,791
  2,036
  2,286
  2,536
  2,785
  3,030
  3,271
  3,507
  3,736
  3,961
  4,181
  4,396
  4,609
  4,820
  5,032
  5,244
  5,459
  5,678
  5,903
  6,135
  6,375
  6,625
  6,886
  7,160
  7,447
  7,748
Issuance/(repurchase) of shares, $m
  440
  0
  1,495
  1,707
  1,899
  2,060
  2,181
  2,253
  2,269
  2,224
  2,113
  1,937
  1,692
  1,382
  1,006
  568
  71
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  2,231
  909
  2,603
  3,030
  3,451
  3,851
  4,217
  4,539
  4,805
  5,009
  5,143
  5,208
  5,199
  5,118
  4,967
  4,749
  4,467
  4,609
  4,820
  5,032
  5,244
  5,459
  5,678
  5,903
  6,135
  6,375
  6,625
  6,886
  7,160
  7,447
  7,748
Total cash flow (excl. dividends), $m
  -133
  951
  1,441
  1,799
  2,213
  2,685
  3,215
  3,804
  4,451
  5,156
  5,916
  6,731
  7,599
  8,518
  9,489
  10,509
  11,578
  12,695
  13,861
  15,076
  16,340
  17,655
  19,021
  20,441
  21,916
  23,448
  25,041
  26,697
  28,419
  30,211
  32,076
Retained Cash Flow (-), $m
  -172
  -2,411
  -2,936
  -3,506
  -4,112
  -4,745
  -5,396
  -6,057
  -6,720
  -7,379
  -8,029
  -8,667
  -9,291
  -9,900
  -10,495
  -11,077
  -11,648
  -12,213
  -12,773
  -13,332
  -13,895
  -14,464
  -15,045
  -15,641
  -16,255
  -16,892
  -17,554
  -18,246
  -18,971
  -19,731
  -20,530
Prev. year cash balance distribution, $m
 
  3,041
  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
 
  1,581
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  483
  1,089
  1,744
  2,446
  3,190
  3,976
  4,800
  5,661
  6,556
  7,487
  8,451
  9,448
  10,480
  11,546
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
 
  1,516
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  105
  200
  269
  311
  330
  330
  315
  288
  255
  218
  181
  146
  114
  87
Current shareholders' claim on cash, %
  100
  100.0
  81.9
  68.7
  58.8
  51.3
  45.6
  41.3
  37.9
  35.3
  33.3
  31.8
  30.7
  29.9
  29.4
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2

Bitauto Holdings Limited provides Internet content and marketing services for the automotive industry in the People’s Republic of China. The company operates in three segments: Advertising Business, EP Platform Business, and Digital Marketing Solutions Business. The Advertising Business segment provides advertising services, including new automobile pricing and promotional information, specifications, reviews, and consumer feedback to automakers through its bitauto.com and taoche.com Websites, as well as mobile applications. The EP Platform Business segment provides Web-based and mobile-based integrated digital marketing, customer relationship management (CRM), and automobile listing services to automobile customers in China. This segment’s platform enables dealer subscribers to create their own online showrooms, list pricing and promotional information, provide dealer contact information, place advertisements, and manage customer relationships. It also provides automobile transaction, CRM, and online automotive financial platform services to automobile customers. The Digital Marketing Solutions Business segment provides one-stop digital marketing solutions, such as Website creation and maintenance, online public relations, online marketing campaigns, and advertising agent services to automakers. The company also distributes its dealer customers' automobile pricing and promotional information through its partners who provides Internet services. In addition, it provides customer services and training to dealer customers. Bitauto Holdings Limited was founded in 2000 and is headquartered in Beijing, the People’s Republic of China.

FINANCIAL RATIOS  of  Bitauto Holdings ADR (BITA)

Valuation Ratios
P/E Ratio -26.2
Price to Sales 2.4
Price to Book 1.5
Price to Tangible Book
Price to Cash Flow 26.9
Price to Free Cash Flow -170.2
Growth Rates
Sales Growth Rate 35.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 158.8%
Cap. Spend. - 3 Yr. Gr. Rate 77.5%
Financial Strength
Quick Ratio 0
Current Ratio 0.5
LT Debt to Equity 42.7%
Total Debt to Equity 132.1%
Interest Coverage 0
Management Effectiveness
Return On Assets -1.4%
Ret/ On Assets - 3 Yr. Avg. 3.9%
Return On Total Capital -3.5%
Ret/ On T. Cap. - 3 Yr. Avg. 4.8%
Return On Equity -6%
Return On Equity - 3 Yr. Avg. 3.9%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 64.1%
Gross Margin - 3 Yr. Avg. 68.2%
EBITDA Margin 10.9%
EBITDA Margin - 3 Yr. Avg. 15%
Operating Margin -2.6%
Oper. Margin - 3 Yr. Avg. 4%
Pre-Tax Margin -3.4%
Pre-Tax Margin - 3 Yr. Avg. 3.9%
Net Profit Margin -9.3%
Net Profit Margin - 3 Yr. Avg. -0.9%
Effective Tax Rate -75%
Eff/ Tax Rate - 3 Yr. Avg. -26.8%
Payout Ratio 0%

BITA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BITA stock intrinsic value calculation we used $4012 million for the last fiscal year's total revenue generated by Bitauto Holdings ADR. The default revenue input number comes from 2016 income statement of Bitauto Holdings 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 BITA stock valuation model: a) initial revenue growth rate of 33.1% 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 BITA is calculated based on our internal credit rating of Bitauto Holdings 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 Bitauto Holdings 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 BITA stock the variable cost ratio is equal to 75.9%.

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 BITA 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 Bitauto Holdings ADR.

Corporate tax rate of 27% is the nominal tax rate for Bitauto Holdings 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 BITA 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 BITA are equal to 4.6%.

Life of production assets of 0.5 years is the average useful life of capital assets used in Bitauto Holdings 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 BITA is equal to 50%. 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 - $10322 million for Bitauto Holdings 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 69.636 million for Bitauto Holdings 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 Bitauto Holdings ADR at the current share price and the inputted number of shares is $2.0 billion.


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Stock chart of BITA Financial statements of BITA Annual reports of BITA
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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