Intrinsic value of Ctrip.com International ADR - CTRP

Previous Close

$49.19

  Intrinsic Value

$203.24

stock screener

  Rating & Target

str. buy

+313%

  Value-price divergence*

+2851%

Previous close

$49.19

 
Intrinsic value

$203.24

 
Up/down potential

+313%

 
Rating

str. buy

 
Value-price divergence*

+2851%

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

We calculate the intrinsic value of CTRP 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 24.1

 

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, %
  76.41
  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
  2,782
  4,451
  6,877
  10,285
  14,923
  21,054
  28,944
  38,851
  51,014
  65,643
  82,912
  102,958
  125,876
  151,723
  180,520
  212,260
  246,909
  284,418
  324,727
  367,771
  413,483
  461,806
  512,688
  566,091
  621,990
  680,377
  741,261
  804,665
  870,633
  939,225
  1,010,518
Variable operating expenses, $m
 
  3,805
  5,437
  7,729
  10,849
  14,973
  20,281
  26,946
  35,127
  44,968
  56,585
  69,260
  84,677
  102,064
  121,436
  142,787
  166,095
  191,328
  218,444
  247,399
  278,150
  310,656
  344,885
  380,809
  418,412
  457,689
  498,645
  541,297
  585,674
  631,816
  679,774
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
  3,016
  3,805
  5,437
  7,729
  10,849
  14,973
  20,281
  26,946
  35,127
  44,968
  56,585
  69,260
  84,677
  102,064
  121,436
  142,787
  166,095
  191,328
  218,444
  247,399
  278,150
  310,656
  344,885
  380,809
  418,412
  457,689
  498,645
  541,297
  585,674
  631,816
  679,774
Operating income, $m
  -234
  646
  1,440
  2,556
  4,074
  6,080
  8,663
  11,906
  15,887
  20,675
  26,327
  33,698
  41,199
  49,659
  59,084
  69,473
  80,814
  93,090
  106,284
  120,372
  135,334
  151,150
  167,803
  185,282
  203,578
  222,688
  242,615
  263,368
  284,959
  307,410
  330,744
EBITDA, $m
  -130
  1,597
  2,467
  3,689
  5,353
  7,553
  10,383
  13,937
  18,300
  23,548
  29,743
  36,935
  45,156
  54,428
  64,759
  76,145
  88,575
  102,031
  116,491
  131,932
  148,331
  165,666
  183,919
  203,076
  223,129
  244,075
  265,916
  288,661
  312,326
  336,933
  362,508
Interest expense (income), $m
  86
  175
  376
  667
  1,076
  1,633
  2,369
  3,316
  4,506
  5,966
  7,722
  9,796
  12,202
  14,954
  18,057
  21,514
  25,325
  29,485
  33,988
  38,827
  43,995
  49,483
  55,285
  61,394
  67,805
  74,516
  81,526
  88,836
  96,448
  104,368
  112,603
Earnings before tax, $m
  -255
  471
  1,065
  1,889
  2,998
  4,448
  6,294
  8,589
  11,381
  14,709
  18,605
  23,903
  28,997
  34,705
  41,028
  47,959
  55,489
  63,606
  72,296
  81,544
  91,338
  101,666
  112,519
  123,889
  135,773
  148,172
  161,089
  174,532
  188,511
  203,042
  218,141
Tax expense, $m
  69
  127
  287
  510
  809
  1,201
  1,699
  2,319
  3,073
  3,971
  5,023
  6,454
  7,829
  9,370
  11,077
  12,949
  14,982
  17,174
  19,520
  22,017
  24,661
  27,450
  30,380
  33,450
  36,659
  40,006
  43,494
  47,124
  50,898
  54,821
  58,898
Net income, $m
  -207
  344
  777
  1,379
  2,188
  3,247
  4,595
  6,270
  8,308
  10,737
  13,581
  17,449
  21,168
  25,335
  29,950
  35,010
  40,507
  46,432
  52,776
  59,527
  66,677
  74,216
  82,139
  90,439
  99,114
  108,166
  117,595
  127,408
  137,613
  148,220
  159,243

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  4,709
  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
  20,893
  25,879
  39,983
  59,795
  86,759
  122,405
  168,278
  225,879
  296,593
  381,643
  482,047
  598,592
  731,837
  882,109
  1,049,536
  1,234,068
  1,435,517
  1,653,595
  1,887,950
  2,138,202
  2,403,973
  2,684,919
  2,980,745
  3,291,226
  3,616,222
  3,955,682
  4,309,654
  4,678,285
  5,061,821
  5,460,613
  5,875,104
Adjusted assets (=assets-cash), $m
  16,184
  25,879
  39,983
  59,795
  86,759
  122,405
  168,278
  225,879
  296,593
  381,643
  482,047
  598,592
  731,837
  882,109
  1,049,536
  1,234,068
  1,435,517
  1,653,595
  1,887,950
  2,138,202
  2,403,973
  2,684,919
  2,980,745
  3,291,226
  3,616,222
  3,955,682
  4,309,654
  4,678,285
  5,061,821
  5,460,613
  5,875,104
Revenue / Adjusted assets
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
Average production assets, $m
  2,625
  4,197
  6,485
  9,698
  14,072
  19,854
  27,294
  36,637
  48,106
  61,901
  78,186
  97,089
  118,701
  143,075
  170,231
  200,161
  232,835
  268,207
  306,218
  346,808
  389,915
  435,483
  483,465
  533,824
  586,537
  641,596
  699,009
  758,799
  821,007
  885,690
  952,918
Working capital, $m
  2,259
  -445
  -688
  -1,028
  -1,492
  -2,105
  -2,894
  -3,885
  -5,101
  -6,564
  -8,291
  -10,296
  -12,588
  -15,172
  -18,052
  -21,226
  -24,691
  -28,442
  -32,473
  -36,777
  -41,348
  -46,181
  -51,269
  -56,609
  -62,199
  -68,038
  -74,126
  -80,466
  -87,063
  -93,923
  -101,052
Total debt, $m
  6,009
  10,734
  19,055
  30,744
  46,653
  67,684
  94,749
  128,733
  170,455
  220,635
  279,872
  348,635
  427,249
  515,909
  614,691
  723,565
  842,420
  971,086
  1,109,356
  1,257,004
  1,413,809
  1,579,567
  1,754,104
  1,937,288
  2,129,036
  2,329,318
  2,538,161
  2,755,653
  2,981,940
  3,217,226
  3,461,776
Total liabilities, $m
  10,543
  15,269
  23,590
  35,279
  51,188
  72,219
  99,284
  133,268
  174,990
  225,170
  284,407
  353,170
  431,784
  520,444
  619,226
  728,100
  846,955
  975,621
  1,113,891
  1,261,539
  1,418,344
  1,584,102
  1,758,639
  1,941,823
  2,133,571
  2,333,853
  2,542,696
  2,760,188
  2,986,475
  3,221,761
  3,466,311
Total equity, $m
  10,349
  10,610
  16,393
  24,516
  35,571
  50,186
  68,994
  92,610
  121,603
  156,474
  197,639
  245,423
  300,053
  361,665
  430,310
  505,968
  588,562
  677,974
  774,060
  876,663
  985,629
  1,100,817
  1,222,105
  1,349,403
  1,482,651
  1,621,830
  1,766,958
  1,918,097
  2,075,347
  2,238,851
  2,408,793
Total liabilities and equity, $m
  20,892
  25,879
  39,983
  59,795
  86,759
  122,405
  168,278
  225,878
  296,593
  381,644
  482,046
  598,593
  731,837
  882,109
  1,049,536
  1,234,068
  1,435,517
  1,653,595
  1,887,951
  2,138,202
  2,403,973
  2,684,919
  2,980,744
  3,291,226
  3,616,222
  3,955,683
  4,309,654
  4,678,285
  5,061,822
  5,460,612
  5,875,104
Debt-to-equity ratio
  0.581
  1.010
  1.160
  1.250
  1.310
  1.350
  1.370
  1.390
  1.400
  1.410
  1.420
  1.420
  1.420
  1.430
  1.430
  1.430
  1.430
  1.430
  1.430
  1.430
  1.430
  1.430
  1.440
  1.440
  1.440
  1.440
  1.440
  1.440
  1.440
  1.440
  1.440
Adjusted equity ratio
  0.409
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -207
  344
  777
  1,379
  2,188
  3,247
  4,595
  6,270
  8,308
  10,737
  13,581
  17,449
  21,168
  25,335
  29,950
  35,010
  40,507
  46,432
  52,776
  59,527
  66,677
  74,216
  82,139
  90,439
  99,114
  108,166
  117,595
  127,408
  137,613
  148,220
  159,243
Depreciation, amort., depletion, $m
  104
  950
  1,027
  1,134
  1,279
  1,472
  1,720
  2,032
  2,414
  2,874
  3,417
  3,236
  3,957
  4,769
  5,674
  6,672
  7,761
  8,940
  10,207
  11,560
  12,997
  14,516
  16,115
  17,794
  19,551
  21,387
  23,300
  25,293
  27,367
  29,523
  31,764
Funds from operations, $m
  1,256
  1,294
  1,804
  2,513
  3,468
  4,719
  6,315
  8,302
  10,722
  13,611
  16,998
  20,685
  25,125
  30,104
  35,625
  41,682
  48,268
  55,372
  62,983
  71,088
  79,674
  88,733
  98,254
  108,233
  118,666
  129,552
  140,896
  152,702
  164,980
  177,743
  191,007
Change in working capital, $m
  493
  -167
  -243
  -341
  -464
  -613
  -789
  -991
  -1,216
  -1,463
  -1,727
  -2,005
  -2,292
  -2,585
  -2,880
  -3,174
  -3,465
  -3,751
  -4,031
  -4,304
  -4,571
  -4,832
  -5,088
  -5,340
  -5,590
  -5,839
  -6,088
  -6,340
  -6,597
  -6,859
  -7,129
Cash from operations, $m
  763
  1,461
  2,046
  2,853
  3,932
  5,332
  7,104
  9,293
  11,938
  15,074
  18,725
  22,690
  27,416
  32,689
  38,504
  44,856
  51,733
  59,123
  67,014
  75,392
  84,246
  93,565
  103,342
  113,573
  124,255
  135,391
  146,984
  159,042
  171,577
  184,603
  198,136
Maintenance CAPEX, $m
  0
  -87
  -140
  -216
  -323
  -469
  -662
  -910
  -1,221
  -1,604
  -2,063
  -2,606
  -3,236
  -3,957
  -4,769
  -5,674
  -6,672
  -7,761
  -8,940
  -10,207
  -11,560
  -12,997
  -14,516
  -16,115
  -17,794
  -19,551
  -21,387
  -23,300
  -25,293
  -27,367
  -29,523
New CAPEX, $m
  -100
  -1,573
  -2,288
  -3,213
  -4,374
  -5,782
  -7,441
  -9,343
  -11,470
  -13,795
  -16,285
  -18,903
  -21,612
  -24,374
  -27,156
  -29,930
  -32,674
  -35,371
  -38,011
  -40,590
  -43,107
  -45,568
  -47,982
  -50,359
  -52,713
  -55,059
  -57,413
  -59,790
  -62,208
  -64,682
  -67,229
Cash from investing activities, $m
  -2,868
  -1,660
  -2,428
  -3,429
  -4,697
  -6,251
  -8,103
  -10,253
  -12,691
  -15,399
  -18,348
  -21,509
  -24,848
  -28,331
  -31,925
  -35,604
  -39,346
  -43,132
  -46,951
  -50,797
  -54,667
  -58,565
  -62,498
  -66,474
  -70,507
  -74,610
  -78,800
  -83,090
  -87,501
  -92,049
  -96,752
Free cash flow, $m
  -2,105
  -199
  -381
  -576
  -765
  -919
  -998
  -960
  -753
  -324
  377
  1,180
  2,568
  4,358
  6,579
  9,251
  12,387
  15,991
  20,062
  24,595
  29,578
  34,999
  40,844
  47,099
  53,748
  60,781
  68,184
  75,952
  84,076
  92,553
  101,384
Issuance/(repayment) of debt, $m
  1,433
  5,722
  8,321
  11,689
  15,909
  21,031
  27,065
  33,984
  41,721
  50,180
  59,238
  68,762
  78,614
  88,661
  98,782
  108,874
  118,855
  128,666
  138,269
  147,648
  156,805
  165,758
  174,537
  183,184
  191,748
  200,282
  208,843
  217,492
  226,287
  235,287
  244,550
Issuance/(repurchase) of shares, $m
  1,572
  3,630
  5,005
  6,744
  8,867
  11,368
  14,214
  17,346
  20,685
  24,133
  27,584
  30,335
  33,462
  36,277
  38,695
  40,648
  42,087
  42,980
  43,310
  43,076
  42,289
  40,971
  39,150
  36,859
  34,134
  31,013
  27,533
  23,730
  19,637
  15,284
  10,699
Cash from financing (excl. dividends), $m  
  1,778
  9,352
  13,326
  18,433
  24,776
  32,399
  41,279
  51,330
  62,406
  74,313
  86,822
  99,097
  112,076
  124,938
  137,477
  149,522
  160,942
  171,646
  181,579
  190,724
  199,094
  206,729
  213,687
  220,043
  225,882
  231,295
  236,376
  241,222
  245,924
  250,571
  255,249
Total cash flow (excl. dividends), $m
  -113
  9,152
  12,946
  17,857
  24,011
  31,480
  40,281
  50,370
  61,654
  73,988
  87,198
  100,277
  114,645
  129,296
  144,056
  158,773
  173,329
  187,637
  201,641
  215,319
  228,673
  241,729
  254,531
  267,142
  279,630
  292,075
  304,561
  317,173
  329,999
  343,124
  356,633
Retained Cash Flow (-), $m
  -3,904
  -3,973
  -5,783
  -8,123
  -11,055
  -14,615
  -18,808
  -23,616
  -28,993
  -34,871
  -41,165
  -47,784
  -54,630
  -61,612
  -68,645
  -75,658
  -82,594
  -89,412
  -96,086
  -102,603
  -108,966
  -115,188
  -121,288
  -127,297
  -133,248
  -139,179
  -145,128
  -151,138
  -157,250
  -163,504
  -169,942
Prev. year cash balance distribution, $m
 
  3,712
  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
 
  8,890
  7,163
  9,734
  12,955
  16,866
  21,472
  26,754
  32,661
  39,118
  46,033
  52,494
  60,015
  67,684
  75,411
  83,115
  90,735
  98,225
  105,556
  112,716
  119,706
  126,541
  133,243
  139,844
  146,382
  152,897
  159,433
  166,035
  172,749
  179,620
  186,691
Discount rate, %
 
  5.20
  5.46
  5.73
  6.02
  6.32
  6.64
  6.97
  7.32
  7.68
  8.07
  8.47
  8.89
  9.34
  9.81
  10.30
  10.81
  11.35
  11.92
  12.51
  13.14
  13.80
  14.49
  15.21
  15.97
  16.77
  17.61
  18.49
  19.41
  20.38
  21.40
PV of cash for distribution, $m
 
  8,451
  6,441
  8,235
  10,254
  12,414
  14,603
  16,696
  18,564
  20,094
  21,191
  21,463
  21,588
  21,205
  20,356
  19,112
  17,558
  15,792
  13,908
  11,996
  10,134
  8,384
  6,792
  5,386
  4,178
  3,170
  2,350
  1,702
  1,202
  828
  555
Current shareholders' claim on cash, %
  100
  81.0
  67.3
  57.2
  49.5
  43.5
  38.8
  35.0
  31.9
  29.4
  27.3
  25.6
  24.2
  23.0
  22.0
  21.2
  20.4
  19.8
  19.3
  18.8
  18.4
  18.1
  17.8
  17.6
  17.4
  17.3
  17.1
  17.0
  17.0
  16.9
  16.9

Ctrip.com International, Ltd., together with its subsidiaries, provides travel service for accommodation reservation, transportation ticketing, packaged tours, and corporate travel management in the People’s Republic of China. The company operates as an agent for hotel-related transactions; sells air tickets; and other related services, including sale of aviation and train insurance, air-ticket delivery services, online check-in, and other value-added services, such as online seat selection and flight dynamics. It also provides independent leisure travelers bundled packaged-tour products comprising group tours, semi-group tours, and private tours or packaged tours with various transportation arrangements, such as cruise, bus, and self-driving. In addition, the company offers integrated transportation and accommodation services; various value-added services, such as transportation at destinations and tickets, insurance, visa services, and tour guides; supplier management and customer relationship management services; and car rental services. Further, it provides travel data collection and analysis, industry benchmark, cost saving analysis, and travel management solutions; Corporate Travel Management System, an online platform that integrates information maintenance, online booking and authorization, online enquiry, and travel report system. Additionally, the company offers online advertising services; and sells Property Management System, as well as provides related maintenance services. Ctrip.com International, Ltd. was founded in 1999 and is headquartered in Shanghai, the People’s Republic of China.

FINANCIAL RATIOS  of  Ctrip.com International ADR (CTRP)

Valuation Ratios
P/E Ratio -15.2
Price to Sales 1.1
Price to Book 0.3
Price to Tangible Book
Price to Cash Flow 4.1
Price to Free Cash Flow 4.8
Growth Rates
Sales Growth Rate 76.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 5.3%
Cap. Spend. - 3 Yr. Gr. Rate 1.2%
Financial Strength
Quick Ratio 5
Current Ratio 0.1
LT Debt to Equity 48.4%
Total Debt to Equity 58.1%
Interest Coverage -2
Management Effectiveness
Return On Assets -0.5%
Ret/ On Assets - 3 Yr. Avg. 1.3%
Return On Total Capital -1.5%
Ret/ On T. Cap. - 3 Yr. Avg. 1.7%
Return On Equity -2.5%
Return On Equity - 3 Yr. Avg. 3.2%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 75.4%
Gross Margin - 3 Yr. Avg. 73%
EBITDA Margin -2.3%
EBITDA Margin - 3 Yr. Avg. 11.7%
Operating Margin -8.4%
Oper. Margin - 3 Yr. Avg. -2.4%
Pre-Tax Margin -9.2%
Pre-Tax Margin - 3 Yr. Avg. 6.8%
Net Profit Margin -7.4%
Net Profit Margin - 3 Yr. Avg. 6.3%
Effective Tax Rate -27.1%
Eff/ Tax Rate - 3 Yr. Avg. 27.9%
Payout Ratio 0%

CTRP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CTRP stock intrinsic value calculation we used $2782 million for the last fiscal year's total revenue generated by Ctrip.com International ADR. The default revenue input number comes from 2016 income statement of Ctrip.com International 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 CTRP 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 5.2%, whose default value for CTRP is calculated based on our internal credit rating of Ctrip.com International 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 Ctrip.com International 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 CTRP stock the variable cost ratio is equal to 96.4%.

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 CTRP 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 Ctrip.com International ADR.

Corporate tax rate of 27% is the nominal tax rate for Ctrip.com International 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 CTRP 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 CTRP are equal to 94.3%.

Life of production assets of 96 years is the average useful life of capital assets used in Ctrip.com International 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 CTRP is equal to -10%. 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 - $10349 million for Ctrip.com International 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 489.033 million for Ctrip.com International 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 Ctrip.com International ADR at the current share price and the inputted number of shares is $24.1 billion.

RELATED COMPANIES Price Int.Val. Rating
PCLN Priceline Grou 1,812.97 1,469.07  sell
EXPE Expedia 144.14 363.66  str.buy
TZOO Travelzoo 8.55 6.56  sell
TOUR Tuniu ADR 7.09 1.30  str.sell
MMYT MakeMyTrip 30.30 10.53  str.sell
TRIP TripAdvisor 39.21 31.65  hold
CEA China Eastern 26.91 19.05  sell

COMPANY NEWS

▶ Could TripAdvisors Leverage Rise in 2017?   [Aug-10-17 05:05PM  Market Realist]
▶ Alibaba & Marriott Form JV To Tap Millions of Travelers   [Aug-07-17 09:16AM  Barrons.com]
▶ Why Pricelines Second-Quarter Margin Is Expected to Fall   [Aug-04-17 09:09AM  Market Realist]
▶ Chinese stocks are getting slammed   [Aug-02-17 12:17PM  Yahoo Finance]
▶ Baidu Shares Surging on a Big Second Quarter   [Jul-31-17 10:55AM  Investopedia]
▶ Alibaba Gets The Buzz, But This Other Chinese Stock May Take Off   [Jul-27-17 04:15PM  Investor's Business Daily]
▶ [$$] Alibaba, JD Battle Pressures Margins   [Jul-20-17 11:08AM  Barrons.com]
▶ Chinese Tourism Giant Ctrip Looks to Go Global   [Jun-14-17 12:56AM  The Wall Street Journal]
▶ Why These 4 Tech Stocks May Beat Apple, Facebook   [Jun-13-17 06:15PM  Investopedia]
▶ Chinese Tourism Giant Ctrip Looks to Go Global   [01:59PM  The Wall Street Journal]
▶ [$$] Ctrip.com: We Can Grow at Home and Overseas   [Jun-09-17 05:18AM  The Wall Street Journal]
▶ [$$] 5 Tech Stocks for the Long Run   [Jun-06-17 07:26AM  Barrons.com]
▶ 3 Top Stocks for Your IRA in May   [01:04PM  Motley Fool]
▶ [$$] Chinese Travel Site Ctrip Looks to Tap Overseas Cash Stash for Deals   [May-12-17 12:53PM  The Wall Street Journal]
▶ Ctrip: Buy the Dip?   [May-11-17 11:19PM  Barrons.com]
▶ Ctrip.Com tops Street 1Q forecasts   [07:44PM  Associated Press]
▶ Ctrip International Falls Short On First-Quarter Earnings   [07:40PM  Investor's Business Daily]
▶ Top Chinese Internets Autohome, YY Earnings Top Views   [08:51AM  Investor's Business Daily]
▶ Will Snap, China's Internet Stocks Leap Like JD? Investing Action Plan   [May-09-17 04:43PM  Investor's Business Daily]
▶ MakeMyTrip Limited Announces $330 Million Equity Financing   [May-02-17 04:32PM  GlobeNewswire]
▶ 5 Consumer Service Stocks to Buy in 2017   [May-01-17 05:36PM  Motley Fool]
▶ Ctrip.com Is Soaring: Must-See Chart   [02:43PM  TheStreet.com]
▶ Ctrip Filed 2016 Annual Report on Form 20-F   [Apr-13-17 04:05PM  PR Newswire]
▶ How Analysts View Priceline in 2017 and Beyond   [Mar-08-17 07:36AM  Market Realist]
▶ 6 Things You Didn't Know About Baidu, Inc.   [Mar-06-17 01:37PM  Motley Fool]
▶ China Internet: Morgan Stanley's Top Picks For 2017   [Feb-23-17 07:57PM  at Barrons.com]
▶ Ctrip Enlists Women in Drive to Create a Travel Giant   [Feb-13-17 04:00PM  at Bloomberg]
▶ Ctrip: It's Time to Buy   [Feb-08-17 11:16PM  at Barrons.com]
▶ 3 Chinese Stocks That Could Grow the Most in 2017   [Feb-07-17 11:00AM  at Motley Fool]
▶ [$$] China's Ctrip.com: Not Time to Check Out Yet   [Jan-28-17 12:01AM  at Barrons.com]
▶ Why China's Ctrip Can Rise 35% in 2017   [Dec-30-16 12:31PM  at Barrons.com]
Stock chart of CTRP Financial statements of CTRP
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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