Intrinsic value of JD.com ADR - JD

Previous Close

$41.33

  Intrinsic Value

premium content

  Rating & Target

premium content

  Value-price divergence*

premium content

Previous close

$41.33

 
Intrinsic value premium content
 
Up/down potential premium content
 
Rating premium content
 
Value-price divergence* premium content

Premium access subscription - $499/yr

please register and log in before paying

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

We calculate the intrinsic value of JD 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 58.3

 

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, %
  43.49
  37.70
  34.43
  31.49
  28.84
  26.45
  24.31
  22.38
  20.64
  19.08
  17.67
  16.40
  15.26
  14.24
  13.31
  12.48
  11.73
  11.06
  10.45
  9.91
  9.42
  8.98
  8.58
  8.22
  7.90
  7.61
  7.35
  7.11
  6.90
  6.71
  6.54
Revenue, $m
  37,632
  249,632
  335,581
  441,245
  568,492
  718,884
  893,638
  1,093,617
  1,319,343
  1,571,024
  1,848,603
  2,151,807
  2,480,207
  2,833,276
  3,210,439
  3,611,124
  4,034,805
  4,481,029
  4,949,450
  5,439,847
  5,952,133
  6,486,370
  7,042,770
  7,621,700
  8,223,676
  8,849,363
  9,499,572
  10,175,255
  10,877,500
  11,607,527
  12,366,684
Variable operating expenses, $m
 
  252,127
  338,934
  445,653
  574,171
  726,064
  902,563
  1,104,538
  1,332,518
  1,586,712
  1,867,062
  2,173,291
  2,504,970
  2,861,563
  3,242,492
  3,647,178
  4,075,088
  4,525,767
  4,998,866
  5,494,158
  6,011,559
  6,551,130
  7,113,085
  7,697,795
  8,305,781
  8,937,715
  9,594,416
  10,276,845
  10,986,101
  11,723,417
  12,490,153
Fixed operating expenses, $m
 
  4,902
  5,024
  5,150
  5,278
  5,410
  5,546
  5,684
  5,826
  5,972
  6,121
  6,274
  6,431
  6,592
  6,757
  6,926
  7,099
  7,276
  7,458
  7,645
  7,836
  8,032
  8,233
  8,438
  8,649
  8,866
  9,087
  9,314
  9,547
  9,786
  10,031
Total operating expenses, $m
  37,943
  257,029
  343,958
  450,803
  579,449
  731,474
  908,109
  1,110,222
  1,338,344
  1,592,684
  1,873,183
  2,179,565
  2,511,401
  2,868,155
  3,249,249
  3,654,104
  4,082,187
  4,533,043
  5,006,324
  5,501,803
  6,019,395
  6,559,162
  7,121,318
  7,706,233
  8,314,430
  8,946,581
  9,603,503
  10,286,159
  10,995,648
  11,733,203
  12,500,184
Operating income, $m
  -310
  -7,397
  -8,377
  -9,558
  -10,957
  -12,591
  -14,471
  -16,606
  -19,002
  -21,660
  -24,581
  -27,758
  -31,194
  -34,879
  -38,810
  -42,979
  -47,382
  -52,015
  -56,874
  -61,956
  -67,262
  -72,792
  -78,548
  -84,533
  -90,755
  -97,218
  -103,931
  -110,904
  -118,148
  -125,676
  -133,500
EBITDA, $m
  216
  -4,153
  -4,018
  -3,827
  -3,574
  -3,255
  -2,866
  -2,405
  -1,870
  -1,261
  -578
  178
  1,006
  1,903
  2,870
  3,902
  4,999
  6,160
  7,382
  8,666
  10,011
  11,417
  12,885
  14,415
  16,009
  17,669
  19,397
  21,196
  23,068
  25,019
  27,050
Interest expense (income), $m
  106
  96
  769
  1,615
  2,655
  3,907
  5,388
  7,108
  9,077
  11,298
  13,776
  16,508
  19,493
  22,726
  26,201
  29,914
  33,858
  38,029
  42,421
  47,032
  51,860
  56,903
  62,161
  67,638
  73,337
  79,263
  85,422
  91,823
  98,474
  105,387
  112,573
Earnings before tax, $m
  -468
  -7,493
  -9,146
  -11,173
  -13,612
  -16,498
  -19,858
  -23,714
  -28,078
  -32,959
  -38,357
  -44,266
  -50,687
  -57,605
  -65,011
  -72,893
  -81,241
  -90,044
  -99,295
  -108,989
  -119,122
  -129,694
  -140,709
  -152,172
  -164,092
  -176,481
  -189,353
  -202,727
  -216,622
  -231,062
  -246,072
Tax expense, $m
  26
  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
Net income, $m
  -551
  -7,493
  -9,146
  -11,173
  -13,612
  -16,498
  -19,858
  -23,714
  -28,078
  -32,959
  -38,357
  -44,266
  -50,687
  -57,605
  -65,011
  -72,893
  -81,241
  -90,044
  -99,295
  -108,989
  -119,122
  -129,694
  -140,709
  -152,172
  -164,092
  -176,481
  -189,353
  -202,727
  -216,622
  -231,062
  -246,072

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  5,561
  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
  23,202
  88,648
  119,169
  156,692
  201,879
  255,285
  317,343
  388,358
  468,517
  557,892
  656,464
  764,136
  880,755
  1,006,135
  1,140,071
  1,282,360
  1,432,814
  1,591,274
  1,757,617
  1,931,764
  2,113,683
  2,303,398
  2,500,984
  2,706,570
  2,920,339
  3,142,530
  3,373,428
  3,613,372
  3,862,749
  4,121,991
  4,391,578
Adjusted assets (=assets-cash), $m
  17,641
  88,648
  119,169
  156,692
  201,879
  255,285
  317,343
  388,358
  468,517
  557,892
  656,464
  764,136
  880,755
  1,006,135
  1,140,071
  1,282,360
  1,432,814
  1,591,274
  1,757,617
  1,931,764
  2,113,683
  2,303,398
  2,500,984
  2,706,570
  2,920,339
  3,142,530
  3,373,428
  3,613,372
  3,862,749
  4,121,991
  4,391,578
Revenue / Adjusted assets
  2.133
  2.816
  2.816
  2.816
  2.816
  2.816
  2.816
  2.816
  2.816
  2.816
  2.816
  2.816
  2.816
  2.816
  2.816
  2.816
  2.816
  2.816
  2.816
  2.816
  2.816
  2.816
  2.816
  2.816
  2.816
  2.816
  2.816
  2.816
  2.816
  2.816
  2.816
Average production assets, $m
  2,531
  18,473
  24,833
  32,652
  42,068
  53,197
  66,129
  80,928
  97,631
  116,256
  136,797
  159,234
  183,535
  209,662
  237,572
  267,223
  298,576
  331,596
  366,259
  402,549
  440,458
  479,991
  521,165
  564,006
  608,552
  654,853
  702,968
  752,969
  804,935
  858,957
  915,135
Working capital, $m
  317
  -10,734
  -14,430
  -18,974
  -24,445
  -30,912
  -38,426
  -47,026
  -56,732
  -67,554
  -79,490
  -92,528
  -106,649
  -121,831
  -138,049
  -155,278
  -173,497
  -192,684
  -212,826
  -233,913
  -255,942
  -278,914
  -302,839
  -327,733
  -353,618
  -380,523
  -408,482
  -437,536
  -467,733
  -499,124
  -531,767
Total debt, $m
  4,142
  21,958
  46,131
  75,849
  111,637
  153,935
  203,085
  259,329
  322,814
  393,600
  471,669
  556,945
  649,307
  748,608
  854,685
  967,378
  1,086,538
  1,212,038
  1,343,782
  1,481,706
  1,625,786
  1,776,040
  1,932,528
  2,095,352
  2,264,658
  2,440,632
  2,623,504
  2,813,540
  3,011,046
  3,216,366
  3,429,879
Total liabilities, $m
  18,298
  70,209
  94,382
  124,100
  159,888
  202,186
  251,336
  307,580
  371,065
  441,851
  519,920
  605,196
  697,558
  796,859
  902,936
  1,015,629
  1,134,789
  1,260,289
  1,392,033
  1,529,957
  1,674,037
  1,824,291
  1,980,779
  2,143,603
  2,312,909
  2,488,883
  2,671,755
  2,861,791
  3,059,297
  3,264,617
  3,478,130
Total equity, $m
  4,903
  18,439
  24,787
  32,592
  41,991
  53,099
  66,007
  80,779
  97,451
  116,042
  136,545
  158,940
  183,197
  209,276
  237,135
  266,731
  298,025
  330,985
  365,584
  401,807
  439,646
  479,107
  520,205
  562,967
  607,431
  653,646
  701,673
  751,581
  803,452
  857,374
  913,448
Total liabilities and equity, $m
  23,201
  88,648
  119,169
  156,692
  201,879
  255,285
  317,343
  388,359
  468,516
  557,893
  656,465
  764,136
  880,755
  1,006,135
  1,140,071
  1,282,360
  1,432,814
  1,591,274
  1,757,617
  1,931,764
  2,113,683
  2,303,398
  2,500,984
  2,706,570
  2,920,340
  3,142,529
  3,373,428
  3,613,372
  3,862,749
  4,121,991
  4,391,578
Debt-to-equity ratio
  0.845
  1.190
  1.860
  2.330
  2.660
  2.900
  3.080
  3.210
  3.310
  3.390
  3.450
  3.500
  3.540
  3.580
  3.600
  3.630
  3.650
  3.660
  3.680
  3.690
  3.700
  3.710
  3.710
  3.720
  3.730
  3.730
  3.740
  3.740
  3.750
  3.750
  3.750
Adjusted equity ratio
  0.108
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -551
  -7,493
  -9,146
  -11,173
  -13,612
  -16,498
  -19,858
  -23,714
  -28,078
  -32,959
  -38,357
  -44,266
  -50,687
  -57,605
  -65,011
  -72,893
  -81,241
  -90,044
  -99,295
  -108,989
  -119,122
  -129,694
  -140,709
  -152,172
  -164,092
  -176,481
  -189,353
  -202,727
  -216,622
  -231,062
  -246,072
Depreciation, amort., depletion, $m
  526
  3,244
  4,360
  5,731
  7,383
  9,336
  11,605
  14,201
  17,131
  20,399
  24,002
  27,936
  32,199
  36,783
  41,679
  46,881
  52,382
  58,175
  64,256
  70,623
  77,273
  84,209
  91,432
  98,948
  106,764
  114,886
  123,328
  132,100
  141,217
  150,694
  160,550
Funds from operations, $m
  1,740
  -4,249
  -4,786
  -5,441
  -6,229
  -7,162
  -8,254
  -9,513
  -10,947
  -12,560
  -14,354
  -16,331
  -18,488
  -20,822
  -23,332
  -26,012
  -28,859
  -31,869
  -35,039
  -38,366
  -41,848
  -45,485
  -49,277
  -53,224
  -57,328
  -61,594
  -66,025
  -70,627
  -75,405
  -80,368
  -85,522
Change in working capital, $m
  472
  -2,939
  -3,696
  -4,544
  -5,472
  -6,467
  -7,514
  -8,599
  -9,706
  -10,822
  -11,936
  -13,038
  -14,121
  -15,182
  -16,218
  -17,229
  -18,218
  -19,188
  -20,142
  -21,087
  -22,028
  -22,972
  -23,925
  -24,894
  -25,885
  -26,905
  -27,959
  -29,054
  -30,197
  -31,391
  -32,644
Cash from operations, $m
  1,268
  -106
  -1,091
  -898
  -757
  -695
  -739
  -914
  -1,241
  -1,738
  -2,419
  -3,293
  -4,366
  -5,640
  -7,114
  -8,782
  -10,641
  -12,681
  -14,897
  -17,279
  -19,820
  -22,513
  -25,351
  -28,330
  -31,443
  -34,690
  -38,066
  -41,573
  -45,209
  -48,977
  -52,879
Maintenance CAPEX, $m
  0
  -2,366
  -3,241
  -4,357
  -5,728
  -7,380
  -9,333
  -11,602
  -14,198
  -17,128
  -20,396
  -23,999
  -27,936
  -32,199
  -36,783
  -41,679
  -46,881
  -52,382
  -58,175
  -64,256
  -70,623
  -77,273
  -84,209
  -91,432
  -98,948
  -106,764
  -114,886
  -123,328
  -132,100
  -141,217
  -150,694
New CAPEX, $m
  -449
  -4,985
  -6,360
  -7,819
  -9,416
  -11,129
  -12,932
  -14,798
  -16,704
  -18,624
  -20,541
  -22,437
  -24,302
  -26,127
  -27,910
  -29,651
  -31,352
  -33,021
  -34,663
  -36,289
  -37,909
  -39,534
  -41,174
  -42,841
  -44,546
  -46,301
  -48,115
  -50,001
  -51,966
  -54,022
  -56,178
Cash from investing activities, $m
  -6,983
  -7,351
  -9,601
  -12,176
  -15,144
  -18,509
  -22,265
  -26,400
  -30,902
  -35,752
  -40,937
  -46,436
  -52,238
  -58,326
  -64,693
  -71,330
  -78,233
  -85,403
  -92,838
  -100,545
  -108,532
  -116,807
  -125,383
  -134,273
  -143,494
  -153,065
  -163,001
  -173,329
  -184,066
  -195,239
  -206,872
Free cash flow, $m
  -5,715
  -7,458
  -10,692
  -13,073
  -15,902
  -19,205
  -23,004
  -27,314
  -32,142
  -37,490
  -43,355
  -49,729
  -56,604
  -63,967
  -71,807
  -80,113
  -88,874
  -98,084
  -107,735
  -117,824
  -128,352
  -139,320
  -150,734
  -162,603
  -174,938
  -187,754
  -201,068
  -214,901
  -229,275
  -244,215
  -259,751
Issuance/(repayment) of debt, $m
  3,151
  19,204
  24,173
  29,718
  35,788
  42,298
  49,149
  56,244
  63,485
  70,785
  78,069
  85,276
  92,363
  99,301
  106,077
  112,693
  119,160
  125,501
  131,744
  137,924
  144,080
  150,254
  156,488
  162,824
  169,306
  175,974
  182,871
  190,036
  197,506
  205,320
  213,513
Issuance/(repurchase) of shares, $m
  196
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1,009
  5,543
  10,591
  16,123
  22,111
  28,526
  35,344
  42,541
  50,096
  57,995
  66,224
  74,773
  83,639
  92,818
  102,312
Cash from financing (excl. dividends), $m  
  5,888
  19,204
  24,173
  29,718
  35,788
  42,298
  49,149
  56,244
  63,485
  70,785
  78,069
  85,276
  92,363
  99,301
  106,077
  112,693
  120,169
  131,044
  142,335
  154,047
  166,191
  178,780
  191,832
  205,365
  219,402
  233,969
  249,095
  264,809
  281,145
  298,138
  315,825
Total cash flow (excl. dividends), $m
  276
  11,746
  13,481
  16,645
  19,887
  23,093
  26,145
  28,930
  31,343
  33,295
  34,714
  35,547
  35,759
  35,334
  34,270
  32,580
  30,286
  27,417
  24,009
  20,100
  15,729
  10,934
  5,754
  221
  -5,632
  -11,780
  -18,197
  -24,865
  -31,768
  -38,895
  -46,238
Retained Cash Flow (-), $m
  -478
  -5,058
  -6,348
  -7,805
  -9,399
  -11,108
  -12,908
  -14,771
  -16,673
  -18,590
  -20,503
  -22,396
  -24,257
  -26,079
  -27,859
  -29,596
  -31,295
  -32,960
  -34,599
  -36,222
  -37,839
  -39,461
  -41,098
  -42,762
  -44,464
  -46,216
  -48,027
  -49,908
  -51,870
  -53,922
  -56,074
Prev. year cash balance distribution, $m
 
  17,160
  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
 
  23,849
  7,133
  8,840
  10,488
  11,984
  13,237
  14,159
  14,670
  14,705
  14,211
  13,151
  11,502
  9,255
  6,412
  2,984
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
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
 
  22,866
  6,530
  7,693
  8,636
  9,289
  9,607
  9,566
  9,169
  8,447
  7,450
  6,245
  4,908
  3,519
  2,153
  876
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
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
  99.8
  98.8
  97.2
  95.0
  92.3
  89.3
  86.0
  82.5
  78.8
  75.0
  71.2
  67.5
  63.8
  60.1
  56.6

JD.com, Inc., through its subsidiaries, operates as an online direct sales company in the People's Republic of China. It primarily offers electronics and home appliances products; and general merchandise products, including audio and video products, and books. The company sells its products directly to customers through its Website jd.com and mobile applications. It also provides an online marketplace for third-party sellers to sell products to customers through its Website and mobile applications; and services, such as advertising, transaction processing, and financing, as well as offers a suite of value-added fulfillment and other services for third-party sellers. As of June 21, 2016, the company operated 7 fulfillment centers and 213 warehouses, and total 5,367 delivery stations and pickup stations in 2,356 counties and districts across the People's Republic of China. The company is headquartered in Beijing, the People's Republic of China.

FINANCIAL RATIOS  of  JD.com ADR (JD)

Valuation Ratios
P/E Ratio -212.8
Price to Sales 3.1
Price to Book 23.9
Price to Tangible Book
Price to Cash Flow 92.5
Price to Free Cash Flow 143.1
Growth Rates
Sales Growth Rate 43.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -17.5%
Cap. Spend. - 3 Yr. Gr. Rate 41.2%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 32.2%
Total Debt to Equity 84.5%
Interest Coverage -3
Management Effectiveness
Return On Assets -2.5%
Ret/ On Assets - 3 Yr. Avg. -8.4%
Return On Total Capital -7.7%
Ret/ On T. Cap. - 3 Yr. Avg. -17.2%
Return On Equity -11.8%
Return On Equity - 3 Yr. Avg. -20%
Asset Turnover 2.1
Profitability Ratios
Gross Margin 15.2%
Gross Margin - 3 Yr. Avg. 13.4%
EBITDA Margin 0.4%
EBITDA Margin - 3 Yr. Avg. -2%
Operating Margin -0.8%
Oper. Margin - 3 Yr. Avg. -3.1%
Pre-Tax Margin -1.2%
Pre-Tax Margin - 3 Yr. Avg. -3.5%
Net Profit Margin -1.5%
Net Profit Margin - 3 Yr. Avg. -3.6%
Effective Tax Rate -5.6%
Eff/ Tax Rate - 3 Yr. Avg. -1.9%
Payout Ratio 0%

JD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the JD stock intrinsic value calculation we used $181287 million for the last fiscal year's total revenue generated by JD.com ADR. The default revenue input number comes from 2016 income statement of JD.com 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 JD stock valuation model: a) initial revenue growth rate of 37.7% 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 JD is calculated based on our internal credit rating of JD.com 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 JD.com 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 JD stock the variable cost ratio is equal to 101%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $4782 million in the base year in the intrinsic value calculation for JD 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 JD.com ADR.

Corporate tax rate of 27% is the nominal tax rate for JD.com 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 JD 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 JD are equal to 7.4%.

Life of production assets of 5.7 years is the average useful life of capital assets used in JD.com 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 JD is equal to -4.3%. 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 - $30541 million for JD.com 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 1409.85 million for JD.com 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 JD.com ADR at the current share price and the inputted number of shares is $58.3 billion.


Premium access subscription - $499/yr

please register and log in before paying
RELATED COMPANIES Price Int.Val. Rating
AMZN Amazon.com 1,001.30 prem.  prem.
VIPS Vipshop Holdin 11.70 prem.  prem.
JMEI Jumei Internat 2.32 prem.  prem.
NTES Netease ADR 325.28 prem.  prem.
WMT Wal-Mart Store 75.52 prem.  prem.
BABA Alibaba Group 142.27 prem.  prem.

COMPANY NEWS

▶ JD or Alibaba: Which Is a Bigger Threat to Amazon?   [Jun-23-17 02:30PM  Investopedia]
▶ Corrections & Amplifications   [10:43AM  The Wall Street Journal]
▶ Chinese Internet Stocks Rise, Led By Alibaba, JD.com, Weibo   [Jun-19-17 04:50PM  Investor's Business Daily]
▶ Stock Futures Up; Check Out This Biotech On The Move   [08:03AM  Investor's Business Daily]
▶ JD.com CEO on the record   [06:43AM  CNBC Videos]
▶ Chinese Online Retailer JD.coms Plan to Diversify   [12:56AM  The Wall Street Journal]
▶ Chinese Online Retailer JD.com Seeks to Diversify   [01:54PM  The Wall Street Journal]
▶ [$$] JD.com Plans Expansion in Developing Markets   [06:24AM  The Wall Street Journal]
▶ Alibaba Soars On This Stunning Growth Forecast   [Jun-08-17 04:31PM  Investor's Business Daily]
▶ Small E-Commerce Firm Sizzles As It Brings Western Brands To China   [Jun-02-17 10:00AM  Investor's Business Daily]
▶ [$$] A Top Fund's Picks: AIA, JD.com   [May-27-17 12:34AM  Barrons.com]
▶ As Alibaba, JD And Weibo Lead, 2013 IPO 58.com Rebounds   [May-26-17 04:07PM  Investor's Business Daily]
▶ JD.com: How High Can its Share Price Go?   [May-25-17 11:33PM  Barrons.com]
▶ Moody's downgrades China's credit rating   [May-24-17 10:35AM  Yahoo Finance Video]
▶ [$$] China tech emerges as global hotspot for VC capital   [May-23-17 08:45PM  Financial Times]
▶ Stocks Turn Up; Alphabet At Record High, China Stocks Whacked   [11:55AM  Investor's Business Daily]
▶ 7 Reasons Alibaba Bulls Beat Bears, MKM Says   [May-22-17 12:26PM  Barrons.com]
▶ Stocks To Buy And Watch: Top IPOs, Big And Small Caps, Growth Stocks   [May-19-17 03:27PM  Investor's Business Daily]
▶ Alibaba Stages Upside Reversal As Investors Dismiss Earnings Miss   [May-18-17 04:23PM  Investor's Business Daily]
▶ This China ETF Is On Fire   [May-17-17 12:00PM  Investopedia]
▶ China Stocks Jump, Led By Strong Earnings From Weibo, Sina   [May-16-17 04:18PM  Investor's Business Daily]
▶ Chinese customers can now order from US Sam's Club stores   [May-15-17 08:01PM  Associated Press]
▶ Alibaba Results Expected To Maintain Double-Digit Growth   [05:02PM  Investor's Business Daily]
▶ NetEase Undervaluation Could Be Short-Lived   [May-14-17 09:15AM  Forbes]
▶ [$$] JD.com Gains on Alibaba   [May-13-17 12:51AM  Barrons.com]
▶ EMQQ -- How This Little-Known ETF Beat Amazon   [May-10-17 11:16AM  Zacks]
▶ What's working: Look outside US   [06:51AM  CNBC Videos]
▶ Why JD.com Is a Buy   [12:47AM  Barrons.com]
▶ [$$] Toutiao touts AI for individual news in vast China market   [May-09-17 04:01PM  Financial Times]
▶ Cisco Downgraded, Alibaba Price Target Hiked, JD.com Upgraded   [04:01PM  Investor's Business Daily]
▶ Nasdaq Hits Another Record; 2 Travel Stocks In Buy Range   [01:40PM  Investor's Business Daily]
▶ Which Companies Are Now Outperforming 95% Of All Stocks?   [12:21PM  Investor's Business Daily]
▶ Alibaba Rival JD.com Earns Rating Upgrade With 850% EPS Growth   [12:00PM  Investor's Business Daily]
▶ JD.com: Behind Its First GAAP Profit; Outlook for Q2   [May-08-17 10:30PM  Barrons.com]
▶ JD.com Posts First Profit Since IPO   [08:40PM  Bloomberg]
Stock chart of JD Financial statements of JD Annual reports of JD
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.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.