Intrinsic value of Leju Holdings ADR - LEJU

Previous Close

$1.50

  Intrinsic Value

$5.45

stock screener

  Rating & Target

str. buy

+263%

Previous close

$1.50

 
Intrinsic value

$5.45

 
Up/down potential

+263%

 
Rating

str. buy

Our model is not good at valuating stocks of financial companies, such as LEJU.

We calculate the intrinsic value of LEJU 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 0.2

 

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, %
  -2.78
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  560
  571
  584
  599
  616
  635
  655
  678
  702
  728
  756
  786
  818
  852
  888
  926
  967
  1,009
  1,055
  1,103
  1,154
  1,207
  1,263
  1,323
  1,385
  1,451
  1,521
  1,594
  1,671
  1,752
  1,837
Variable operating expenses, $m
 
  527
  539
  553
  568
  585
  604
  625
  647
  671
  696
  720
  749
  780
  813
  848
  885
  925
  966
  1,010
  1,057
  1,106
  1,157
  1,212
  1,269
  1,330
  1,393
  1,460
  1,531
  1,605
  1,683
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
  575
  527
  539
  553
  568
  585
  604
  625
  647
  671
  696
  720
  749
  780
  813
  848
  885
  925
  966
  1,010
  1,057
  1,106
  1,157
  1,212
  1,269
  1,330
  1,393
  1,460
  1,531
  1,605
  1,683
Operating income, $m
  -15
  44
  45
  46
  48
  49
  51
  53
  55
  57
  60
  66
  69
  72
  75
  78
  81
  85
  89
  93
  97
  101
  106
  111
  116
  122
  128
  134
  140
  147
  154
EBITDA, $m
  0
  59
  60
  62
  63
  65
  67
  70
  72
  75
  78
  81
  84
  87
  91
  95
  99
  104
  108
  113
  118
  124
  130
  136
  142
  149
  156
  164
  172
  180
  189
Interest expense (income), $m
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  2
  2
  2
  3
  3
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  9
  9
  10
  11
  12
  13
Earnings before tax, $m
  -13
  44
  45
  46
  47
  49
  50
  52
  54
  56
  58
  64
  66
  69
  71
  74
  77
  80
  84
  87
  91
  95
  99
  104
  108
  113
  118
  124
  129
  135
  142
Tax expense, $m
  -2
  12
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
  35
  37
  38
Net income, $m
  -10
  32
  33
  34
  35
  36
  37
  38
  39
  41
  42
  47
  48
  50
  52
  54
  56
  59
  61
  64
  67
  69
  72
  76
  79
  83
  86
  90
  94
  99
  103

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  277
  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
  576
  305
  312
  320
  329
  339
  350
  362
  375
  389
  404
  420
  437
  455
  474
  494
  516
  539
  563
  589
  616
  644
  675
  706
  740
  775
  812
  851
  892
  935
  981
Adjusted assets (=assets-cash), $m
  299
  305
  312
  320
  329
  339
  350
  362
  375
  389
  404
  420
  437
  455
  474
  494
  516
  539
  563
  589
  616
  644
  675
  706
  740
  775
  812
  851
  892
  935
  981
Revenue / Adjusted assets
  1.873
  1.872
  1.872
  1.872
  1.872
  1.873
  1.871
  1.873
  1.872
  1.871
  1.871
  1.871
  1.872
  1.873
  1.873
  1.874
  1.874
  1.872
  1.874
  1.873
  1.873
  1.874
  1.871
  1.874
  1.872
  1.872
  1.873
  1.873
  1.873
  1.874
  1.873
Average production assets, $m
  92
  93
  95
  98
  100
  103
  107
  110
  114
  119
  123
  128
  133
  139
  145
  151
  158
  165
  172
  180
  188
  197
  206
  216
  226
  237
  248
  260
  272
  286
  299
Working capital, $m
  255
  -22
  -23
  -23
  -24
  -25
  -26
  -26
  -27
  -28
  -29
  -31
  -32
  -33
  -35
  -36
  -38
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -72
Total debt, $m
  0
  3
  7
  12
  17
  23
  29
  35
  43
  50
  59
  68
  77
  88
  98
  110
  122
  135
  149
  163
  178
  194
  211
  229
  248
  268
  288
  310
  333
  358
  383
Total liabilities, $m
  167
  171
  175
  180
  185
  191
  197
  203
  211
  218
  227
  236
  245
  256
  266
  278
  290
  303
  317
  331
  346
  362
  379
  397
  416
  436
  456
  478
  501
  526
  551
Total equity, $m
  408
  134
  137
  140
  144
  148
  153
  158
  164
  170
  177
  184
  191
  199
  208
  217
  226
  236
  247
  258
  270
  282
  295
  309
  324
  339
  356
  373
  391
  410
  430
Total liabilities and equity, $m
  575
  305
  312
  320
  329
  339
  350
  361
  375
  388
  404
  420
  436
  455
  474
  495
  516
  539
  564
  589
  616
  644
  674
  706
  740
  775
  812
  851
  892
  936
  981
Debt-to-equity ratio
  0.000
  0.030
  0.050
  0.080
  0.120
  0.150
  0.190
  0.220
  0.260
  0.300
  0.330
  0.370
  0.400
  0.440
  0.470
  0.510
  0.540
  0.570
  0.600
  0.630
  0.660
  0.690
  0.710
  0.740
  0.760
  0.790
  0.810
  0.830
  0.850
  0.870
  0.890
Adjusted equity ratio
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -10
  32
  33
  34
  35
  36
  37
  38
  39
  41
  42
  47
  48
  50
  52
  54
  56
  59
  61
  64
  67
  69
  72
  76
  79
  83
  86
  90
  94
  99
  103
Depreciation, amort., depletion, $m
  15
  15
  15
  15
  15
  16
  16
  17
  17
  18
  18
  15
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  33
  34
Funds from operations, $m
  39
  47
  48
  49
  50
  51
  53
  55
  56
  58
  60
  61
  64
  66
  69
  72
  75
  78
  81
  84
  88
  92
  96
  100
  105
  110
  115
  120
  126
  132
  138
Change in working capital, $m
  4
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
Cash from operations, $m
  35
  47
  48
  49
  51
  52
  54
  55
  57
  59
  61
  63
  65
  67
  70
  73
  76
  79
  83
  86
  90
  94
  98
  103
  107
  112
  118
  123
  129
  135
  141
Maintenance CAPEX, $m
  0
  -11
  -11
  -11
  -11
  -12
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -33
New CAPEX, $m
  -4
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
Cash from investing activities, $m
  -4
  -13
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -17
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -31
  -32
  -34
  -35
  -37
  -38
  -40
  -43
  -44
  -47
Free cash flow, $m
  31
  35
  35
  36
  37
  38
  38
  40
  41
  42
  43
  44
  45
  47
  48
  50
  52
  54
  56
  59
  61
  64
  67
  69
  72
  76
  79
  83
  86
  90
  94
Issuance/(repayment) of debt, $m
  0
  3
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  10
  10
  11
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
Issuance/(repurchase) of shares, $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
  0
Cash from financing (excl. dividends), $m  
  -5
  3
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  10
  10
  11
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
Total cash flow (excl. dividends), $m
  14
  38
  39
  41
  42
  43
  45
  46
  48
  50
  52
  52
  55
  57
  59
  62
  64
  67
  70
  73
  76
  80
  83
  87
  91
  95
  100
  105
  109
  115
  120
Retained Cash Flow (-), $m
  17
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
Prev. year cash balance distribution, $m
 
  277
  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
 
  313
  36
  37
  38
  39
  40
  41
  42
  44
  45
  45
  47
  49
  51
  53
  55
  57
  59
  62
  65
  67
  70
  73
  77
  80
  84
  87
  91
  96
  100
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
 
  300
  33
  32
  31
  30
  29
  28
  26
  25
  24
  22
  20
  19
  17
  15
  14
  12
  11
  10
  8
  7
  6
  5
  4
  3
  2
  2
  1
  1
  1
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

Leju Holdings Limited is an online to offline (O2O), real estate services provider in China. The Company offers real estate e-commerce, online advertising and online listing services through its online platform, which consists of local Websites covering over 260 cities and various mobile applications. The Company integrates its online platform with offline services to facilitate residential property transactions. In addition to its own Websites, the Company operates various real estate and home furnishing Websites of SINA Corporation (SINA). Its O2O services for new residential properties include selling discount coupons and facilitating online property viewing, physical property visits, marketing events and pre-sale customer support. It sells advertising primarily on the SINA new residential properties and home furnishing Websites, which are operated by the Company.

FINANCIAL RATIOS  of  Leju Holdings ADR (LEJU)

Valuation Ratios
P/E Ratio -20.3
Price to Sales 0.4
Price to Book 0.5
Price to Tangible Book
Price to Cash Flow 5.8
Price to Free Cash Flow 6.6
Growth Rates
Sales Growth Rate -2.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -73.3%
Cap. Spend. - 3 Yr. Gr. Rate -25.1%
Financial Strength
Quick Ratio NaN
Current Ratio 0.3
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -1.7%
Ret/ On Assets - 3 Yr. Avg. 5.6%
Return On Total Capital -2.4%
Ret/ On T. Cap. - 3 Yr. Avg. 8.7%
Return On Equity -2.4%
Return On Equity - 3 Yr. Avg. 8.7%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 89.6%
Gross Margin - 3 Yr. Avg. 89.6%
EBITDA Margin 0.4%
EBITDA Margin - 3 Yr. Avg. 11.7%
Operating Margin -2.7%
Oper. Margin - 3 Yr. Avg. 7.1%
Pre-Tax Margin -2.3%
Pre-Tax Margin - 3 Yr. Avg. 7.3%
Net Profit Margin -1.8%
Net Profit Margin - 3 Yr. Avg. 5.9%
Effective Tax Rate 15.4%
Eff/ Tax Rate - 3 Yr. Avg. 18.6%
Payout Ratio 0%

LEJU stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LEJU stock intrinsic value calculation we used $560 million for the last fiscal year's total revenue generated by Leju Holdings ADR. The default revenue input number comes from 2016 income statement of Leju 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 LEJU stock valuation model: a) initial revenue growth rate of 2% 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 LEJU is calculated based on our internal credit rating of Leju 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 Leju 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 LEJU stock the variable cost ratio is equal to 92.3%.

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 LEJU 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 Leju Holdings ADR.

Corporate tax rate of 27% is the nominal tax rate for Leju 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 LEJU 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 LEJU are equal to 16.3%.

Life of production assets of 8.7 years is the average useful life of capital assets used in Leju 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 LEJU is equal to -3.9%. 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 - $408 million for Leju 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 135.767 million for Leju 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 Leju Holdings ADR at the current share price and the inputted number of shares is $0.2 billion.

RELATED COMPANIES Price Int.Val. Rating
SFUN Fang Holdings 4.20 0.28  str.sell
WUBA 58.com ADR 67.08 114.24  str.buy
SINA Sina 110.48 305.74  str.buy
SOHU Sohu.com 67.62 101.97  str.buy
JD JD.com ADR 39.00 309.69  str.buy
BIDU Baidu ADR 264.90 214.89  hold

COMPANY NEWS

▶ Leju Reports Second Quarter 2017 Results   [Aug-31-17 06:05AM  PR Newswire]
▶ Leju Reports First Quarter 2017 Results   [Jun-14-17 06:00AM  PR Newswire]
▶ Leju Files Its Annual Report on Form 20-F   [Apr-21-17 09:18AM  PR Newswire]
▶ New Strong Sell Stocks for April 13th   [Apr-13-17 08:12AM  Zacks]
▶ New Strong Sell Stocks for March 28th   [Mar-28-17 08:40AM  Zacks]
▶ What Makes Leju Holdings (LEJU) a Strong Sell?   [Dec-27-16 08:35AM  Zacks]
▶ Is Perficient, Inc. (PRFT) A Good Stock to Buy?   [Dec-12-16 05:09PM  at Insider Monkey]
▶ Leju Reports Third Quarter 2016 Results   [06:30AM  PR Newswire]
▶ Leju Reports Second Quarter 2016 Results   [06:00AM  PR Newswire]
▶ Leju to Launch Third Annual "Home Promotion on Mobile"   [Jun-28-16 07:00AM  PR Newswire]
▶ Leju Reports First Quarter 2016 Results   [06:00AM  PR Newswire]
▶ LEJU HOLDINGS LTD Financials   [01:04PM  EDGAR Online Financials]
▶ Leju Files Its Annual Report on Form 20-F   [Apr-22-16 08:00AM  PR Newswire]
▶ Do Hedge Funds Love Quality Systems, Inc. (QSII)?   [Nov-30  01:42PM  at Insider Monkey]
▶ Leju Reports Third Quarter 2015 Results   [06:00AM  PR Newswire]
▶ Leju Reports Second Quarter 2015 Results   [05:30AM  PR Newswire]
▶ Leju Reports First Quarter 2015 Results   [06:00AM  PR Newswire]
▶ Leju Files Its Annual Report on Form 20-F   [Apr-21  07:25PM  at noodls]
▶ Leju Files Its Annual Report on Form 20-F   [07:00PM  PR Newswire]
Financial statements of LEJU
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.