Intrinsic value of Netease ADR - NTES

Previous Close

$219.71

  Intrinsic Value

$2,888

stock screener

  Rating & Target

str. buy

+999%

Previous close

$219.71

 
Intrinsic value

$2,888

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of NTES 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  67.41
  48.80
  44.42
  40.48
  36.93
  33.74
  30.86
  28.28
  25.95
  23.85
  21.97
  20.27
  18.74
  17.37
  16.13
  15.02
  14.02
  13.12
  12.30
  11.57
  10.92
  10.33
  9.79
  9.31
  8.88
  8.49
  8.14
  7.83
  7.55
  7.29
  7.06
Revenue, $m
  5,523
  12,168
  17,573
  24,686
  33,803
  45,207
  59,160
  75,888
  95,581
  118,381
  144,389
  173,659
  206,211
  242,031
  281,079
  323,297
  368,617
  416,966
  468,272
  522,470
  579,507
  639,341
  701,949
  767,324
  835,477
  906,441
  980,265
  1,057,019
  1,136,792
  1,219,690
  1,305,837
Variable operating expenses, $m
 
  8,136
  11,746
  16,497
  22,586
  30,203
  39,522
  50,695
  63,848
  79,076
  96,447
  115,988
  137,729
  161,653
  187,734
  215,931
  246,201
  278,493
  312,760
  348,960
  387,055
  427,018
  468,834
  512,498
  558,018
  605,415
  654,722
  705,987
  759,267
  814,635
  872,173
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
  3,696
  8,136
  11,746
  16,497
  22,586
  30,203
  39,522
  50,695
  63,848
  79,076
  96,447
  115,988
  137,729
  161,653
  187,734
  215,931
  246,201
  278,493
  312,760
  348,960
  387,055
  427,018
  468,834
  512,498
  558,018
  605,415
  654,722
  705,987
  759,267
  814,635
  872,173
Operating income, $m
  1,827
  4,032
  5,827
  8,189
  11,217
  15,004
  19,638
  25,193
  31,733
  39,305
  47,942
  57,672
  68,482
  80,378
  93,345
  107,366
  122,416
  138,473
  155,511
  173,511
  192,452
  212,323
  233,115
  254,826
  277,459
  301,026
  325,543
  351,032
  377,525
  405,055
  433,664
EBITDA, $m
  1,874
  4,189
  6,050
  8,499
  11,638
  15,565
  20,369
  26,128
  32,908
  40,758
  49,712
  59,790
  70,998
  83,331
  96,775
  111,310
  126,914
  143,560
  161,224
  179,885
  199,522
  220,123
  241,679
  264,187
  287,652
  312,084
  337,502
  363,928
  391,394
  419,935
  449,595
Interest expense (income), $m
  0
  54
  125
  222
  350
  513
  718
  968
  1,267
  1,620
  2,029
  2,495
  3,020
  3,603
  4,245
  4,945
  5,701
  6,514
  7,380
  8,300
  9,271
  10,293
  11,366
  12,488
  13,659
  14,881
  16,153
  17,476
  18,851
  20,281
  21,767
Earnings before tax, $m
  2,010
  3,978
  5,702
  7,967
  10,867
  14,491
  18,920
  24,226
  30,466
  37,685
  45,913
  55,177
  65,462
  76,775
  89,100
  102,421
  116,715
  131,959
  148,131
  165,211
  183,181
  202,030
  221,749
  242,338
  263,800
  286,145
  309,390
  333,557
  358,674
  384,774
  411,897
Tax expense, $m
  304
  1,074
  1,539
  2,151
  2,934
  3,913
  5,108
  6,541
  8,226
  10,175
  12,397
  14,898
  17,675
  20,729
  24,057
  27,654
  31,513
  35,629
  39,995
  44,607
  49,459
  54,548
  59,872
  65,431
  71,226
  77,259
  83,535
  90,060
  96,842
  103,889
  111,212
Net income, $m
  1,679
  2,904
  4,162
  5,816
  7,933
  10,578
  13,812
  17,685
  22,240
  27,510
  33,516
  40,279
  47,788
  56,046
  65,043
  74,767
  85,202
  96,330
  108,136
  120,604
  133,722
  147,482
  161,877
  176,907
  192,574
  208,886
  225,855
  243,497
  261,832
  280,885
  300,685

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  5,264
  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
  8,396
  8,798
  12,707
  17,850
  24,442
  32,688
  42,776
  54,872
  69,111
  85,598
  104,402
  125,567
  149,104
  175,005
  203,239
  233,765
  266,534
  301,494
  338,591
  377,780
  419,022
  462,286
  507,555
  554,826
  604,105
  655,416
  708,796
  764,294
  821,975
  881,916
  944,206
Adjusted assets (=assets-cash), $m
  3,132
  8,798
  12,707
  17,850
  24,442
  32,688
  42,776
  54,872
  69,111
  85,598
  104,402
  125,567
  149,104
  175,005
  203,239
  233,765
  266,534
  301,494
  338,591
  377,780
  419,022
  462,286
  507,555
  554,826
  604,105
  655,416
  708,796
  764,294
  821,975
  881,916
  944,206
Revenue / Adjusted assets
  1.763
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
  1.383
Average production assets, $m
  225
  742
  1,072
  1,506
  2,062
  2,758
  3,609
  4,629
  5,830
  7,221
  8,808
  10,593
  12,579
  14,764
  17,146
  19,721
  22,486
  25,435
  28,565
  31,871
  35,350
  39,000
  42,819
  46,807
  50,964
  55,293
  59,796
  64,478
  69,344
  74,401
  79,656
Working capital, $m
  4,370
  -949
  -1,371
  -1,926
  -2,637
  -3,526
  -4,614
  -5,919
  -7,455
  -9,234
  -11,262
  -13,545
  -16,084
  -18,878
  -21,924
  -25,217
  -28,752
  -32,523
  -36,525
  -40,753
  -45,202
  -49,869
  -54,752
  -59,851
  -65,167
  -70,702
  -76,461
  -82,447
  -88,670
  -95,136
  -101,855
Total debt, $m
  552
  2,323
  4,117
  6,478
  9,503
  13,288
  17,919
  23,471
  30,007
  37,574
  46,205
  55,920
  66,724
  78,612
  91,571
  105,583
  120,624
  136,670
  153,698
  171,686
  190,615
  210,474
  231,253
  252,950
  275,569
  299,121
  323,622
  349,096
  375,571
  403,084
  431,675
Total liabilities, $m
  2,870
  4,038
  5,832
  8,193
  11,219
  15,004
  19,634
  25,186
  31,722
  39,289
  47,921
  57,635
  68,439
  80,327
  93,287
  107,298
  122,339
  138,386
  155,413
  173,401
  192,331
  212,189
  232,968
  254,665
  277,284
  300,836
  325,337
  350,811
  377,287
  404,799
  433,391
Total equity, $m
  5,525
  4,760
  6,874
  9,657
  13,223
  17,684
  23,142
  29,686
  37,389
  46,308
  56,482
  67,932
  80,666
  94,677
  109,952
  126,467
  144,195
  163,108
  183,178
  204,379
  226,691
  250,097
  274,587
  300,161
  326,821
  354,580
  383,459
  413,483
  444,689
  477,117
  510,815
Total liabilities and equity, $m
  8,395
  8,798
  12,706
  17,850
  24,442
  32,688
  42,776
  54,872
  69,111
  85,597
  104,403
  125,567
  149,105
  175,004
  203,239
  233,765
  266,534
  301,494
  338,591
  377,780
  419,022
  462,286
  507,555
  554,826
  604,105
  655,416
  708,796
  764,294
  821,976
  881,916
  944,206
Debt-to-equity ratio
  0.100
  0.490
  0.600
  0.670
  0.720
  0.750
  0.770
  0.790
  0.800
  0.810
  0.820
  0.820
  0.830
  0.830
  0.830
  0.830
  0.840
  0.840
  0.840
  0.840
  0.840
  0.840
  0.840
  0.840
  0.840
  0.840
  0.840
  0.840
  0.840
  0.840
  0.850
Adjusted equity ratio
  0.260
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541
  0.541

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,679
  2,904
  4,162
  5,816
  7,933
  10,578
  13,812
  17,685
  22,240
  27,510
  33,516
  40,279
  47,788
  56,046
  65,043
  74,767
  85,202
  96,330
  108,136
  120,604
  133,722
  147,482
  161,877
  176,907
  192,574
  208,886
  225,855
  243,497
  261,832
  280,885
  300,685
Depreciation, amort., depletion, $m
  47
  157
  223
  310
  421
  560
  731
  935
  1,175
  1,453
  1,771
  2,119
  2,516
  2,953
  3,429
  3,944
  4,497
  5,087
  5,713
  6,374
  7,070
  7,800
  8,564
  9,361
  10,193
  11,059
  11,959
  12,896
  13,869
  14,880
  15,931
Funds from operations, $m
  2,623
  3,061
  4,385
  6,126
  8,354
  11,139
  14,542
  18,620
  23,415
  28,963
  35,287
  42,398
  50,303
  58,998
  68,472
  78,712
  89,699
  101,417
  113,849
  126,978
  140,792
  155,282
  170,441
  186,268
  202,767
  219,945
  237,814
  256,392
  275,701
  295,765
  316,616
Change in working capital, $m
  382
  -311
  -422
  -555
  -711
  -890
  -1,088
  -1,305
  -1,536
  -1,778
  -2,029
  -2,283
  -2,539
  -2,794
  -3,046
  -3,293
  -3,535
  -3,771
  -4,002
  -4,227
  -4,449
  -4,667
  -4,883
  -5,099
  -5,316
  -5,535
  -5,758
  -5,987
  -6,222
  -6,466
  -6,719
Cash from operations, $m
  2,241
  3,373
  4,807
  6,681
  9,065
  12,028
  15,631
  19,924
  24,951
  30,741
  37,316
  44,681
  52,842
  61,792
  71,518
  82,005
  93,234
  105,188
  117,851
  131,206
  145,241
  159,949
  175,324
  191,367
  208,083
  225,480
  243,572
  262,379
  281,923
  302,231
  323,336
Maintenance CAPEX, $m
  0
  -101
  -148
  -214
  -301
  -412
  -552
  -722
  -926
  -1,166
  -1,444
  -1,762
  -2,119
  -2,516
  -2,953
  -3,429
  -3,944
  -4,497
  -5,087
  -5,713
  -6,374
  -7,070
  -7,800
  -8,564
  -9,361
  -10,193
  -11,059
  -11,959
  -12,896
  -13,869
  -14,880
New CAPEX, $m
  -165
  -240
  -330
  -434
  -556
  -696
  -851
  -1,020
  -1,201
  -1,391
  -1,586
  -1,786
  -1,986
  -2,185
  -2,382
  -2,575
  -2,765
  -2,949
  -3,130
  -3,306
  -3,479
  -3,650
  -3,819
  -3,988
  -4,157
  -4,329
  -4,503
  -4,682
  -4,866
  -5,057
  -5,255
Cash from investing activities, $m
  -2,026
  -341
  -478
  -648
  -857
  -1,108
  -1,403
  -1,742
  -2,127
  -2,557
  -3,030
  -3,548
  -4,105
  -4,701
  -5,335
  -6,004
  -6,709
  -7,446
  -8,217
  -9,019
  -9,853
  -10,720
  -11,619
  -12,552
  -13,518
  -14,522
  -15,562
  -16,641
  -17,762
  -18,926
  -20,135
Free cash flow, $m
  215
  3,032
  4,329
  6,033
  8,208
  10,920
  14,228
  18,182
  22,824
  28,185
  34,285
  41,134
  48,738
  57,091
  66,183
  76,000
  86,525
  97,742
  109,634
  122,187
  135,388
  149,229
  163,705
  178,816
  194,564
  210,958
  228,010
  245,738
  264,161
  283,306
  303,201
Issuance/(repayment) of debt, $m
  216
  1,322
  1,794
  2,361
  3,026
  3,785
  4,631
  5,552
  6,536
  7,567
  8,631
  9,715
  10,804
  11,888
  12,959
  14,012
  15,041
  16,046
  17,028
  17,988
  18,930
  19,858
  20,779
  21,697
  22,619
  23,552
  24,501
  25,474
  26,476
  27,513
  28,591
Issuance/(repurchase) of shares, $m
  -173
  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  
  42
  1,322
  1,794
  2,361
  3,026
  3,785
  4,631
  5,552
  6,536
  7,567
  8,631
  9,715
  10,804
  11,888
  12,959
  14,012
  15,041
  16,046
  17,028
  17,988
  18,930
  19,858
  20,779
  21,697
  22,619
  23,552
  24,501
  25,474
  26,476
  27,513
  28,591
Total cash flow (excl. dividends), $m
  277
  4,354
  6,123
  8,393
  11,234
  14,705
  18,859
  23,734
  29,360
  35,752
  42,916
  50,848
  59,542
  68,980
  79,143
  90,012
  101,566
  113,788
  126,662
  140,174
  154,318
  169,087
  184,484
  200,513
  217,183
  234,510
  252,512
  271,211
  290,637
  310,818
  331,792
Retained Cash Flow (-), $m
  -1,295
  -1,563
  -2,114
  -2,783
  -3,566
  -4,461
  -5,458
  -6,544
  -7,703
  -8,919
  -10,173
  -11,450
  -12,734
  -14,012
  -15,275
  -16,515
  -17,728
  -18,913
  -20,070
  -21,201
  -22,312
  -23,406
  -24,491
  -25,573
  -26,660
  -27,759
  -28,878
  -30,025
  -31,205
  -32,428
  -33,699
Prev. year cash balance distribution, $m
 
  3,822
  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
 
  6,613
  4,008
  5,611
  7,668
  10,244
  13,401
  17,190
  21,656
  26,833
  32,743
  39,398
  46,808
  54,968
  63,868
  73,497
  83,838
  94,875
  106,592
  118,973
  132,006
  145,681
  159,993
  174,940
  190,523
  206,751
  223,633
  241,187
  259,431
  278,390
  298,093
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
 
  6,340
  3,670
  4,883
  6,314
  7,941
  9,726
  11,614
  13,536
  15,414
  17,166
  18,710
  19,975
  20,900
  21,442
  21,577
  21,305
  20,643
  19,630
  18,318
  16,774
  15,068
  13,275
  11,466
  9,704
  8,043
  6,525
  5,177
  4,014
  3,039
  2,245
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

NetEase, Inc. (NetEase) is a technology company. The Company operates an interactive online community in China and is a provider of Chinese language content and services through its online games, Internet media, e-mail, e-commerce and other businesses. The Company operates through three segments: Online Game Services; Advertising Services, and E-mail, E-commerce and Others. Its online games business primarily focuses on offering personal computer (PC)-client massively multi-player online role-playing games (PC-client MMORPGs), as well as mobile games to the Chinese market. The NetEase Websites provide Internet users with Chinese language online services centered over three core service categories, which include content, community and communication. Its online advertising offerings include banner advertising, direct e-mail, sponsored special events, games, contests and other activities. It offers free and fee-based premium e-mail services to its individual users and corporate users.

FINANCIAL RATIOS  of  Netease ADR (NTES)

Valuation Ratios
P/E Ratio 430.1
Price to Sales 130.8
Price to Book 130.7
Price to Tangible Book
Price to Cash Flow 322.3
Price to Free Cash Flow 347.9
Growth Rates
Sales Growth Rate 67.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 10.7%
Cap. Spend. - 3 Yr. Gr. Rate 38.8%
Financial Strength
Quick Ratio 10
Current Ratio 0.2
LT Debt to Equity 0%
Total Debt to Equity 10%
Interest Coverage 0
Management Effectiveness
Return On Assets 23.4%
Ret/ On Assets - 3 Yr. Avg. 19.9%
Return On Total Capital 31.6%
Ret/ On T. Cap. - 3 Yr. Avg. 25.2%
Return On Equity 34.4%
Return On Equity - 3 Yr. Avg. 27.3%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 56.7%
Gross Margin - 3 Yr. Avg. 62.6%
EBITDA Margin 37.2%
EBITDA Margin - 3 Yr. Avg. 40.6%
Operating Margin 33.1%
Oper. Margin - 3 Yr. Avg. 35.2%
Pre-Tax Margin 36.4%
Pre-Tax Margin - 3 Yr. Avg. 39.5%
Net Profit Margin 30.4%
Net Profit Margin - 3 Yr. Avg. 33.5%
Effective Tax Rate 15.1%
Eff/ Tax Rate - 3 Yr. Avg. 14.3%
Payout Ratio 21.9%

NTES stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NTES stock intrinsic value calculation we used $8177.45148126 million for the last fiscal year's total revenue generated by Netease ADR. The default revenue input number comes from 2016 income statement of Netease 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 NTES stock valuation model: a) initial revenue growth rate of 48.8% 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 NTES is calculated based on our internal credit rating of Netease 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 Netease 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 NTES stock the variable cost ratio is equal to 66.9%.

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 NTES 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 5.4% for Netease ADR.

Corporate tax rate of 27% is the nominal tax rate for Netease 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 NTES 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 NTES are equal to 6.1%.

Life of production assets of 4.5 years is the average useful life of capital assets used in Netease 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 NTES is equal to -7.8%. 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 - $7018.61245466 million for Netease 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 131.329 million for Netease 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 Netease ADR at the current share price and the inputted number of shares is $28.9 billion.

RELATED COMPANIES Price Int.Val. Rating
BIDU Baidu ADR 185.06 824.24  str.buy
CYOU Changyou.com A 18.33 100.09  str.buy
SOHU Sohu.com ADR 19.18 23.80  hold
SINA Sina 62.22 2,630.30  str.buy

COMPANY NEWS

▶ Three Stocks Move Thursday   [Nov-15-18 02:21PM  GuruFocus.com]
▶ NetEase: 3Q Earnings Snapshot   [Nov-14-18 06:23PM  Associated Press]
▶ NetEase Q3 Earnings Preview   [07:57AM  Benzinga]
▶ 2 Chinese Dot-Com Laggards Have a Lot to Prove This Week   [Nov-13-18 01:02PM  Motley Fool]
▶ Activision Blizzard Mobile Game 'Diablo Immortal' Gets Upbeat Outlook   [Nov-06-18 04:11PM  Investor's Business Daily]
▶ 5 Top Stocks to Buy in November   [09:30AM  Motley Fool]
▶ 9 Blue Chip Giants That Will Crush the S&P 500   [Nov-02-18 08:00AM  Investopedia]
▶ How To Trade Stocks: What Is A Base? And How To Use Stock Charts To Win Big   [Oct-31-18 05:45PM  Investor's Business Daily]
▶ Dont Expect Earnings to Save Baidu Stock   [Oct-29-18 09:59AM  InvestorPlace]
▶ 4 New Long-Term Catalysts For Baidus Stock   [Oct-25-18 10:02PM  Motley Fool]
▶ [$$] Chinas Pause on Videogame Approvals Expected to Drag Into Next Year   [Oct-24-18 07:38PM  The Wall Street Journal]
▶ Why NetEase, Inc. Stock Popped 15.4% in September   [Oct-10-18 05:39PM  Motley Fool]
▶ 99 Problems: NFL players and Madden disagree on ratings   [Oct-05-18 01:10PM  Yahoo Finance Video]
▶ Is JD.com Stock a Value Play on Chinas Huge Opportunity?   [Oct-01-18 12:32PM  InvestorPlace]
▶ 4 Things NetEase CFO Zhaoxuan Yang Wants You to Know   [Sep-27-18 10:11PM  Motley Fool]
▶ Stocks, Oil Prices Rise: Acuity Upgraded, McDonald's Hikes Dividend   [Sep-21-18 09:42AM  Investor's Business Daily]
▶ A Messy Story Creates an Opportunity in NetEase Stock   [Sep-20-18 01:32AM  InvestorPlace]
▶ Use The 10-Day Moving Average To Get Ahead Of Sell Signals   [Sep-18-18 12:45PM  Investor's Business Daily]
▶ Baidu Stock Looks Like a Falling Knife   [Sep-10-18 03:19PM  InvestorPlace]
▶ 3 Reasons NetEase Stock Can Bounce Back   [Sep-04-18 10:05AM  Motley Fool]
▶ [$$] Tencent and Chinese Gaming Rivals Shudder as Government Tightens Grip   [Aug-31-18 07:52PM  The Wall Street Journal]
▶ [$$] Tencent Shudders as China Tightens Grip on Videogames   [07:56AM  The Wall Street Journal]
▶ Has NetEase Inc (NASDAQ:NTES) Got Enough Cash?   [Aug-29-18 01:58PM  Simply Wall St.]
▶ Why Shares of NetEase Inc. Tumbled Today   [Aug-09-18 04:24PM  Motley Fool]
▶ NetEase Still Can't Win the Earnings Game   [01:58PM  Motley Fool]
▶ NetEase: 2Q Earnings Snapshot   [Aug-08-18 07:16PM  Associated Press]
▶ Why NetEase, Inc. Stock Gained 10.7% in June   [Jul-11-18 12:35PM  Motley Fool]
▶ Stocks Jump Into Short Session; Oil Prices Climb, NetEase Upgraded   [Jul-03-18 08:59AM  Investor's Business Daily]
▶ 7 Favorite Picks of a $40 Billion Portfolio Star   [Jul-02-18 08:00AM  Investopedia]
▶ Should You Chase Bilibilis Post-IPO Rally?   [Jun-27-18 11:11AM  Motley Fool]
▶ Are NetEases Days of High Growth Over?   [Jun-20-18 09:48PM  Motley Fool]
▶ NetEase doubles stock repurchase program to $2 billion   [Jun-11-18 08:55AM  MarketWatch]
▶ 2 of Tencent's Biggest Games Aren't Getting Along   [Jun-06-18 08:03PM  Motley Fool]
▶ NetEase Announces Strategic Investment in Bungie   [Jun-01-18 05:00PM  PR Newswire]
▶ Why Is No One Talking About NetEase Inc. Stock?   [May-29-18 05:33PM  Motley Fool]
▶ Should You Buy NetEase After Its 30% Decline in 2018?   [May-24-18 11:33AM  Motley Fool]
▶ What's Behind NetEase's Plunging Profit?   [10:18AM  Motley Fool]
▶ NetEase: 1Q Earnings Snapshot   [May-16-18 07:11PM  Associated Press]
Financial statements of NTES
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

CONTACT US       ASSET ALLOCATION

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

Copyright © X-FIN.com 2005-2018. All rigths reserved.