Intrinsic value of Vipshop Holdings ADR - VIPS

Previous Close

$8.34

  Intrinsic Value

$60.76

stock screener

  Rating & Target

str. buy

+629%

  Value-price divergence*

-53%

Previous close

$8.34

 
Intrinsic value

$60.76

 
Up/down potential

+629%

 
Rating

str. buy

 
Value-price divergence*

-53%

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

We calculate the intrinsic value of VIPS 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 4.8

 

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, %
  40.77
  30.30
  27.77
  25.49
  23.44
  21.60
  19.94
  18.45
  17.10
  15.89
  14.80
  13.82
  12.94
  12.15
  11.43
  10.79
  10.21
  9.69
  9.22
  8.80
  8.42
  8.08
  7.77
  7.49
  7.24
  7.02
  6.82
  6.63
  6.47
  6.32
  6.19
Revenue, $m
  8,187
  10,668
  13,630
  17,105
  21,115
  25,675
  30,795
  36,475
  42,713
  49,500
  56,827
  64,682
  73,051
  81,923
  91,288
  101,136
  111,461
  122,259
  133,531
  145,278
  157,507
  170,227
  183,451
  197,194
  211,476
  226,317
  241,744
  257,782
  274,464
  291,821
  309,890
Variable operating expenses, $m
 
  10,229
  13,068
  16,398
  20,241
  24,611
  29,518
  34,961
  40,939
  47,444
  54,466
  61,988
  70,009
  78,511
  87,486
  96,924
  106,819
  117,168
  127,970
  139,228
  150,947
  163,138
  175,811
  188,982
  202,668
  216,892
  231,676
  247,046
  263,033
  279,668
  296,984
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
  7,864
  10,229
  13,068
  16,398
  20,241
  24,611
  29,518
  34,961
  40,939
  47,444
  54,466
  61,988
  70,009
  78,511
  87,486
  96,924
  106,819
  117,168
  127,970
  139,228
  150,947
  163,138
  175,811
  188,982
  202,668
  216,892
  231,676
  247,046
  263,033
  279,668
  296,984
Operating income, $m
  323
  439
  562
  707
  874
  1,064
  1,277
  1,514
  1,774
  2,056
  2,361
  2,694
  3,042
  3,412
  3,802
  4,212
  4,642
  5,092
  5,561
  6,050
  6,560
  7,090
  7,640
  8,213
  8,807
  9,426
  10,068
  10,736
  11,431
  12,154
  12,906
EBITDA, $m
  469
  613
  783
  983
  1,213
  1,475
  1,769
  2,095
  2,454
  2,844
  3,265
  3,716
  4,197
  4,706
  5,244
  5,810
  6,403
  7,023
  7,671
  8,346
  9,048
  9,779
  10,539
  11,328
  12,149
  13,001
  13,888
  14,809
  15,767
  16,764
  17,802
Interest expense (income), $m
  0
  22
  45
  78
  117
  163
  214
  272
  336
  407
  484
  566
  655
  750
  850
  956
  1,067
  1,184
  1,306
  1,433
  1,566
  1,704
  1,848
  1,998
  2,153
  2,314
  2,482
  2,656
  2,838
  3,026
  3,222
Earnings before tax, $m
  386
  417
  518
  629
  757
  901
  1,063
  1,242
  1,437
  1,649
  1,878
  2,127
  2,387
  2,662
  2,952
  3,256
  3,575
  3,908
  4,255
  4,617
  4,994
  5,385
  5,792
  6,215
  6,654
  7,111
  7,586
  8,080
  8,593
  9,127
  9,684
Tax expense, $m
  87
  113
  140
  170
  204
  243
  287
  335
  388
  445
  507
  574
  645
  719
  797
  879
  965
  1,055
  1,149
  1,247
  1,348
  1,454
  1,564
  1,678
  1,797
  1,920
  2,048
  2,181
  2,320
  2,464
  2,615
Net income, $m
  295
  304
  378
  459
  552
  658
  776
  906
  1,049
  1,204
  1,371
  1,553
  1,743
  1,943
  2,155
  2,377
  2,610
  2,853
  3,106
  3,370
  3,645
  3,931
  4,228
  4,537
  4,858
  5,191
  5,538
  5,898
  6,273
  6,663
  7,069

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  692
  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
  3,630
  3,828
  4,891
  6,137
  7,576
  9,213
  11,049
  13,088
  15,326
  17,761
  20,390
  23,208
  26,211
  29,395
  32,755
  36,288
  39,993
  43,868
  47,912
  52,127
  56,515
  61,079
  65,824
  70,755
  75,879
  81,205
  86,740
  92,495
  98,480
  104,708
  111,191
Adjusted assets (=assets-cash), $m
  2,938
  3,828
  4,891
  6,137
  7,576
  9,213
  11,049
  13,088
  15,326
  17,761
  20,390
  23,208
  26,211
  29,395
  32,755
  36,288
  39,993
  43,868
  47,912
  52,127
  56,515
  61,079
  65,824
  70,755
  75,879
  81,205
  86,740
  92,495
  98,480
  104,708
  111,191
Revenue / Adjusted assets
  2.787
  2.787
  2.787
  2.787
  2.787
  2.787
  2.787
  2.787
  2.787
  2.787
  2.787
  2.787
  2.787
  2.787
  2.787
  2.787
  2.787
  2.787
  2.787
  2.787
  2.787
  2.787
  2.787
  2.787
  2.787
  2.787
  2.787
  2.787
  2.787
  2.787
  2.787
Average production assets, $m
  643
  843
  1,077
  1,351
  1,668
  2,028
  2,433
  2,882
  3,374
  3,911
  4,489
  5,110
  5,771
  6,472
  7,212
  7,990
  8,805
  9,658
  10,549
  11,477
  12,443
  13,448
  14,493
  15,578
  16,707
  17,879
  19,098
  20,365
  21,683
  23,054
  24,481
Working capital, $m
  -1
  -907
  -1,159
  -1,454
  -1,795
  -2,182
  -2,618
  -3,100
  -3,631
  -4,208
  -4,830
  -5,498
  -6,209
  -6,963
  -7,759
  -8,597
  -9,474
  -10,392
  -11,350
  -12,349
  -13,388
  -14,469
  -15,593
  -16,762
  -17,975
  -19,237
  -20,548
  -21,912
  -23,329
  -24,805
  -26,341
Total debt, $m
  634
  1,278
  2,235
  3,357
  4,652
  6,124
  7,778
  9,612
  11,626
  13,818
  16,184
  18,720
  21,423
  24,288
  27,312
  30,493
  33,827
  37,314
  40,954
  44,747
  48,696
  52,804
  57,074
  61,512
  66,124
  70,917
  75,899
  81,078
  86,465
  92,070
  97,905
Total liabilities, $m
  2,801
  3,445
  4,402
  5,524
  6,819
  8,291
  9,945
  11,779
  13,793
  15,985
  18,351
  20,887
  23,590
  26,455
  29,479
  32,660
  35,994
  39,481
  43,121
  46,914
  50,863
  54,971
  59,241
  63,679
  68,291
  73,084
  78,066
  83,245
  88,632
  94,237
  100,072
Total equity, $m
  829
  383
  489
  614
  758
  921
  1,105
  1,309
  1,533
  1,776
  2,039
  2,321
  2,621
  2,939
  3,275
  3,629
  3,999
  4,387
  4,791
  5,213
  5,651
  6,108
  6,582
  7,075
  7,588
  8,120
  8,674
  9,249
  9,848
  10,471
  11,119
Total liabilities and equity, $m
  3,630
  3,828
  4,891
  6,138
  7,577
  9,212
  11,050
  13,088
  15,326
  17,761
  20,390
  23,208
  26,211
  29,394
  32,754
  36,289
  39,993
  43,868
  47,912
  52,127
  56,514
  61,079
  65,823
  70,754
  75,879
  81,204
  86,740
  92,494
  98,480
  104,708
  111,191
Debt-to-equity ratio
  0.765
  3.340
  4.570
  5.470
  6.140
  6.650
  7.040
  7.340
  7.590
  7.780
  7.940
  8.070
  8.170
  8.260
  8.340
  8.400
  8.460
  8.510
  8.550
  8.580
  8.620
  8.650
  8.670
  8.690
  8.710
  8.730
  8.750
  8.770
  8.780
  8.790
  8.810
Adjusted equity ratio
  0.047
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  295
  304
  378
  459
  552
  658
  776
  906
  1,049
  1,204
  1,371
  1,553
  1,743
  1,943
  2,155
  2,377
  2,610
  2,853
  3,106
  3,370
  3,645
  3,931
  4,228
  4,537
  4,858
  5,191
  5,538
  5,898
  6,273
  6,663
  7,069
Depreciation, amort., depletion, $m
  146
  174
  221
  276
  339
  411
  492
  582
  680
  787
  903
  1,022
  1,154
  1,294
  1,442
  1,598
  1,761
  1,932
  2,110
  2,295
  2,489
  2,690
  2,899
  3,116
  3,341
  3,576
  3,820
  4,073
  4,337
  4,611
  4,896
Funds from operations, $m
  248
  478
  599
  735
  891
  1,069
  1,268
  1,488
  1,729
  1,991
  2,274
  2,575
  2,897
  3,238
  3,597
  3,975
  4,371
  4,784
  5,216
  5,666
  6,134
  6,621
  7,127
  7,653
  8,199
  8,767
  9,357
  9,971
  10,609
  11,274
  11,965
Change in working capital, $m
  -162
  -211
  -252
  -295
  -341
  -388
  -435
  -483
  -530
  -577
  -623
  -668
  -711
  -754
  -796
  -837
  -878
  -918
  -958
  -999
  -1,039
  -1,081
  -1,124
  -1,168
  -1,214
  -1,262
  -1,311
  -1,363
  -1,418
  -1,475
  -1,536
Cash from operations, $m
  410
  689
  850
  1,030
  1,232
  1,457
  1,703
  1,971
  2,259
  2,568
  2,897
  3,243
  3,608
  3,992
  4,393
  4,812
  5,248
  5,702
  6,174
  6,664
  7,173
  7,702
  8,251
  8,821
  9,413
  10,028
  10,668
  11,334
  12,027
  12,749
  13,501
Maintenance CAPEX, $m
  0
  -129
  -169
  -215
  -270
  -334
  -406
  -487
  -576
  -675
  -782
  -898
  -1,022
  -1,154
  -1,294
  -1,442
  -1,598
  -1,761
  -1,932
  -2,110
  -2,295
  -2,489
  -2,690
  -2,899
  -3,116
  -3,341
  -3,576
  -3,820
  -4,073
  -4,337
  -4,611
New CAPEX, $m
  -314
  -200
  -234
  -275
  -317
  -360
  -404
  -449
  -493
  -536
  -579
  -620
  -661
  -701
  -740
  -778
  -816
  -853
  -890
  -928
  -966
  -1,005
  -1,045
  -1,086
  -1,128
  -1,172
  -1,219
  -1,267
  -1,318
  -1,371
  -1,427
Cash from investing activities, $m
  -241
  -329
  -403
  -490
  -587
  -694
  -810
  -936
  -1,069
  -1,211
  -1,361
  -1,518
  -1,683
  -1,855
  -2,034
  -2,220
  -2,414
  -2,614
  -2,822
  -3,038
  -3,261
  -3,494
  -3,735
  -3,985
  -4,244
  -4,513
  -4,795
  -5,087
  -5,391
  -5,708
  -6,038
Free cash flow, $m
  169
  361
  448
  540
  645
  763
  893
  1,035
  1,190
  1,357
  1,536
  1,724
  1,925
  2,137
  2,359
  2,592
  2,835
  3,088
  3,352
  3,627
  3,912
  4,208
  4,517
  4,837
  5,169
  5,515
  5,874
  6,248
  6,637
  7,041
  7,463
Issuance/(repayment) of debt, $m
  -13
  644
  957
  1,122
  1,295
  1,473
  1,653
  1,834
  2,014
  2,192
  2,366
  2,536
  2,703
  2,865
  3,024
  3,180
  3,334
  3,487
  3,640
  3,794
  3,949
  4,108
  4,270
  4,438
  4,612
  4,793
  4,982
  5,179
  5,387
  5,605
  5,835
Issuance/(repurchase) of shares, $m
  -28
  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  
  -57
  644
  957
  1,122
  1,295
  1,473
  1,653
  1,834
  2,014
  2,192
  2,366
  2,536
  2,703
  2,865
  3,024
  3,180
  3,334
  3,487
  3,640
  3,794
  3,949
  4,108
  4,270
  4,438
  4,612
  4,793
  4,982
  5,179
  5,387
  5,605
  5,835
Total cash flow (excl. dividends), $m
  114
  1,005
  1,404
  1,662
  1,940
  2,235
  2,546
  2,870
  3,205
  3,549
  3,902
  4,261
  4,628
  5,002
  5,383
  5,772
  6,169
  6,575
  6,992
  7,420
  7,861
  8,316
  8,787
  9,275
  9,781
  10,307
  10,856
  11,427
  12,023
  12,646
  13,298
Retained Cash Flow (-), $m
  -317
  -246
  -106
  -125
  -144
  -164
  -184
  -204
  -224
  -244
  -263
  -282
  -300
  -318
  -336
  -353
  -370
  -387
  -404
  -422
  -439
  -456
  -474
  -493
  -512
  -533
  -554
  -575
  -599
  -623
  -648
Prev. year cash balance distribution, $m
 
  692
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  1,451
  1,298
  1,538
  1,796
  2,072
  2,362
  2,666
  2,981
  3,306
  3,639
  3,979
  4,327
  4,684
  5,047
  5,418
  5,798
  6,188
  6,587
  6,999
  7,422
  7,860
  8,312
  8,781
  9,269
  9,775
  10,302
  10,852
  11,425
  12,024
  12,649
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  1,391
  1,188
  1,338
  1,479
  1,606
  1,714
  1,801
  1,863
  1,899
  1,908
  1,889
  1,847
  1,781
  1,694
  1,591
  1,474
  1,346
  1,213
  1,078
  943
  813
  690
  576
  472
  380
  301
  233
  177
  131
  95
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

Vipshop Holdings Limited is a holding company. The Company is an online discount retailer for brands in China. The Company offers branded products to consumers in China through flash sales mainly on its vip.com Website. The Company's segment is sales, product distribution and offering of goods on its online platforms. The Company conducts its business through its subsidiaries and consolidated affiliated entities in China. Through its flash sales model, the Company sells limited quantities of discounted branded products online for limited periods of time. The Company offers diversified product offerings from over 17,000 domestic and international brands, including apparel for women, men and children, fashion goods, cosmetics, home goods and other lifestyle products. The Company offers a range of products and services for consumers through lefeng.com, specializing in branded cosmetics, apparel, healthcare products, food and other consumer products.

FINANCIAL RATIOS  of  Vipshop Holdings ADR (VIPS)

Valuation Ratios
P/E Ratio 3.3
Price to Sales 0.1
Price to Book 1.2
Price to Tangible Book
Price to Cash Flow 2.4
Price to Free Cash Flow 10.3
Growth Rates
Sales Growth Rate 40.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -6%
Cap. Spend. - 3 Yr. Gr. Rate 63.3%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 76.5%
Total Debt to Equity 76.5%
Interest Coverage 0
Management Effectiveness
Return On Assets 9%
Ret/ On Assets - 3 Yr. Avg. 8.2%
Return On Total Capital 22.9%
Ret/ On T. Cap. - 3 Yr. Avg. 22.1%
Return On Equity 44%
Return On Equity - 3 Yr. Avg. 45.5%
Asset Turnover 2.5
Profitability Ratios
Gross Margin 24%
Gross Margin - 3 Yr. Avg. 24.5%
EBITDA Margin 6.5%
EBITDA Margin - 3 Yr. Avg. 6.4%
Operating Margin 3.9%
Oper. Margin - 3 Yr. Avg. 3.7%
Pre-Tax Margin 4.7%
Pre-Tax Margin - 3 Yr. Avg. 4.8%
Net Profit Margin 3.6%
Net Profit Margin - 3 Yr. Avg. 3.7%
Effective Tax Rate 22.5%
Eff/ Tax Rate - 3 Yr. Avg. 22.7%
Payout Ratio 0%

VIPS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the VIPS stock intrinsic value calculation we used $8187 million for the last fiscal year's total revenue generated by Vipshop Holdings ADR. The default revenue input number comes from 2016 income statement of Vipshop 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 VIPS stock valuation model: a) initial revenue growth rate of 30.3% 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 VIPS is calculated based on our internal credit rating of Vipshop 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 Vipshop 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 VIPS stock the variable cost ratio is equal to 95.9%.

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 VIPS 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 Vipshop Holdings ADR.

Corporate tax rate of 27% is the nominal tax rate for Vipshop 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 VIPS 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 VIPS are equal to 7.9%.

Life of production assets of 4.6 years is the average useful life of capital assets used in Vipshop 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 VIPS is equal to -8.5%. 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 - $829 million for Vipshop 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 577.778 million for Vipshop 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 Vipshop Holdings ADR at the current share price and the inputted number of shares is $4.8 billion.

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COMPANY NEWS

▶ Chinese Basket Is Hot, Vipshop Is Not   [Oct-10-17 01:34PM  Forbes]
▶ Navient, NeoPhotonics Dive into Thursdays 52-Week Low Club   [Oct-05-17 04:04PM  24/7 Wall St.]
▶ Rite Aid, JC Penney Tumble into Mondays 52-Week Low Club   [Oct-02-17 04:04PM  24/7 Wall St.]
▶ 3 Great Stocks Under $10   [Sep-21-17 10:05AM  Motley Fool]
▶ 3 Top Retail Stocks Under $10   [10:05AM  Motley Fool]
▶ Vipshop Stock Doesn't Earn Its Way Out of Its Slump   [Aug-16-17 08:11PM  Motley Fool]
▶ Vipshop Stock Has a Lot to Prove on Wednesday   [Aug-12-17 10:00AM  Motley Fool]
▶ [$$] Alibaba, JD Battle Pressures Margins   [Jul-20-17 11:08AM  Barrons.com]
▶ The options market: Buy this stock!   [Jul-19-17 01:44PM  CNBC Videos]
▶ China E-Commerce Sales A Positive Barometer For Alibaba, JD.com   [Jul-18-17 04:18PM  Investor's Business Daily]
▶ Get bullish on these three stocks   [01:55PM  CNBC Videos]
▶ Vipshop Stock Keeps Winning Streaks Alive   [May-16-17 03:04PM  Motley Fool]
▶ Vipshop, SINA, and Weibo Have a Lot to Prove This Week   [May-14-17 09:16AM  Motley Fool]
▶ Vipshop to Announce First Quarter 2017 Financial Results   [May-08-17 08:00AM  PR Newswire]
▶ Vipshop Stock: Next Stop, $17?   [Mar-23-17 12:45PM  Motley Fool]
▶ Vipshop Stock: Next Stop, $17?   [12:45PM  at Motley Fool]
▶ Alibaba, Tencent to Get Most of China Fintech Mkt.   [Mar-15-17 05:48PM  Investopedia]
▶ Vipshop Announces Entry into Facility Agreement   [Mar-07-17 06:00AM  PR Newswire]
▶ Vipshop Stock Has a Lot to Prove on Monday   [Feb-18-17 11:00AM  at Motley Fool]
▶ [$$] Here's 6 Asian Internet Stocks to Buy in 2017   [Dec-28-16 11:26PM  at Barrons.com]
▶ Why Vipshop Can Meet Q4 Expectations   [09:38AM  at Barrons.com]
▶ Tencent Tops Ranking Of China's Best Employers   [Dec-11-16 08:33AM  at Forbes]
▶ Is News Corp (NWSA) a Good Stock To Buy?   [Nov-30-16 04:47PM  at Insider Monkey]
▶ Is Dominos Pizza, Inc. (DPZ) a Good Stock To Buy?   [03:14PM  at Insider Monkey]
▶ Why Vipshop Holdings Shares Plunged Today   [12:26PM  at Motley Fool]
▶ Vipshop Stock Fails to Live Up to the Hype   [09:07AM  at Motley Fool]
▶ Vipshop Tumbles On Q3 Margin Miss   [Nov-21-16 08:23PM  at Barrons.com]
Financial statements of VIPS
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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