Intrinsic value of 58.com ADR - WUBA

Previous Close

$53.26

  Intrinsic Value

$237.69

stock screener

  Rating & Target

str. buy

+346%

  Value-price divergence*

-44%

Previous close

$53.26

 
Intrinsic value

$237.69

 
Up/down potential

+346%

 
Rating

str. buy

 
Value-price divergence*

-44%

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

We calculate the intrinsic value of WUBA 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 8.7

 

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, %
  69.44
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  1,098
  1,757
  2,714
  4,059
  5,890
  8,309
  11,424
  15,334
  20,134
  25,908
  32,724
  40,635
  49,681
  59,882
  71,248
  83,775
  97,450
  112,254
  128,163
  145,152
  163,194
  182,266
  202,348
  223,425
  245,487
  268,531
  292,561
  317,585
  343,622
  370,694
  398,831
Variable operating expenses, $m
 
  983
  1,393
  1,969
  2,753
  3,790
  5,124
  6,800
  8,856
  11,330
  14,250
  17,410
  21,285
  25,656
  30,525
  35,892
  41,751
  48,094
  54,910
  62,188
  69,918
  78,089
  86,693
  95,723
  105,176
  115,049
  125,344
  136,065
  147,220
  158,819
  170,874
Fixed operating expenses, $m
 
  371
  380
  390
  400
  410
  420
  430
  441
  452
  463
  475
  487
  499
  511
  524
  537
  551
  565
  579
  593
  608
  623
  639
  655
  671
  688
  705
  723
  741
  759
Total operating expenses, $m
  1,053
  1,354
  1,773
  2,359
  3,153
  4,200
  5,544
  7,230
  9,297
  11,782
  14,713
  17,885
  21,772
  26,155
  31,036
  36,416
  42,288
  48,645
  55,475
  62,767
  70,511
  78,697
  87,316
  96,362
  105,831
  115,720
  126,032
  136,770
  147,943
  159,560
  171,633
Operating income, $m
  45
  403
  941
  1,700
  2,737
  4,110
  5,879
  8,104
  10,837
  14,126
  18,010
  22,751
  27,909
  33,727
  40,211
  47,358
  55,161
  63,610
  72,689
  82,385
  92,682
  103,568
  115,031
  127,063
  139,657
  152,811
  166,529
  180,815
  195,679
  211,134
  227,198
EBITDA, $m
  104
  655
  1,204
  1,980
  3,039
  4,441
  6,249
  8,521
  11,313
  14,673
  18,641
  23,248
  28,517
  34,460
  41,083
  48,383
  56,354
  64,983
  74,257
  84,160
  94,679
  105,798
  117,507
  129,796
  142,660
  156,096
  170,108
  184,700
  199,882
  215,669
  232,077
Interest expense (income), $m
  0
  0
  18
  43
  79
  128
  193
  276
  381
  509
  663
  846
  1,057
  1,299
  1,572
  1,875
  2,210
  2,576
  2,972
  3,397
  3,851
  4,333
  4,843
  5,380
  5,944
  6,533
  7,149
  7,792
  8,461
  9,157
  9,881
Earnings before tax, $m
  -119
  403
  923
  1,657
  2,657
  3,982
  5,687
  7,828
  10,456
  13,617
  17,347
  21,905
  26,852
  32,428
  38,640
  45,483
  52,951
  61,034
  69,717
  78,988
  88,831
  99,235
  110,188
  121,682
  133,713
  146,278
  159,380
  173,023
  187,218
  201,977
  217,317
Tax expense, $m
  -7
  109
  249
  447
  717
  1,075
  1,535
  2,113
  2,823
  3,677
  4,684
  5,914
  7,250
  8,756
  10,433
  12,280
  14,297
  16,479
  18,824
  21,327
  23,984
  26,793
  29,751
  32,854
  36,103
  39,495
  43,032
  46,716
  50,549
  54,534
  58,676
Net income, $m
  -113
  294
  674
  1,210
  1,940
  2,907
  4,151
  5,714
  7,633
  9,940
  12,663
  15,991
  19,602
  23,673
  28,207
  33,202
  38,654
  44,555
  50,894
  57,661
  64,847
  72,441
  80,437
  88,828
  97,611
  106,783
  116,347
  126,307
  136,669
  147,443
  158,642

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  298
  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
  3,664
  5,389
  8,326
  12,451
  18,066
  25,489
  35,042
  47,036
  61,761
  79,472
  100,379
  124,649
  152,395
  183,687
  218,551
  256,977
  298,926
  344,338
  393,139
  445,251
  500,594
  559,097
  620,699
  685,352
  753,028
  823,716
  897,426
  974,188
  1,054,054
  1,137,097
  1,223,409
Adjusted assets (=assets-cash), $m
  3,366
  5,389
  8,326
  12,451
  18,066
  25,489
  35,042
  47,036
  61,761
  79,472
  100,379
  124,649
  152,395
  183,687
  218,551
  256,977
  298,926
  344,338
  393,139
  445,251
  500,594
  559,097
  620,699
  685,352
  753,028
  823,716
  897,426
  974,188
  1,054,054
  1,137,097
  1,223,409
Revenue / Adjusted assets
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
Average production assets, $m
  404
  645
  996
  1,490
  2,162
  3,050
  4,192
  5,627
  7,389
  9,508
  12,010
  14,913
  18,233
  21,977
  26,148
  30,745
  35,764
  41,197
  47,036
  53,271
  59,892
  66,891
  74,262
  81,997
  90,094
  98,551
  107,370
  116,554
  126,109
  136,045
  146,371
Working capital, $m
  -407
  -176
  -271
  -406
  -589
  -831
  -1,142
  -1,533
  -2,013
  -2,591
  -3,272
  -4,064
  -4,968
  -5,988
  -7,125
  -8,377
  -9,745
  -11,225
  -12,816
  -14,515
  -16,319
  -18,227
  -20,235
  -22,342
  -24,549
  -26,853
  -29,256
  -31,759
  -34,362
  -37,069
  -39,883
Total debt, $m
  267
  505
  1,236
  2,263
  3,662
  5,510
  7,888
  10,875
  14,542
  18,952
  24,157
  30,200
  37,109
  44,901
  53,582
  63,150
  73,596
  84,903
  97,055
  110,030
  123,811
  138,378
  153,717
  169,816
  186,667
  204,268
  222,622
  241,736
  261,622
  282,300
  303,792
Total liabilities, $m
  1,104
  1,342
  2,073
  3,100
  4,499
  6,347
  8,725
  11,712
  15,379
  19,789
  24,994
  31,037
  37,946
  45,738
  54,419
  63,987
  74,433
  85,740
  97,892
  110,867
  124,648
  139,215
  154,554
  170,653
  187,504
  205,105
  223,459
  242,573
  262,459
  283,137
  304,629
Total equity, $m
  2,560
  4,047
  6,253
  9,351
  13,568
  19,142
  26,316
  35,324
  46,383
  59,683
  75,385
  93,611
  114,449
  137,949
  164,132
  192,990
  224,494
  258,598
  295,248
  334,383
  375,946
  419,882
  466,145
  514,699
  565,524
  618,611
  673,967
  731,615
  791,595
  853,960
  918,780
Total liabilities and equity, $m
  3,664
  5,389
  8,326
  12,451
  18,067
  25,489
  35,041
  47,036
  61,762
  79,472
  100,379
  124,648
  152,395
  183,687
  218,551
  256,977
  298,927
  344,338
  393,140
  445,250
  500,594
  559,097
  620,699
  685,352
  753,028
  823,716
  897,426
  974,188
  1,054,054
  1,137,097
  1,223,409
Debt-to-equity ratio
  0.104
  0.120
  0.200
  0.240
  0.270
  0.290
  0.300
  0.310
  0.310
  0.320
  0.320
  0.320
  0.320
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
  0.330
Adjusted equity ratio
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -113
  294
  674
  1,210
  1,940
  2,907
  4,151
  5,714
  7,633
  9,940
  12,663
  15,991
  19,602
  23,673
  28,207
  33,202
  38,654
  44,555
  50,894
  57,661
  64,847
  72,441
  80,437
  88,828
  97,611
  106,783
  116,347
  126,307
  136,669
  147,443
  158,642
Depreciation, amort., depletion, $m
  59
  252
  263
  280
  302
  332
  370
  418
  476
  547
  630
  497
  608
  733
  872
  1,025
  1,192
  1,373
  1,568
  1,776
  1,996
  2,230
  2,475
  2,733
  3,003
  3,285
  3,579
  3,885
  4,204
  4,535
  4,879
Funds from operations, $m
  539
  546
  937
  1,489
  2,242
  3,238
  4,521
  6,132
  8,109
  10,487
  13,294
  16,488
  20,210
  24,405
  29,078
  34,227
  39,846
  45,928
  52,461
  59,437
  66,843
  74,671
  82,913
  91,561
  100,614
  110,068
  119,926
  130,192
  140,873
  151,978
  163,521
Change in working capital, $m
  266
  -66
  -96
  -134
  -183
  -242
  -311
  -391
  -480
  -577
  -682
  -791
  -905
  -1,020
  -1,137
  -1,253
  -1,368
  -1,480
  -1,591
  -1,699
  -1,804
  -1,907
  -2,008
  -2,108
  -2,206
  -2,304
  -2,403
  -2,502
  -2,604
  -2,707
  -2,814
Cash from operations, $m
  273
  612
  1,033
  1,624
  2,425
  3,480
  4,832
  6,523
  8,589
  11,065
  13,975
  17,279
  21,114
  25,425
  30,215
  35,480
  41,214
  47,408
  54,052
  61,136
  68,647
  76,578
  84,921
  93,669
  102,820
  112,372
  122,329
  132,694
  143,476
  154,685
  166,334
Maintenance CAPEX, $m
  0
  -13
  -21
  -33
  -50
  -72
  -102
  -140
  -188
  -246
  -317
  -400
  -497
  -608
  -733
  -872
  -1,025
  -1,192
  -1,373
  -1,568
  -1,776
  -1,996
  -2,230
  -2,475
  -2,733
  -3,003
  -3,285
  -3,579
  -3,885
  -4,204
  -4,535
New CAPEX, $m
  -31
  -241
  -351
  -494
  -672
  -888
  -1,143
  -1,435
  -1,762
  -2,119
  -2,501
  -2,904
  -3,320
  -3,744
  -4,171
  -4,597
  -5,019
  -5,433
  -5,839
  -6,235
  -6,621
  -6,999
  -7,370
  -7,735
  -8,097
  -8,457
  -8,819
  -9,184
  -9,555
  -9,935
  -10,327
Cash from investing activities, $m
  -571
  -254
  -372
  -527
  -722
  -960
  -1,245
  -1,575
  -1,950
  -2,365
  -2,818
  -3,304
  -3,817
  -4,352
  -4,904
  -5,469
  -6,044
  -6,625
  -7,212
  -7,803
  -8,397
  -8,995
  -9,600
  -10,210
  -10,830
  -11,460
  -12,104
  -12,763
  -13,440
  -14,139
  -14,862
Free cash flow, $m
  -298
  357
  660
  1,097
  1,704
  2,520
  3,588
  4,948
  6,640
  8,699
  11,157
  13,975
  17,297
  21,074
  25,311
  30,011
  35,170
  40,783
  46,840
  53,333
  60,250
  67,583
  75,321
  83,458
  91,990
  100,912
  110,225
  119,931
  130,036
  140,546
  151,473
Issuance/(repayment) of debt, $m
  1
  505
  731
  1,027
  1,398
  1,848
  2,379
  2,987
  3,667
  4,410
  5,206
  6,043
  6,909
  7,792
  8,681
  9,568
  10,445
  11,308
  12,151
  12,976
  13,780
  14,567
  15,339
  16,099
  16,851
  17,601
  18,354
  19,114
  19,887
  20,678
  21,492
Issuance/(repurchase) of shares, $m
  3
  1,224
  1,532
  1,889
  2,277
  2,668
  3,023
  3,294
  3,426
  3,360
  3,038
  2,235
  1,236
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  8
  1,729
  2,263
  2,916
  3,675
  4,516
  5,402
  6,281
  7,093
  7,770
  8,244
  8,278
  8,145
  7,792
  8,681
  9,568
  10,445
  11,308
  12,151
  12,976
  13,780
  14,567
  15,339
  16,099
  16,851
  17,601
  18,354
  19,114
  19,887
  20,678
  21,492
Total cash flow (excl. dividends), $m
  -280
  2,086
  2,923
  4,013
  5,379
  7,036
  8,989
  11,228
  13,732
  16,470
  19,401
  22,253
  25,442
  28,866
  33,992
  39,579
  45,616
  52,090
  58,992
  66,309
  74,031
  82,150
  90,660
  99,557
  108,841
  118,513
  128,579
  139,045
  149,923
  161,224
  172,965
Retained Cash Flow (-), $m
  80
  -1,518
  -2,206
  -3,098
  -4,217
  -5,574
  -7,174
  -9,008
  -11,059
  -13,301
  -15,702
  -18,226
  -20,837
  -23,500
  -26,183
  -28,858
  -31,504
  -34,104
  -36,650
  -39,136
  -41,563
  -43,936
  -46,263
  -48,555
  -50,825
  -53,087
  -55,356
  -57,648
  -59,980
  -62,365
  -64,820
Prev. year cash balance distribution, $m
 
  31
  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
 
  599
  717
  915
  1,162
  1,462
  1,815
  2,221
  2,674
  3,169
  3,700
  4,027
  4,604
  5,365
  7,809
  10,721
  14,112
  17,986
  22,342
  27,173
  32,468
  38,214
  44,397
  51,002
  58,016
  65,427
  73,223
  81,397
  89,943
  98,859
  108,144
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
 
  574
  657
  796
  957
  1,133
  1,317
  1,500
  1,671
  1,820
  1,940
  1,913
  1,965
  2,040
  2,622
  3,148
  3,586
  3,914
  4,115
  4,184
  4,126
  3,953
  3,684
  3,343
  2,955
  2,545
  2,136
  1,747
  1,392
  1,079
  814
Current shareholders' claim on cash, %
  100
  87.5
  78.7
  72.3
  67.5
  63.8
  60.9
  58.8
  57.1
  55.9
  55.1
  54.6
  54.4
  54.4
  54.4
  54.4
  54.4
  54.4
  54.4
  54.4
  54.4
  54.4
  54.4
  54.4
  54.4
  54.4
  54.4
  54.4
  54.4
  54.4
  54.4

58.com Inc. operates an online marketplace for local merchants and consumers in the People’s Republic of China. Its online marketplace enables local merchants and consumers to connect, share information, and conduct business. The company’s online marketplace contains local information in approximately 485 cities in various content categories, including jobs, real estate, used goods, automotive, and yellow pages. It offers membership services, such as merchant certification and listing benefits, as well as display of online storefronts; and online marketing services comprising listing services, such as real-time bidding and priority listing, and marketing services through collaboration with third party Internet companies. 58.com Inc. was founded in 2005 and is headquartered in Beijing, the People’s Republic of China.

FINANCIAL RATIOS  of  58.com ADR (WUBA)

Valuation Ratios
P/E Ratio -136.5
Price to Sales 14.1
Price to Book 6
Price to Tangible Book
Price to Cash Flow 56.5
Price to Free Cash Flow 63.8
Growth Rates
Sales Growth Rate 69.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -83%
Cap. Spend. - 3 Yr. Gr. Rate 50.6%
Financial Strength
Quick Ratio 1
Current Ratio 0.2
LT Debt to Equity 0%
Total Debt to Equity 10.4%
Interest Coverage 0
Management Effectiveness
Return On Assets -3%
Ret/ On Assets - 3 Yr. Avg. -2.9%
Return On Total Capital -3.9%
Ret/ On T. Cap. - 3 Yr. Avg. -3.7%
Return On Equity -4.3%
Return On Equity - 3 Yr. Avg. -4.2%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 90.7%
Gross Margin - 3 Yr. Avg. 92.7%
EBITDA Margin -5.5%
EBITDA Margin - 3 Yr. Avg. -8.5%
Operating Margin 4.1%
Oper. Margin - 3 Yr. Avg. -3.8%
Pre-Tax Margin -10.8%
Pre-Tax Margin - 3 Yr. Avg. -12.6%
Net Profit Margin -10.3%
Net Profit Margin - 3 Yr. Avg. -12.3%
Effective Tax Rate 5.9%
Eff/ Tax Rate - 3 Yr. Avg. 9.8%
Payout Ratio 0%

WUBA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the WUBA stock intrinsic value calculation we used $1098 million for the last fiscal year's total revenue generated by 58.com ADR. The default revenue input number comes from 2016 income statement of 58.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 WUBA stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for WUBA is calculated based on our internal credit rating of 58.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 58.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 WUBA stock the variable cost ratio is equal to 63.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $362 million in the base year in the intrinsic value calculation for WUBA 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 58.com ADR.

Corporate tax rate of 27% is the nominal tax rate for 58.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 WUBA 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 WUBA are equal to 36.7%.

Life of production assets of 45.9 years is the average useful life of capital assets used in 58.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 WUBA is equal to -10%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $2560 million for 58.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 163.067 million for 58.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 58.com ADR at the current share price and the inputted number of shares is $8.7 billion.

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COMPANY NEWS

▶ As Alibaba Climbs, This Other Chinese Stock Tests New Buy Zone   [Jul-11-17 04:09PM  Investor's Business Daily]
▶ Can These Momentum Stocks Break Out One More Time?   [Jul-05-17 01:00PM  Investopedia]
▶ After Alibaba, Weibo Moves, This Chinese Stock May Be Setting Up   [Jun-30-17 03:06PM  Investor's Business Daily]
▶ ETFs with exposure to 58.com Inc. : June 27, 2017   [Jun-27-17 04:00PM  Capital Cube]
▶ Guazi Announces Series B Financing   [Jun-16-17 02:00AM  PR Newswire]
▶ IPO Stock News And Analysis: Find Today's Top New Issues   [May-26-17 04:31PM  Investor's Business Daily]
▶ Which Stocks Are Showing Rising Relative Strength?   [04:09PM  Investor's Business Daily]
▶ As Alibaba, JD And Weibo Lead, 2013 IPO 58.com Rebounds   [04:07PM  Investor's Business Daily]
▶ ETFs with exposure to 58.com Inc. : May 19, 2017   [May-19-17 02:16PM  Capital Cube]
▶ New Strong Buy Stocks for May 2nd   [May-02-17 10:52AM  Zacks]
▶ ETFs with exposure to 58.com Inc. : April 24, 2017   [Apr-24-17 02:49PM  Capital Cube]
▶ ETFs with exposure to 58.com Inc. : April 5, 2017   [Apr-05-17 05:45PM  Capital Cube]
▶ [$$] 58.com: Chinese Internet Stock Is Way Too Pricey   [Mar-01-17 10:19PM  Barrons.com]
▶ Why 58.com Inc. (ADR) Shares Popped Today   [Feb-28-17 03:45PM  Motley Fool]
▶ ETFs with exposure to 58.com Inc. : January 11, 2017   [Jan-11-17 01:34PM  Capital Cube]
▶ 3 Stocks That Were Cut in Half in 2016   [Dec-16-16 08:35PM  at Motley Fool]
▶ China's Property Market Is Freezing Up: Sell This Stock Now   [Dec-14-16 09:13PM  at Barrons.com]
▶ Near a 3-Year Low, Is 58.com Inc. (ADR) a Buy?   [Dec-09-16 10:19AM  at Motley Fool]
▶ Do Hedge Funds Love Westlake Chemical Corporation (WLK)?   [Dec-07-16 10:54AM  at Insider Monkey]
▶ Hedge Funds Are Betting On Plains GP Holdings LP (PAGP)   [Nov-29-16 09:33AM  at Insider Monkey]
▶ 58.com Announces Management Change   [06:53AM  PR Newswire]
▶ 58.com (WUBA) Stock Coverage Initiated at Deutsche Bank   [Oct-05-16 08:46AM  at TheStreet]
▶ Guazi Completes Another Round of Financing   [Sep-28-16 07:30AM  PR Newswire]
▶ Are Hedge Funds Losing Interest in China?   [Sep-16-16 01:17PM  at Insider Monkey]
▶ [$$] VC Profile: DCM Finds Exits With East Asia-U.S. Strategy   [Sep-06-16 09:05AM  at The Wall Street Journal]
▶ SINA, 58.com Among Billionaire Lei Zhangs Big Purchases in Q2   [Aug-28-16 10:52PM  at Insider Monkey]
▶ Can 58.com Bounce Back After Last Week's 10% Drop?   [Aug-22-16 09:08AM  at Motley Fool]
▶ Why 58.com Inc. (ADR) Stock Plunged Today   [12:15PM  at Motley Fool]
▶ Kylin Managements Top Q2 Stock Picks Dominated by China   [Jul-09-16 05:48PM  at Insider Monkey]
Stock chart of WUBA Financial statements of WUBA
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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