Intrinsic value of JD.com ADR - JD

Previous Close

$45.90

  Intrinsic Value

$200.88

stock screener

  Rating & Target

str. buy

+338%

Previous close

$45.90

 
Intrinsic value

$200.88

 
Up/down potential

+338%

 
Rating

str. buy

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

We calculate the intrinsic value of JD stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

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, %
  43.49
  39.20
  35.78
  32.70
  29.93
  27.44
  25.19
  23.18
  21.36
  19.72
  18.25
  16.92
  15.73
  14.66
  13.69
  12.82
  12.04
  11.34
  10.70
  10.13
  9.62
  9.16
  8.74
  8.37
  8.03
  7.73
  7.46
  7.21
  6.99
  6.79
  6.61
Revenue, $m
  37,632
  52,384
  71,127
  94,386
  122,638
  156,288
  195,665
  241,011
  292,485
  350,169
  414,074
  484,155
  560,324
  642,462
  730,436
  824,106
  923,340
  1,028,022
  1,138,058
  1,253,380
  1,373,954
  1,499,780
  1,630,892
  1,767,364
  1,909,303
  2,056,854
  2,210,197
  2,369,546
  2,535,147
  2,707,279
  2,886,254
Variable operating expenses, $m
 
  49,466
  67,131
  89,053
  115,680
  147,395
  184,507
  227,245
  275,759
  330,126
  390,355
  456,312
  528,100
  605,515
  688,429
  776,713
  870,240
  968,902
  1,072,610
  1,181,300
  1,294,940
  1,413,530
  1,537,102
  1,665,726
  1,799,502
  1,938,568
  2,083,092
  2,233,277
  2,389,354
  2,551,588
  2,720,270
Fixed operating expenses, $m
 
  2,493
  2,555
  2,619
  2,684
  2,752
  2,820
  2,891
  2,963
  3,037
  3,113
  3,191
  3,271
  3,353
  3,436
  3,522
  3,610
  3,701
  3,793
  3,888
  3,985
  4,085
  4,187
  4,292
  4,399
  4,509
  4,622
  4,737
  4,855
  4,977
  5,101
Total operating expenses, $m
  37,943
  51,959
  69,686
  91,672
  118,364
  150,147
  187,327
  230,136
  278,722
  333,163
  393,468
  459,503
  531,371
  608,868
  691,865
  780,235
  873,850
  972,603
  1,076,403
  1,185,188
  1,298,925
  1,417,615
  1,541,289
  1,670,018
  1,803,901
  1,943,077
  2,087,714
  2,238,014
  2,394,209
  2,556,565
  2,725,371
Operating income, $m
  -310
  425
  1,441
  2,715
  4,274
  6,142
  8,338
  10,875
  13,763
  17,006
  20,605
  24,652
  28,953
  33,595
  38,570
  43,871
  49,490
  55,419
  61,655
  68,192
  75,029
  82,165
  89,603
  97,347
  105,402
  113,778
  122,484
  131,532
  140,937
  150,715
  160,883
EBITDA, $m
  216
  1,002
  2,190
  3,677
  5,497
  7,674
  10,232
  13,187
  16,548
  20,322
  24,509
  29,106
  34,108
  39,505
  45,290
  51,453
  57,984
  64,877
  72,125
  79,723
  87,669
  95,963
  104,608
  113,607
  122,968
  132,701
  142,817
  153,332
  164,260
  175,622
  187,436
Interest expense (income), $m
  106
  73
  432
  889
  1,456
  2,145
  2,966
  3,926
  5,032
  6,287
  7,694
  9,252
  10,961
  12,819
  14,822
  16,967
  19,251
  21,671
  24,224
  26,907
  29,720
  32,660
  35,728
  38,926
  42,254
  45,715
  49,313
  53,053
  56,938
  60,977
  65,174
Earnings before tax, $m
  -468
  352
  1,009
  1,825
  2,817
  3,997
  5,372
  6,949
  8,731
  10,719
  12,911
  15,400
  17,991
  20,776
  23,748
  26,904
  30,238
  33,748
  37,431
  41,285
  45,309
  49,505
  53,875
  58,421
  63,149
  68,063
  73,170
  78,479
  83,999
  89,738
  95,708
Tax expense, $m
  26
  95
  272
  493
  761
  1,079
  1,450
  1,876
  2,357
  2,894
  3,486
  4,158
  4,858
  5,609
  6,412
  7,264
  8,164
  9,112
  10,106
  11,147
  12,234
  13,366
  14,546
  15,774
  17,050
  18,377
  19,756
  21,189
  22,680
  24,229
  25,841
Net income, $m
  -551
  257
  736
  1,333
  2,057
  2,917
  3,921
  5,073
  6,373
  7,825
  9,425
  11,242
  13,134
  15,166
  17,336
  19,640
  22,074
  24,636
  27,325
  30,138
  33,076
  36,139
  39,329
  42,648
  46,099
  49,686
  53,414
  57,290
  61,319
  65,509
  69,867

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  3,199
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  23,202
  27,849
  37,813
  50,179
  65,198
  83,088
  104,022
  128,129
  155,494
  186,161
  220,135
  257,392
  297,886
  341,554
  388,323
  438,121
  490,877
  546,530
  605,028
  666,337
  730,438
  797,331
  867,035
  939,587
  1,015,047
  1,093,490
  1,175,012
  1,259,727
  1,347,765
  1,439,277
  1,534,425
Adjusted assets (=assets-cash), $m
  20,003
  27,849
  37,813
  50,179
  65,198
  83,088
  104,022
  128,129
  155,494
  186,161
  220,135
  257,392
  297,886
  341,554
  388,323
  438,121
  490,877
  546,530
  605,028
  666,337
  730,438
  797,331
  867,035
  939,587
  1,015,047
  1,093,490
  1,175,012
  1,259,727
  1,347,765
  1,439,277
  1,534,425
Revenue / Adjusted assets
  1.881
  1.881
  1.881
  1.881
  1.881
  1.881
  1.881
  1.881
  1.881
  1.881
  1.881
  1.881
  1.881
  1.881
  1.881
  1.881
  1.881
  1.881
  1.881
  1.881
  1.881
  1.881
  1.881
  1.881
  1.881
  1.881
  1.881
  1.881
  1.881
  1.881
  1.881
Average production assets, $m
  1,750
  2,410
  3,272
  4,342
  5,641
  7,189
  9,001
  11,086
  13,454
  16,108
  19,047
  22,271
  25,775
  29,553
  33,600
  37,909
  42,474
  47,289
  52,351
  57,655
  63,202
  68,990
  75,021
  81,299
  87,828
  94,615
  101,669
  108,999
  116,617
  124,535
  132,768
Working capital, $m
  317
  -1,781
  -2,418
  -3,209
  -4,170
  -5,314
  -6,653
  -8,194
  -9,944
  -11,906
  -14,079
  -16,461
  -19,051
  -21,844
  -24,835
  -28,020
  -31,394
  -34,953
  -38,694
  -42,615
  -46,714
  -50,993
  -55,450
  -60,090
  -64,916
  -69,933
  -75,147
  -80,565
  -86,195
  -92,047
  -98,133
Total debt, $m
  2,931
  7,858
  16,168
  26,481
  39,007
  53,927
  71,386
  91,492
  114,314
  139,890
  168,225
  199,297
  233,069
  269,488
  308,493
  350,025
  394,024
  440,438
  489,225
  540,357
  593,817
  649,606
  707,739
  768,248
  831,181
  896,603
  964,592
  1,035,244
  1,108,668
  1,184,989
  1,264,343
Total liabilities, $m
  18,298
  23,226
  31,536
  41,849
  54,375
  69,295
  86,754
  106,860
  129,682
  155,258
  183,593
  214,665
  248,437
  284,856
  323,861
  365,393
  409,392
  455,806
  504,593
  555,725
  609,185
  664,974
  723,107
  783,616
  846,549
  911,971
  979,960
  1,050,612
  1,124,036
  1,200,357
  1,279,711
Total equity, $m
  4,903
  4,623
  6,277
  8,330
  10,823
  13,793
  17,268
  21,269
  25,812
  30,903
  36,542
  42,727
  49,449
  56,698
  64,462
  72,728
  81,486
  90,724
  100,435
  110,612
  121,253
  132,357
  143,928
  155,972
  168,498
  181,519
  195,052
  209,115
  223,729
  238,920
  254,715
Total liabilities and equity, $m
  23,201
  27,849
  37,813
  50,179
  65,198
  83,088
  104,022
  128,129
  155,494
  186,161
  220,135
  257,392
  297,886
  341,554
  388,323
  438,121
  490,878
  546,530
  605,028
  666,337
  730,438
  797,331
  867,035
  939,588
  1,015,047
  1,093,490
  1,175,012
  1,259,727
  1,347,765
  1,439,277
  1,534,426
Debt-to-equity ratio
  0.598
  1.700
  2.580
  3.180
  3.600
  3.910
  4.130
  4.300
  4.430
  4.530
  4.600
  4.660
  4.710
  4.750
  4.790
  4.810
  4.840
  4.850
  4.870
  4.890
  4.900
  4.910
  4.920
  4.930
  4.930
  4.940
  4.950
  4.950
  4.960
  4.960
  4.960
Adjusted equity ratio
  0.099
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -551
  257
  736
  1,333
  2,057
  2,917
  3,921
  5,073
  6,373
  7,825
  9,425
  11,242
  13,134
  15,166
  17,336
  19,640
  22,074
  24,636
  27,325
  30,138
  33,076
  36,139
  39,329
  42,648
  46,099
  49,686
  53,414
  57,290
  61,319
  65,509
  69,867
Depreciation, amort., depletion, $m
  526
  576
  749
  963
  1,223
  1,532
  1,895
  2,312
  2,785
  3,316
  3,904
  4,454
  5,155
  5,911
  6,720
  7,582
  8,495
  9,458
  10,470
  11,531
  12,640
  13,798
  15,004
  16,260
  17,566
  18,923
  20,334
  21,800
  23,323
  24,907
  26,554
Funds from operations, $m
  1,740
  834
  1,485
  2,295
  3,279
  4,450
  5,816
  7,384
  9,159
  11,141
  13,329
  15,696
  18,289
  21,077
  24,056
  27,221
  30,569
  34,094
  37,795
  41,669
  45,716
  49,937
  54,333
  58,907
  63,664
  68,609
  73,748
  79,090
  84,642
  90,416
  96,421
Change in working capital, $m
  472
  -502
  -637
  -791
  -961
  -1,144
  -1,339
  -1,542
  -1,750
  -1,961
  -2,173
  -2,383
  -2,590
  -2,793
  -2,991
  -3,185
  -3,374
  -3,559
  -3,741
  -3,921
  -4,100
  -4,278
  -4,458
  -4,640
  -4,826
  -5,017
  -5,214
  -5,418
  -5,630
  -5,853
  -6,085
Cash from operations, $m
  1,268
  1,335
  2,122
  3,086
  4,240
  5,594
  7,155
  8,926
  10,909
  13,102
  15,502
  18,079
  20,878
  23,870
  27,047
  30,406
  33,943
  37,653
  41,536
  45,590
  49,816
  54,215
  58,791
  63,547
  68,490
  73,626
  78,962
  84,508
  90,273
  96,268
  102,506
Maintenance CAPEX, $m
  0
  -350
  -482
  -654
  -868
  -1,128
  -1,438
  -1,800
  -2,217
  -2,691
  -3,222
  -3,809
  -4,454
  -5,155
  -5,911
  -6,720
  -7,582
  -8,495
  -9,458
  -10,470
  -11,531
  -12,640
  -13,798
  -15,004
  -16,260
  -17,566
  -18,923
  -20,334
  -21,800
  -23,323
  -24,907
New CAPEX, $m
  -449
  -660
  -862
  -1,070
  -1,300
  -1,548
  -1,811
  -2,086
  -2,368
  -2,653
  -2,940
  -3,224
  -3,504
  -3,778
  -4,047
  -4,309
  -4,565
  -4,815
  -5,062
  -5,305
  -5,546
  -5,788
  -6,031
  -6,278
  -6,529
  -6,787
  -7,054
  -7,330
  -7,618
  -7,918
  -8,233
Cash from investing activities, $m
  -6,983
  -1,010
  -1,344
  -1,724
  -2,168
  -2,676
  -3,249
  -3,886
  -4,585
  -5,344
  -6,162
  -7,033
  -7,958
  -8,933
  -9,958
  -11,029
  -12,147
  -13,310
  -14,520
  -15,775
  -17,077
  -18,428
  -19,829
  -21,282
  -22,789
  -24,353
  -25,977
  -27,664
  -29,418
  -31,241
  -33,140
Free cash flow, $m
  -5,715
  325
  778
  1,362
  2,072
  2,918
  3,905
  5,040
  6,324
  7,758
  9,341
  11,046
  12,920
  14,936
  17,090
  19,377
  21,796
  24,343
  27,016
  29,815
  32,738
  35,787
  38,962
  42,265
  45,701
  49,273
  52,985
  56,844
  60,855
  65,027
  69,366
Issuance/(repayment) of debt, $m
  3,151
  6,534
  8,310
  10,313
  12,526
  14,920
  17,459
  20,105
  22,823
  25,576
  28,334
  31,073
  33,772
  36,419
  39,006
  41,532
  43,999
  46,414
  48,788
  51,132
  53,460
  55,789
  58,133
  60,509
  62,933
  65,421
  67,989
  70,652
  73,424
  76,320
  79,354
Issuance/(repurchase) of shares, $m
  196
  1,055
  918
  720
  437
  52
  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  
  5,888
  7,589
  9,228
  11,033
  12,963
  14,972
  17,459
  20,105
  22,823
  25,576
  28,334
  31,073
  33,772
  36,419
  39,006
  41,532
  43,999
  46,414
  48,788
  51,132
  53,460
  55,789
  58,133
  60,509
  62,933
  65,421
  67,989
  70,652
  73,424
  76,320
  79,354
Total cash flow (excl. dividends), $m
  276
  7,914
  10,006
  12,395
  15,035
  17,890
  21,364
  25,145
  29,147
  33,334
  37,675
  42,118
  46,692
  51,355
  56,096
  60,909
  65,795
  70,757
  75,804
  80,947
  86,198
  91,575
  97,095
  102,774
  108,634
  114,694
  120,974
  127,496
  134,280
  141,347
  148,720
Retained Cash Flow (-), $m
  -478
  -1,312
  -1,654
  -2,053
  -2,493
  -2,970
  -3,475
  -4,002
  -4,543
  -5,091
  -5,640
  -6,185
  -6,722
  -7,249
  -7,764
  -8,266
  -8,758
  -9,238
  -9,711
  -10,177
  -10,641
  -11,104
  -11,571
  -12,044
  -12,526
  -13,022
  -13,533
  -14,063
  -14,614
  -15,191
  -15,795
Prev. year cash balance distribution, $m
 
  1,592
  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
 
  8,194
  8,352
  10,342
  12,542
  14,920
  17,889
  21,144
  24,604
  28,243
  32,035
  35,933
  39,970
  44,106
  48,332
  52,642
  57,037
  61,519
  66,093
  70,769
  75,558
  80,471
  85,524
  90,731
  96,108
  101,673
  107,442
  113,433
  119,665
  126,156
  132,925
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
 
  7,856
  7,646
  9,001
  10,327
  11,565
  12,983
  14,284
  15,378
  16,224
  16,795
  17,064
  17,057
  16,770
  16,226
  15,455
  14,494
  13,385
  12,172
  10,896
  9,601
  8,323
  7,096
  5,947
  4,895
  3,955
  3,135
  2,435
  1,851
  1,377
  1,001
Current shareholders' claim on cash, %
  100
  96.9
  95.0
  93.9
  93.5
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4
  93.4

JD.com, Inc. is an online direct sales company. The Company engages in the sale of electronics and home appliance products and general merchandise products (including audio, video products and books) sourced from manufacturers, distributors and publishers in China on the Internet through its Website, www.jd.com. It also offers an online marketplace that enables third-party sellers to sell their products to customers on the Company's Website. The Company operates through the provision of a single class of services for accelerating and improving the delivery of its products over the Internet. The Company also offers online and in-person payment options and customer services. The Company operates approximately 210 warehouses with an aggregate gross floor area of approximately four million square meters in over 50 cities. It operates over 5,370 delivery stations and pickup stations in approximately 2,350 counties and districts across China.

FINANCIAL RATIOS  of  JD.com ADR (JD)

Valuation Ratios
P/E Ratio -236.3
Price to Sales 3.5
Price to Book 26.6
Price to Tangible Book
Price to Cash Flow 102.7
Price to Free Cash Flow 159
Growth Rates
Sales Growth Rate 43.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -17.5%
Cap. Spend. - 3 Yr. Gr. Rate 41.2%
Financial Strength
Quick Ratio 2
Current Ratio 0.2
LT Debt to Equity 27%
Total Debt to Equity 59.8%
Interest Coverage -3
Management Effectiveness
Return On Assets -2.5%
Ret/ On Assets - 3 Yr. Avg. -8.4%
Return On Total Capital -8.4%
Ret/ On T. Cap. - 3 Yr. Avg. -17.5%
Return On Equity -11.8%
Return On Equity - 3 Yr. Avg. -20%
Asset Turnover 2.1
Profitability Ratios
Gross Margin 15.2%
Gross Margin - 3 Yr. Avg. 13.4%
EBITDA Margin 0.4%
EBITDA Margin - 3 Yr. Avg. -2%
Operating Margin -0.8%
Oper. Margin - 3 Yr. Avg. -3.1%
Pre-Tax Margin -1.2%
Pre-Tax Margin - 3 Yr. Avg. -3.5%
Net Profit Margin -1.5%
Net Profit Margin - 3 Yr. Avg. -3.6%
Effective Tax Rate -5.6%
Eff/ Tax Rate - 3 Yr. Avg. -1.9%
Payout Ratio 0%

JD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the JD stock intrinsic value calculation we used $37632 million for the last fiscal year's total revenue generated by JD.com ADR. The default revenue input number comes from 2016 income statement of JD.com ADR. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our JD stock valuation model: a) initial revenue growth rate of 39.2% 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 JD is calculated based on our internal credit rating of JD.com ADR, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of JD.com ADR.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of JD stock the variable cost ratio is equal to 94.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $2432 million in the base year in the intrinsic value calculation for JD stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.5% for JD.com ADR.

Corporate tax rate of 27% is the nominal tax rate for JD.com ADR. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the JD stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for JD are equal to 4.6%.

Life of production assets of 4.2 years is the average useful life of capital assets used in JD.com ADR operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for JD is equal to -3.4%. 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 - $4903 million for JD.com ADR - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 1431.19 million for JD.com ADR is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of JD.com ADR at the current share price and the inputted number of shares is $65.7 billion.

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COMPANY NEWS

▶ Vipshop Stock Is Winning Again in 2018   [Jan-18-18 12:05PM  Motley Fool]
▶ Why JD.com Stock Soared 62.8% in 2017   [Jan-17-18 11:23AM  Motley Fool]
▶ Why Vipshop Stock Soared Today   [Jan-16-18 03:38PM  Motley Fool]
▶ [$$] Chinese Retailer JD.coms Latest Gig: Supplying Restaurants   [Jan-12-18 11:40PM  The Wall Street Journal]
▶ The Real Risk of Owning JD.com Stock   [11:44AM  InvestorPlace]
▶ Why Vipshop Holdings Ltd. - ADR Stock Jumped Monday   [Jan-08-18 04:46PM  Motley Fool]
▶ A Baidu Dream that Might Spur Bitcoin Mining   [09:03AM  Market Realist]
▶ Why JD.com Inc Stock Has an Alibaba Problem   [Jan-02-18 01:21PM  InvestorPlace]
▶ As Barriers Come Down, China Stocks Look More Appealing To Investors   [Dec-29-17 08:00AM  Investor's Business Daily]
▶ Why JD.Com Inc Stock Might Be a Way Better Pick than BABA   [Dec-27-17 07:37AM  InvestorPlace]
▶ Six Chinese stocks to buy while theyre on sale   [Dec-26-17 03:41PM  MarketWatch]
▶ Can Vipshop Stock Keep Going After Last Week's 45% Pop?   [Dec-24-17 10:39AM  Motley Fool]
▶ Chinese Stocks Major Hedge Funds Are Buying as Market Soars   [Dec-21-17 06:06PM  GuruFocus.com]
▶ Inside the Expanded JD-Tencent Partnership   [11:22AM  Market Realist]
▶ Five Stocks to Watch in Final Trades   [01:18PM  CNBC Videos]
▶ [$$] Tencent Teams Up With JD.com to Take on Alibaba   [01:01AM  The Wall Street Journal]
▶ Vipshop Upgraded by Daiwa After Tencent, JD.com Deal   [Dec-18-17 09:34PM  Barrons.com]
▶ Vipshop Soars On $863 Million Investment From Tencent, JD.com   [04:21PM  Investor's Business Daily]
▶ Campbell, Hershey, Humana Lead Frenzy Of Year-End M&A Activity   [04:06PM  Investor's Business Daily]
▶ [$$] Tencent Teams Up With JD.com to Take on Alibaba   [03:13AM  The Wall Street Journal]
▶ Tencent. Retail. Makes Sense   [10:10PM  Bloomberg]
▶ 10 Largest Online Retailers In the World in 2017   [Dec-13-17 05:41PM  Insider Monkey]
Financial statements of JD
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