Intrinsic value of JD.com ADR - JD

Previous Close

$24.20

  Intrinsic Value

$161.63

stock screener

  Rating & Target

str. buy

+568%

Previous close

$24.20

 
Intrinsic value

$161.63

 
Up/down potential

+568%

 
Rating

str. buy

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

Revenue (in 0001), $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 29.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  47.30
  43.07
  39.26
  35.84
  32.75
  29.98
  27.48
  25.23
  23.21
  21.39
  19.75
  18.27
  16.95
  15.75
  14.68
  13.71
  12.84
  12.05
  11.35
  10.71
  10.14
  9.63
  9.17
  8.75
  8.37
  8.04
  7.73
  7.46
  7.21
  6.99
Revenue, $m
  80,670
  115,415
  160,730
  218,331
  289,841
  376,728
  480,253
  601,431
  741,015
  899,503
  1,077,146
  1,273,986
  1,489,886
  1,724,574
  1,977,688
  2,248,813
  2,537,521
  2,843,406
  3,166,104
  3,505,323
  3,860,857
  4,232,597
  4,620,539
  5,024,791
  5,445,573
  5,883,218
  6,338,170
  6,810,980
  7,302,308
  7,812,914
Variable operating expenses, $m
  80,282
  114,727
  159,652
  216,755
  287,648
  373,786
  476,418
  596,549
  734,930
  892,050
  1,067,852
  1,262,994
  1,477,030
  1,709,693
  1,960,623
  2,229,409
  2,515,626
  2,818,871
  3,138,785
  3,475,077
  3,827,544
  4,196,076
  4,580,671
  4,981,435
  5,398,586
  5,832,455
  6,283,480
  6,752,211
  7,239,300
  7,745,499
Fixed operating expenses, $m
  307
  313
  320
  327
  334
  342
  349
  357
  365
  373
  381
  390
  398
  407
  416
  425
  434
  444
  454
  464
  474
  484
  495
  506
  517
  528
  540
  552
  564
  576
Total operating expenses, $m
  80,589
  115,040
  159,972
  217,082
  287,982
  374,128
  476,767
  596,906
  735,295
  892,423
  1,068,233
  1,263,384
  1,477,428
  1,710,100
  1,961,039
  2,229,834
  2,516,060
  2,819,315
  3,139,239
  3,475,541
  3,828,018
  4,196,560
  4,581,166
  4,981,941
  5,399,103
  5,832,983
  6,284,020
  6,752,763
  7,239,864
  7,746,075
Operating income, $m
  81
  374
  758
  1,248
  1,858
  2,601
  3,486
  4,524
  5,721
  7,080
  8,913
  10,603
  12,457
  14,474
  16,649
  18,979
  21,461
  24,091
  26,865
  29,782
  32,840
  36,037
  39,374
  42,851
  46,471
  50,236
  54,149
  58,217
  62,445
  66,838
EBITDA, $m
  1,041
  1,615
  2,366
  3,321
  4,509
  5,954
  7,676
  9,693
  12,018
  14,658
  17,619
  20,900
  24,499
  28,412
  32,633
  37,154
  41,970
  47,072
  52,454
  58,113
  64,044
  70,246
  76,718
  83,462
  90,483
  97,785
  105,376
  113,265
  121,463
  129,983
Interest expense (income), $m
  106
  194
  703
  1,386
  2,277
  3,410
  4,816
  6,525
  8,560
  10,943
  13,688
  16,804
  20,298
  24,168
  28,414
  33,028
  38,006
  43,337
  49,014
  55,029
  61,374
  68,045
  75,036
  82,346
  89,974
  97,923
  106,197
  114,803
  123,749
  133,046
  142,708
Earnings before tax, $m
  -113
  -329
  -628
  -1,029
  -1,552
  -2,216
  -3,038
  -4,036
  -5,222
  -6,608
  -7,891
  -9,694
  -11,711
  -13,940
  -16,380
  -19,027
  -21,876
  -24,923
  -28,164
  -31,592
  -35,205
  -38,999
  -42,972
  -47,123
  -51,453
  -55,962
  -60,654
  -65,532
  -70,602
  -75,870
Tax expense, $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
Net income, $m
  -113
  -329
  -628
  -1,029
  -1,552
  -2,216
  -3,038
  -4,036
  -5,222
  -6,608
  -7,891
  -9,694
  -11,711
  -13,940
  -16,380
  -19,027
  -21,876
  -24,923
  -28,164
  -31,592
  -35,205
  -38,999
  -42,972
  -47,123
  -51,453
  -55,962
  -60,654
  -65,532
  -70,602
  -75,870

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  40,970
  58,616
  81,630
  110,884
  147,202
  191,330
  243,907
  305,450
  376,341
  456,832
  547,053
  647,022
  756,671
  875,863
  1,004,412
  1,142,109
  1,288,736
  1,444,086
  1,607,975
  1,780,256
  1,960,821
  2,149,618
  2,346,643
  2,551,951
  2,765,654
  2,987,922
  3,218,979
  3,459,106
  3,708,638
  3,967,960
Adjusted assets (=assets-cash), $m
  40,970
  58,616
  81,630
  110,884
  147,202
  191,330
  243,907
  305,450
  376,341
  456,832
  547,053
  647,022
  756,671
  875,863
  1,004,412
  1,142,109
  1,288,736
  1,444,086
  1,607,975
  1,780,256
  1,960,821
  2,149,618
  2,346,643
  2,551,951
  2,765,654
  2,987,922
  3,218,979
  3,459,106
  3,708,638
  3,967,960
Revenue / Adjusted assets
  1.969
  1.969
  1.969
  1.969
  1.969
  1.969
  1.969
  1.969
  1.969
  1.969
  1.969
  1.969
  1.969
  1.969
  1.969
  1.969
  1.969
  1.969
  1.969
  1.969
  1.969
  1.969
  1.969
  1.969
  1.969
  1.969
  1.969
  1.969
  1.969
  1.969
Average production assets, $m
  4,760
  6,809
  9,483
  12,882
  17,101
  22,227
  28,335
  35,484
  43,720
  53,071
  63,552
  75,165
  87,903
  101,750
  116,684
  132,680
  149,714
  167,761
  186,800
  206,814
  227,791
  249,723
  272,612
  296,463
  321,289
  347,110
  373,952
  401,848
  430,836
  460,962
Working capital, $m
  -7,502
  -10,734
  -14,948
  -20,305
  -26,955
  -35,036
  -44,664
  -55,933
  -68,914
  -83,654
  -100,175
  -118,481
  -138,559
  -160,385
  -183,925
  -209,140
  -235,989
  -264,437
  -294,448
  -325,995
  -359,060
  -393,632
  -429,710
  -467,306
  -506,438
  -547,139
  -589,450
  -633,421
  -679,115
  -726,601
Total debt, $m
  13,020
  25,672
  42,174
  63,149
  89,189
  120,828
  158,526
  202,652
  253,481
  311,193
  375,881
  447,559
  526,178
  611,638
  703,808
  802,537
  907,668
  1,019,054
  1,136,563
  1,260,088
  1,389,554
  1,524,921
  1,666,187
  1,813,394
  1,966,619
  2,125,985
  2,291,653
  2,463,824
  2,642,738
  2,828,672
Total liabilities, $m
  29,376
  42,028
  58,529
  79,504
  105,544
  137,184
  174,881
  219,007
  269,836
  327,549
  392,237
  463,915
  542,533
  627,994
  720,164
  818,892
  924,024
  1,035,410
  1,152,918
  1,276,443
  1,405,909
  1,541,276
  1,682,543
  1,829,749
  1,982,974
  2,142,340
  2,308,008
  2,480,179
  2,659,093
  2,845,027
Total equity, $m
  11,595
  16,588
  23,101
  31,380
  41,658
  54,146
  69,026
  86,442
  106,504
  129,284
  154,816
  183,107
  214,138
  247,869
  284,249
  323,217
  364,712
  408,676
  455,057
  503,812
  554,912
  608,342
  664,100
  722,202
  782,680
  845,582
  910,971
  978,927
  1,049,545
  1,122,933
Total liabilities and equity, $m
  40,971
  58,616
  81,630
  110,884
  147,202
  191,330
  243,907
  305,449
  376,340
  456,833
  547,053
  647,022
  756,671
  875,863
  1,004,413
  1,142,109
  1,288,736
  1,444,086
  1,607,975
  1,780,255
  1,960,821
  2,149,618
  2,346,643
  2,551,951
  2,765,654
  2,987,922
  3,218,979
  3,459,106
  3,708,638
  3,967,960
Debt-to-equity ratio
  1.120
  1.550
  1.830
  2.010
  2.140
  2.230
  2.300
  2.340
  2.380
  2.410
  2.430
  2.440
  2.460
  2.470
  2.480
  2.480
  2.490
  2.490
  2.500
  2.500
  2.500
  2.510
  2.510
  2.510
  2.510
  2.510
  2.520
  2.520
  2.520
  2.520
Adjusted equity ratio
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -113
  -329
  -628
  -1,029
  -1,552
  -2,216
  -3,038
  -4,036
  -5,222
  -6,608
  -7,891
  -9,694
  -11,711
  -13,940
  -16,380
  -19,027
  -21,876
  -24,923
  -28,164
  -31,592
  -35,205
  -38,999
  -42,972
  -47,123
  -51,453
  -55,962
  -60,654
  -65,532
  -70,602
  -75,870
Depreciation, amort., depletion, $m
  960
  1,241
  1,607
  2,073
  2,651
  3,353
  4,190
  5,169
  6,297
  7,578
  8,706
  10,297
  12,042
  13,938
  15,984
  18,175
  20,509
  22,981
  25,589
  28,331
  31,204
  34,209
  37,344
  40,611
  44,012
  47,549
  51,226
  55,048
  59,019
  63,145
Funds from operations, $m
  847
  912
  979
  1,044
  1,099
  1,137
  1,151
  1,133
  1,075
  970
  814
  602
  331
  -2
  -396
  -851
  -1,367
  -1,942
  -2,575
  -3,261
  -4,001
  -4,790
  -5,628
  -6,512
  -7,440
  -8,413
  -9,427
  -10,484
  -11,583
  -12,724
Change in working capital, $m
  -2,409
  -3,231
  -4,214
  -5,357
  -6,650
  -8,081
  -9,628
  -11,269
  -12,981
  -14,739
  -16,521
  -18,306
  -20,079
  -21,826
  -23,540
  -25,215
  -26,850
  -28,447
  -30,011
  -31,547
  -33,065
  -34,572
  -36,079
  -37,595
  -39,133
  -40,701
  -42,310
  -43,971
  -45,693
  -47,486
Cash from operations, $m
  3,256
  4,143
  5,194
  6,401
  7,749
  9,218
  10,779
  12,402
  14,056
  15,710
  17,335
  18,908
  20,409
  21,824
  23,144
  24,363
  25,483
  26,505
  27,436
  28,286
  29,064
  29,782
  30,451
  31,084
  31,692
  32,288
  32,883
  33,487
  34,110
  34,762
Maintenance CAPEX, $m
  -443
  -652
  -933
  -1,299
  -1,765
  -2,343
  -3,045
  -3,881
  -4,861
  -5,989
  -7,270
  -8,706
  -10,297
  -12,042
  -13,938
  -15,984
  -18,175
  -20,509
  -22,981
  -25,589
  -28,331
  -31,204
  -34,209
  -37,344
  -40,611
  -44,012
  -47,549
  -51,226
  -55,048
  -59,019
New CAPEX, $m
  -1,526
  -2,050
  -2,674
  -3,398
  -4,219
  -5,126
  -6,108
  -7,149
  -8,235
  -9,351
  -10,481
  -11,614
  -12,738
  -13,847
  -14,934
  -15,996
  -17,034
  -18,047
  -19,039
  -20,014
  -20,977
  -21,933
  -22,889
  -23,851
  -24,826
  -25,821
  -26,842
  -27,896
  -28,988
  -30,126
Cash from investing activities, $m
  -1,969
  -2,702
  -3,607
  -4,697
  -5,984
  -7,469
  -9,153
  -11,030
  -13,096
  -15,340
  -17,751
  -20,320
  -23,035
  -25,889
  -28,872
  -31,980
  -35,209
  -38,556
  -42,020
  -45,603
  -49,308
  -53,137
  -57,098
  -61,195
  -65,437
  -69,833
  -74,391
  -79,122
  -84,036
  -89,145
Free cash flow, $m
  1,287
  1,442
  1,587
  1,703
  1,766
  1,749
  1,626
  1,371
  960
  370
  -416
  -1,411
  -2,625
  -4,064
  -5,728
  -7,617
  -9,727
  -12,051
  -14,584
  -17,317
  -20,243
  -23,355
  -26,646
  -30,111
  -33,745
  -37,545
  -41,508
  -45,635
  -49,926
  -54,382
Issuance/(repayment) of debt, $m
  9,422
  12,652
  16,501
  20,975
  26,040
  31,640
  37,698
  44,126
  50,829
  57,712
  64,688
  71,678
  78,619
  85,460
  92,170
  98,729
  105,132
  111,386
  117,509
  123,525
  129,466
  135,367
  141,267
  147,206
  153,225
  159,366
  165,668
  172,171
  178,914
  185,934
Issuance/(repurchase) of shares, $m
  3,842
  5,323
  7,141
  9,308
  11,830
  14,704
  17,918
  21,453
  25,285
  29,387
  33,424
  37,986
  42,741
  47,671
  52,759
  57,995
  63,372
  68,887
  74,544
  80,347
  86,305
  92,428
  98,730
  105,225
  111,931
  118,864
  126,043
  133,488
  141,219
  149,258
Cash from financing (excl. dividends), $m  
  13,264
  17,975
  23,642
  30,283
  37,870
  46,344
  55,616
  65,579
  76,114
  87,099
  98,112
  109,664
  121,360
  133,131
  144,929
  156,724
  168,504
  180,273
  192,053
  203,872
  215,771
  227,795
  239,997
  252,431
  265,156
  278,230
  291,711
  305,659
  320,133
  335,192
Total cash flow (excl. dividends), $m
  14,551
  19,416
  25,230
  31,986
  39,635
  48,093
  57,242
  66,950
  77,073
  87,469
  97,696
  108,253
  118,735
  129,068
  139,201
  149,106
  158,777
  168,222
  177,469
  186,555
  195,528
  204,440
  213,350
  222,320
  231,411
  240,685
  250,202
  260,024
  270,208
  280,810
Retained Cash Flow (-), $m
  -3,842
  -5,323
  -7,141
  -9,308
  -11,830
  -14,704
  -17,918
  -21,453
  -25,285
  -29,387
  -33,424
  -37,986
  -42,741
  -47,671
  -52,759
  -57,995
  -63,372
  -68,887
  -74,544
  -80,347
  -86,305
  -92,428
  -98,730
  -105,225
  -111,931
  -118,864
  -126,043
  -133,488
  -141,219
  -149,258
Prev. year cash balance distribution, $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 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
  10,709
  14,094
  18,089
  22,678
  27,806
  33,389
  39,324
  45,497
  51,789
  58,082
  64,272
  70,267
  75,993
  81,397
  86,442
  91,112
  95,405
  99,335
  102,925
  106,208
  109,223
  112,012
  114,620
  117,095
  119,480
  121,821
  124,160
  126,536
  128,988
  131,552
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
  10,268
  12,902
  15,742
  18,673
  21,553
  24,232
  26,567
  28,437
  29,750
  30,450
  30,522
  29,985
  28,894
  27,326
  25,378
  23,153
  20,759
  18,293
  15,848
  13,496
  11,297
  9,294
  7,512
  5,964
  4,648
  3,554
  2,665
  1,958
  1,408
  991
Current shareholders' claim on cash, %
  88.4
  78.6
  70.4
  63.5
  57.6
  52.6
  48.3
  44.6
  41.3
  38.4
  35.9
  33.7
  31.7
  29.9
  28.3
  26.8
  25.5
  24.2
  23.1
  22.0
  21.1
  20.2
  19.3
  18.5
  17.8
  17.1
  16.4
  15.8
  15.2
  14.6

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 -124.6
Price to Sales 1.8
Price to Book 14
Price to Tangible Book
Price to Cash Flow 54.1
Price to Free Cash Flow 83.8
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 $54765.9845828 million for the last fiscal year's total revenue generated by JD.com ADR. The default revenue input number comes from 0001 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 47.3% 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 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 99.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $300 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 5.4% 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 5.9%.

Life of production assets of 7.3 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 -9.3%. 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 - $7865.90296252 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 1203.99 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 $29.1 billion.

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COMPANY NEWS

▶ 3 Earnings Reports to Watch Next Week   [02:24PM  InvestorPlace]
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▶ There Are Better Chinese Equities Than JD.com Stock   [Nov-08-18 02:47PM  InvestorPlace]
▶ While China Reels, BABA Stock Is Looking Dirt Cheap   [Nov-01-18 09:59AM  InvestorPlace]
▶ Dont Expect Earnings to Save Baidu Stock   [Oct-29-18 09:59AM  InvestorPlace]
▶ JD.com Green Planet-Sustainable Week   [Oct-18-18 09:00AM  PR Newswire]
▶ JD.com Turning Its Logistics Network Into Broader Delivery Service   [Oct-17-18 11:30PM  The Wall Street Journal]
▶ BABA Stock Could Turn Around Before the Headlines Notice   [Oct-12-18 11:46AM  InvestorPlace]
▶ 3 Stocks I'm Buying if the Market Crashes   [08:23AM  Motley Fool]
▶ JD.com Traders Bet Stock Will Fall 13%   [Oct-10-18 02:30PM  Investopedia]
▶ 3 Top Chinese Stocks to Watch in October   [07:00AM  Motley Fool]
▶ 3 Chinese Stocks to Buy Now   [08:52AM  InvestorPlace]
▶ Why JD.com Inc. Stock Lost 17% Last Month   [Oct-02-18 02:29PM  Motley Fool]
▶ Is JD.com Stock a Value Play on Chinas Huge Opportunity?   [Oct-01-18 12:32PM  InvestorPlace]
▶ The Art Part of JD's Valuation   [11:45AM  GuruFocus.com]
▶ JD.com target cut to $32 at Stifel   [Sep-26-18 01:53PM  MarketWatch]
▶ [$$] How JD.com won the trust of watchmakers   [07:02AM  Financial Times]
▶ 5 Emerging Markets Stocks to Buy   [Sep-25-18 02:55PM  InvestorPlace]
▶ BABA Stock Could Get Even Cheaper   [Sep-24-18 11:47PM  InvestorPlace]
▶ JD.com Stock Seen Plunging 10% Further   [02:00PM  Investopedia]
▶ 3 Trade War Stocks to Buy (and 3 to Sell)   [03:22PM  InvestorPlace]
▶ CEO Richard Liu Is Integral to JD.com   [11:06AM  Motley Fool]

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