Discounted EPS GAP_RSP Value Formula : PDD Case Study
Discounted EPS GAP_RSP Value Formula : PDD Case Study
.
The DISCOUNTED RUNWAY PERIOD in Discounted Earnings Flow is breaking into the following:
.
Discounted Runway Period
= Growth Appreciation Period + Returns Spread Period
.
PDD
(Financial.2025.Sep.Q3.TTM)
.
(1)
:: Formulation ::
CTAC Factor ttm
= Clean Total Assets Cost Factor ttm
= 30Y Government Bond Yield Factor × (1 + Total Liabilities/Total Equity × (1 + Prime Ratio + Spread Ratio) ÷ (1 + Total Liabilities/Total Equity)
= 1.04864×(1+0.5680113735×1.10)÷(1+0.5680113735)
= 1.0866269341
.
CICC Factor ttm
= Clean Invested Capital Cost Factor ttm
= 30Y Government Bond Yield Factor × (1 + D/E × (1 + Prime Ratio + Spread Ratio) ÷ (1 + D/E)
= 1.04864×(1+0.027270204×1.10)÷(1+0.027270204)
= 1.0514237493
.
DISCOUNT FACTOR
= Geometric Mean of Costs Factor
= √(CTAC Factor ttm × CICC Factor ttm)
= √(1.0866269341×1.0514237493)
= 1.068880426
.
GAP
= Growth Appreciation Period
= Geometric Mean of Costs
= 100 × Geometric Mean of Costs Ratio
= 100× (1.068880426 - 1)
= 6.8880426
.
Geometric Mean of Returns
= √(ROA ttm × ROIC ttm)
= √(25.4354775147×16.6638511789)
= 20.5876907877
.
Ggap Factor
= 1 + (Geometric Mean of Returns Ratio - Geometric Mean of Costs Ratio)
= 1 + (0.205876907877 - 0.068880426)
= 1.136996481877
.
RSP
= Returns Spread Period
= Geometric Mean of Returns - Geometric Mean of Costs
= Geometric Mean of Returns - GAP
= 20.5876907877 - 6.8880426
= 13.6996481877
.
(2)
:: Formula ::
Discounted EPS GAP_RSP Value
= Discounted GAP Value + Discounted RSP Value
=
EPS × (Ggap Factor ÷ Discount Factor)×(1-(Ggap Factor ÷ Discount Factor)^gap)÷(1-Ggap Factor ÷ Discount Factor)
+
EPS × (1÷Discount Factor)×(1-(1÷CICC Factor)^rsp)÷(1-1÷Discount Factor)
=
EPS
×
[
(Ggap Factor ÷ Discount Factor)×(1-(Ggap Factor ÷ Discount Factor)^gap)÷(1-Ggap Factor ÷ Discount Factor)
+
(1÷Discount Factor)×(1-(1÷Discount Factor)^rsp)÷(1-1÷Discount Factor)
]
=
10.289979567
×
(
(1.136996481877÷1.068880426)×(1-(1.136996481877÷1.068880426)^6.8880426)÷(1-1.136996481877÷1.068880426)
+
(1÷1.068880426)×(1-(1÷1.068880426)^13.6996481877)÷(1-1÷1.068880426)
)
= USD 180.5126093214
.
Remark:
Compared to Graham’s Overvalued Formula, EPS×(7+2G), what's your take?