Discounted EPS ROA_CTAC Value Formula : PDD Case Study (Version.2026.03.23)
Discounted EPS ROA_CTAC Value Formula : PDD Case Study (Version.2026.03.23)
.
The DISCOUNTED RUNWAY PERIOD in Discounted Earnings Flow is breaking into the following:
.
(A)
Design 1 :
Total Runway Period (Years)
= Front Runway Period (Shorter Growth Period) + Rear Runway Period (Longer Competitive Moat Advantage Perpetual Period)
= Clean Total Assets Cost + (ROA - Clean Total Assets Cost)
= CTAC + Economic Spread
.
Front Runway Period
= CTAC
.
Rear Runway Period
= Economic Spread
= (ROA - Clean Total Assets Cost)
.
Design 2 :
Gfront_runway_period Factor
(ROA & CTAC Case; Concept: in order for a business to survive, the Least Growth during Front Runway Period must equal the Discount)
= DISCOUNT FACTOR
.
Design 3 :
DISCOUNT FACTOR
= CTAC Factor
.
In short :
Gfront_runway_period Factor = DISCOUNT Factor
DISCOUNT Factor = CTAC Factor
Front Runway Period = CTAC
.
Discounted EPS ROA_CTAC Value (Version.2026.03.23)
= Discounted Front Runway Period Value + Discounted Rear Runway Period Value
=
EPS × (Gfront_runway_period Factor ÷ Discount Factor)×(1-(Gfront_runway_period Factor ÷ Discount Factor)^front_runway_period)÷(1-Gfront_runway_period Factor ÷ Discount Factor)
+
EPS × (1÷Discount Factor)×(1-(1÷Discount Factor)^rear_runway_period)÷(1-1÷Discount Factor)
=
EPS × (Discount Factor ÷ Discount Factor)×(1-(Discount Factor ÷ Discount Factor)^front_runway_period)÷(1-Discount Factor ÷ Discount Factor)
+
EPS × (1÷Discount Factor)×(1-(1÷Discount Factor)^rear_runway_period)÷(1-1÷Discount Factor)
=
EPS × Front Runway Period
+
EPS × (1÷Discount Factor)×(1-(1÷Discount Factor)^rear_runway_period)÷(1-1÷Discount Factor)
=
EPS × CTAC
+
EPS × (1÷CTAC Factor)×(1-(1÷CTAC Factor)^(roa-ctac))÷(1-1÷CTAC Factor)
.
As you can see, mathematically, when the growth rate equals discount rate, the Exponential Power is transformed into Linear.
.
(B)
Similarly, for ROIC & CICC context:
.
Design 1 :
Total Runway Period (Years)
(ROIC & CICC Based)
= [Front Runway Period] + [Rear Runway Period Power]
= [CICC] + [ROIC-CICC]
.
Where,
Front Runway Period
= CICC
.
Rear Runway Period
= ROIC-CICC
.
Design 2 :
Gfront_runway_period Factor
(ROIC & CICC Case; Concept: in order for a business to survive, the Least Growth during Front Runway Period must equal the Discount)
= DISCOUNT FACTOR
.
Design 3 :
DISCOUNT FACTOR
= CICC Factor
.
In short :
Gfront_runway_period Factor = DISCOUNT Factor
DISCOUNT Factor = CICC Factor
Front Period Power = CICC
.
Discounted EPS ROIC_CICC Value (Version.2026.03.23)
= Discounted Front Runway Period Value + Discounted Rear Runway Period Value
=
EPS × (Gfront_runway_period Factor ÷ Discount Factor)×(1-(Gfront_runway_period Factor ÷ Discount Factor)^front_runway_period)÷(1-Gfront_runway_period Factor ÷ Discount Factor)
+
EPS × (1÷Discount Factor)×(1-(1÷Discount Factor)^rear_runway_period)÷(1-1÷Discount Factor)
=
EPS × (Discount Factor ÷ Discount Factor)×(1-(Discount Factor ÷ Discount Factor)^front_runway_period)÷(1-Discount Factor ÷ Discount Factor)
+
EPS × (1÷Discount Factor)×(1-(1÷Discount Factor)^rear_runway_period)÷(1-1÷Discount Factor)
=
EPS × Front Runway Period
+
EPS × (1÷Discount Factor)×(1-(1÷Discount Factor)^rear_runway_period)÷(1-1÷Discount Factor)
=
EPS × CICC
+
EPS × (1÷CICC Factor)×(1-(1÷CICC Factor)^(roic-cicc))÷(1-1÷CICC Factor)
.
(C)
CASE STUDY
.
PDD
(Non_Gaap_Financial.2025.Dec.Q4.TTM)
Subject:
Discounted EPS ROA_CTAC Value
.
(1)
CTAC Factor ttm (Version.2026.03.23)
= Clean Total Assets Cost Factor ttm
= 30Y Government Bond Yield Factor × (1 + Total Liabilities/Total Equity × (1 + 2 × 30Y Government Bond Yield Ratio)) ÷ (1 + Total Liabilities/Total Equity)
= 1.04982×(1+0.5185190812×(1+0.04982×2))÷(1+0.5185190812)
= 1.085538486
.
Gfront_runway_period Factor
(Concept: in order for a business to survive, the Least Growth during Front Period must equal the Discount)
= DISCOUNT FACTOR (ROA & CTAC Case)
= CTAC Factor
= 1.085538486
.
Front Runway Period
= CTAC
= 8.5538486
.
Non-Gaap ROA
= 100×107,301,440÷630,044,327
= 17.0307763123
.
Rear Runway Period
= Non-Gaap ROA - CTAC
= 17.0307763123 - 8.5538486
= 8.4769277123
.
Non-Gaap EPS (Diluted)
= (99,364,469+7,936,971)÷6.9931÷(5,929,576÷4)
= USD 10.3507581966
.
(2)
:: Formula ::
Discounted EPS ROA_CTAC Value (Version.2026.03.23)
= Discounted Front Runway Period Value + Discounted Rear Runway Period Value
=
EPS × Front Runway Period
+
EPS × (1÷Discount Factor)×(1-(1÷Discount Factor)^rear_runway period)÷(1-1÷Discount Factor)
=
10.3507581966×8.5538486
+
10.3507581966×(1÷1.085538486)×(1-(1÷1.085538486)^8.4769277123)÷(1-1÷1.085538486)
= 88.5388185089 + 60.6610142837
= USD 149.1998327926
Or
=
10.3507581966×(8.5538486+(1÷1.085538486)×(1-(1÷1.085538486)^8.4769277123)÷(1-1÷1.085538486))
= USD 149.1998327926
.
Remark:
Compared to Graham’s Overvalued Formula, EPS×(7+2G), what's your take?
.
Reference :