Selective Deserved P/E — PDD Case Study
Subject : Selective Deserved P/E — PDD Case Study
.
Selective Deserved P/E
= (Gnet_profit × ROIC × A)^(1÷3)
or
= (1 + Gnet_profit_ratio) × √(ROIC × A)
= whichever is positive and lower
.
Where
.
A
= ROA or EPV Multiple, whichever is lower
.
EPV Multiple (CTAC Based)
= 1÷CTAC_Ratio
.
(A)
PDD
FY2025
Gnet_profit_ratio = -0.1152
ROIC = 25.5305840264
ROA = 17.03077631
CTAC_Ratio = 0.085538486
EPV Multiple (CTAC Based)
= 1÷CTAC_Ratio
= 11.6906441388 ✅ Lower
.
Therefore,
A = 11.6906441388 ✅ Lower
.
Selective Deserved P/E
= (1 + Gnet_profit_ratio) × √(ROIC × A)
= (1 - 0.1152) × √(25.5305840264 × 11.6906441388)
= 15.2860300574
.
(B)
PDD
Forecast FY2026
Forecasted Gnet_profit = 16
Forecasted Gnet_profit_ratio by Analysts = +0.16
Forecasted Gnet_profit_minimum could be achieved
= CTAC
= 8.5538486
.
Forecasted Gnet_profit_minimum ratio could be achieved
= CTAC_Ratio
= 0.085538486
.
ROIC = 25.5305840264 = remain the same
ROA = 17.03077631 = remain the same
CTAC_Ratio = 0.085538486 = remain the same
EPV Multiple (CTAC Based)
= 1÷CTAC_Ratio
= 11.6906441388 ✅ Lower
= remain the same
.
Therefore
A = 11.6906441388 ✅ Lower
.
(I)
Selective Deserved P/E
= (Gnet_profit × ROIC × A)^(1÷3)
= (16 × 25.5305840264 × 11.6906441388)^(1÷3)
= 16.8399083824 ✅ Lower
.
(II)
Selective Deserved P/E
= (1 + Gnet_profit_ratio) × √(ROIC × A)
= (1 + 0.16) × √(25.5305840264 × 11.6906441388)
= 20.0404553194
.
(III)
MINIMUM Selective Deserved P/E
= (Gnet_profit_minimum × ROIC × A)^(1÷3)
= (8.5538486 × 25.5305840264 × 11.6906441388)^(1÷3)
= 13.6674318344 ✅ Lower
.
(IV)
MINIMUM Selective Deserved P/E
= (1 + Gnet_profit_minimum_ratio) × √(ROIC × A)
= (1 + 0.085538486) × √(25.5305840264 × 11.6906441388)
= 18.7540392467
.
Remark:
However, in an efficient stock market, P/E Range from 20.0404553194 (Selective Deserved P/E, High Side) to 25.5305840264 (ROIC) is possible.