Ultimate & Ultimate-Next Of Kin Intrinsic Value Formulas — PDD Case Study
Subject : Ultimate & Ultimate-Next Of Kin Intrinsic Value Formulas — PDD Case Study
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If you ask me for the Ultimate & Ultimate-Next Of Kin Intrinsic Value formulas IN an EFFICIENT MARKET, I would advocate:
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Ultimate Intrinsic Value (IN EFFICIENT MARKET)
= Non-Gaap EPS × NetROIC
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Ultimate-Next Of Kin Intrinsic Value (IN EFFICIENT MARKET)
= Non-Gaap EPS × ROA
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NetROIC
= 100 × Net Income ÷ (Total Equity + Total Interest Bearing Debts)
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Since NetROIC & ROA’s numerator (Net Income) has absorbed all top line and bottom line costs in the P/L, they are “clean earning strength” figures, therefore Economic Spread is not suitable in the presence of NetROIC & ROA.
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Since Net Profit Growth has been manifested in the form of NetROIC & ROA, it could not be presented in the formula in the presence of NetROIC & ROA, otherwise the result would be too overstated or too understated.
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But currently, the Market is Not Efficient.
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PDD Case Study:
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FY2025
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Non-Gaap EPS
= USD 10.3507581966
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NetROIC
= 100 × Net Income ÷ (Total Equity + Total Interest Bearing Debts)
= 25.5305840264
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PDD’s Ultimate Intrinsic Value FY2025 (IN EFFICIENT MARKET)
= Non-Gaap EPS × NetROIC
= 10.3507581966 × 25.5305840264
= USD 264.2609018752
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PDD’s Ultimate-Next Of Kin Intrinsic Value FY2025 (IN EFFICIENT MARKET)
= Non-Gaap EPS × ROA
= 10.3507581966×17.03077631
= USD 176.2814474852