The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value. We use
analyst's estimates of cash flows going forward 5 years.
See our documentation to learn about this calculation.
|Levered FCF (CNY, Millions)||CN¥11,749.55||CN¥15,111.49||CN¥18,295.90||CN¥18,069.85||CN¥20,296.07|
|Source||Analyst x7||Analyst x12||Analyst x10||Analyst x4||Analyst x3|
Discounted (@ 10.05%)
Present value of next 5 years cash flows:
Terminal Value = FCF2021 × (1 + g) ÷ (Discount Rate – g)
Terminal Value = CN¥20,296 × (1 + 2.47%) ÷ (10.05% – 2.47%)
Terminal value based on the Perpetuity Method where growth (g) =
Present value of terminal value:
Equity Value (Total value) = Present value of next 5 years cash flows +
CN¥231,604 = CN¥61,767 + CN¥169,837
Value = Total value / Shares Outstanding (CN¥231,604 / 131)Discount to Share Price
Value per share (CNY): CN¥1764.48Exchange rate CNY/USD = 0.151
Value per share (USD): $266.97
Current discount (share price of $355.79): -33.27%
The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.
Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)
Discount rate = 10.05% = 2.47% + (1.007 * 7.53%)
The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm). Note the market value of equity is used not the book value ($46,784,713,804).
Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))
1.007 = 0.995 (1 + (1- 35%) (1.85%))
Levered Beta used in calculation = 1.007
Mr. Lei Ding, also known as William, founded NetEase, Inc. and has been its Chief Executive Officer since November 2005. Mr. Ding founded NetEase Capital in April 2012. Mr. Ding established NetEase and Guangzhou Netease in May 1997 and has been a major force in the development of the Internet in China. He served as the Chief Architect of NetEase.com, Inc. from March 2001 to November 2005. Mr. Ding served as Acting Chief Executive Officer and Chief Operating Officer of Netease Com Inc. from June 2001 to September 2001. He served as the Co-Chief Technology Officer from July 1999 to March 2001 and Interim Chief Executive Officer of NetEase.com, Inc. from July 1999 to April 2000. During NetEase's initial two years of operation, he focused on Internet application systems. In November 1997, he introduced China's first dual language free email service to users, which was a decisive factor in the prevalence and growth of China's Internet industry. He has accumulated rich and varied experience in his professional life in the Internet world. Mr. Ding spent one year at Guangzhou Feijie Co. as a systems analyst, from June 1996 to April 1997, one year at Sybase (China) as a project manager/technical support engineer from May 1995 to May 1996 and two years at China Telecom Ningbo Branch as a technical engineer from June 1993 to May 1995. He served as the Chairman of the Board of Directors at NetEase.com, Inc. until September 2001. Mr. Ding has been a Director of NetEase, Inc. since July 1999. Mr. Ding holds a Bachelor of Science degree in Communication Technology from the University of Electronic Science and Technology of China.
Average tenure of the NetEase management team in years:
Average tenure and age of the NetEase board of directors in years:
NetEase, Inc. operates an interactive online community in the People’s Republic of China. The company operates through Online Game Services; Advertising Services; and E-mail, E-commerce and Others segments. It offers PC-client massively multi-player online role-playing games and mobile games; and distributes its point cards to gamers. The company’s NetEase Websites provide Chinese Internet users a network of Chinese language-based online content channels, as well as community and communication services, including news content, community forums, mobile-based applications, open courses, and interactive online video. It also offers other Web-based applications and services, including a Web directory. In addition, NetEase, Inc. provides online advertising services that include banner advertising, channel sponsorships, direct email, interactive media-rich sites, sponsored special events, games, contests, and other activities; email services to individual and corporate users; and wireless value-added services. Further, the company offers e-commerce services, including Caipiao, an online service that facilitates the processing of end users’ purchase orders for lotteries; Baoxian, an online service for the sale of insurance products; Kaola that sells imported maternity and baby products, skincare and cosmetics, and other general merchandise; Yanxuan, which sells its private label products, including apparel, homeware, kitchenware, and other general merchandise; Wangyibao, an online payment platform; EaseRead, an e-reading apps; Cloud Music, an online music social network; and NetEase Cloud Classroom, an online education platform. Additionally, it provides and Internet finance services, as well as sells game-related accessories. The company was formerly known as NetEase.com, Inc. and changed its name to NetEase, Inc. in March 2012. NetEase, Inc. was founded in 1997 and is based in Beijing, the People’s Republic of China.
Building No. 7, West Zone,
Zhongguancun Software Park (Phase II),
|Exchange Symbol||Ticker Symbol||Security||Exchange||Country||Currency||Listed on|
|NasdaqGS||NTES||ADR EACH REPR 25 COM STK USD0.0001||Nasdaq Global Select||US||USD||30. Jun 2000|
|DB||NEH||ADR EACH REPR 25 COM STK USD0.0001||Deutsche Boerse AG||DE||EUR||30. Jun 2000|
|SWX||NTES||ADR EACH REPR 25 COM STK USD0.0001||SIX Swiss Exchange||CH||CHF||30. Jun 2000|
|WBAG||NTES||ADR EACH REPR 25 COM STK USD0.0001||Wiener Boerse AG||AT||EUR||30. Jun 2000|
|BMV||NTES N||ADR EACH REPR 25 COM STK USD0.0001||Bolsa Mexicana de Valores||MX||MXN||30. Jun 2000|
|BATS-CHIXE||NTESZ||ADR EACH REPR 25 COM STK USD0.0001||BATS 'Chi-X Europe'||GB||CHF||30. Jun 2000|
|Industry:||Internet Software and Services|