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QuestionsCategory: Valuation QuadrantHow to Plot a P/E Chart (Alibaba)
Erastus Jonker asked 3 months ago

Can you please check if I have plotted the chart correctly for Alibaba? The first year is above 100 which seems strange. For the first year the P/E was only about 50c and the next year it was consistently above $1.50. I see this question on plotting a P/E chart gets asked over and over again, but because everybody uploads it with a PDF I cannot retrace their calculations.

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Victor Chng replied 3 months ago

I have also uploaded a model PE valuation under the excel tab.

As for uploading excel file, the current template of this forum can’t do it. You can just email me the excel. :)

Erastus Jonker replied 3 months ago

Oh, I guess I missed it!

Victor Chng replied 3 months ago

Hi Eratus Jonker,

You did not miss anything. I just create the file after you mentioned about it.

Thank you for your suggestion. :)

3 Answers
Victor Chng answered 3 months ago

Hi Erastus Jonker,

There seem to be some issues with your chart. Please answer the questions below so I can pin point your issues.
 

  1. Which Alibaba shares price are you using? Alibaba US or HK
  2. The financials of Alibaba is in RMB so have you converted the EPS from RMB to USD/HKD ?

 

Erastus Jonker replied 3 months ago

I used US Alibaba because it has a longer track record. I consistently used USD figures from their Annual report. Yes, sometimes it’s a bit frustrating when you must convert the exchange rates, it feels like I increase the margin of error.

Victor Chng replied 3 months ago

Can you send me the excel on those financial numbers that you have collected. I want to take a look and see where the issues lies.

Erastus Jonker replied 3 months ago

I’ve been a bit busier the last few days than I had hoped. I looked at everything one more time. The big problem I had was because the weighted average shares outstanding got multiplied by 8 in 2017. So the EPS was out of tune. I colored the EPS relevant to determining P/E in yellow. Let me upload both financial analysis and my modified P/E valuation.

Erastus Jonker answered 3 months ago

First one valuation, second one financial analysis

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Erastus Jonker replied 3 months ago

And there seems to be good news today for students interested in buying the China dip, it seems more likely that Beijing will co-operate with American auditors: “China’s securities watchdog said on Friday it would create conditions to cooperate with the United States on auditing supervision.”

https://www.reuters.com/world/china/china-strengthens-supervision-accounting-firms-fight-against-forgery-2021-08-23/

Victor Chng answered 3 months ago

Hi Erastus Jonker,
I have look through your figures regarding the number of shares. The increase of shares in 2018 onwards is probably due to the secondary listing. 
 
You just have to divide those outstanding share from 2018-2021 by 8.
 

Erastus Jonker replied 3 months ago

Thank you for checking for me, Victor!

Victor Chng replied 3 months ago

Welcome Erastus Jonker :)