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QuestionsCategory: Financials QuadrantNet Profit & Other Queries Under Income Statement
Ka Fatt Chan asked 6 months ago

Hi Victor,
I just enrolled in your company class and there are a lot of inform which were shared in all yr teaching. I really benefit from them.
I have the following queries and hope you can guide and answer them:
 

  1. Which profits- net profit or comprehensive income should I base on under Keppel DC Reit as attached.
  2. What is non controlling interest and should we include this as part of valuation as attached.
  3. What is adjusted EBITDA  & EBITA and non GAAP net income for Alibaba? Which one should i base on for valuation?
  4. Which EPS should I refer to- basic or Dilute? Non GAAP per share or ADS as attached ? what is the difference between these?

Thank you in advance.
 
Ka Fatt

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1 Answers
Victor Chng answered 6 months ago

Hi Ka Fatt,

  • Use the profit attributed to unitholder for valuation.

 

  • You should exclude non-controlling interest as it is stake that are not own by shareholder of Keppel DC

 

  • EBITDA = Earnings before interest depreciation and amortisation while EBITA is the same but remove depreciation. Non-GAAP net income is how the management think the company profit should be seen as instead of the usual accounting profit. My take is for you to use the GAAP income which is the profit attributed to shareholder (removing one-off item) and do valuation.

 

  • You can use the diluted shares as it accounts for future dilution and is more conservative. In order to choose whether to follow GAAP earnings per share or GAAP earnings per ADS depend on which Alibaba stock, you want to purchase. Diluted GAAP earnings per share is use to calculate the intrinsic value for HK listed Alibaba as the share is worth 1/8 of the listed US Alibaba. The other GAAP earnings per ADS is for US listed Alibaba as it represent 8 ordinary share which is stated foot note 4 below that you screenshot. 

 

  • Do note that Investment quadrant method cannot be use to evaluated banks, insurance and REITs as they are different breed of asset that required different type of analysis or perspective to look at.