This edition first published 2018
© 2018 Stanley Lim Peir Shenq and Cheong Mun Hong
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For Jo Ying, Howey and Hong Vee. Remember to let money be the tool that helps you work towards your happiness, rather than being the reason for your happiness.
– Stanley
For my wife, Sze Wing, who has always believed in me.
And for Sonia, may this book inspire you to have the courage, convictions, and perseverance to chase your dreams. Even if you want to be a princess with a pet unicorn.
– Mun Hong
All views or opinions articulated in this book are expressed in the Authors' personal capacity and do not in any way represent those of the company, their employers and other related entities.
This book is based on the study and research of the Authors, and represents the written collection of the Authors' opinions and ideas. As such, the information in this book are for educational purposes and/or for study or research only. For all intents and purposes, the contents of this book are not intended to be, and does not constitute financial, investment or any other form of advice or recommendations to buy or sell any shares, securities or other instruments.
Information used in the publication of this book has been compiled from publicly available sources that are believed to be reliable. Hence, the Authors do not take responsibility for any factual inaccuracies made. Any expression of opinion (which may be subject to change without notice) is personal to the Authors, and the Authors make no guarantee of any sort regarding the accuracy or completeness of any information or analysis supplied.
It is also important to bear in mind that any investment involves the taking of substantial risks, including but not limited to the complete loss of capital. The Authors do not take responsibility whatsoever for any loss or damage of any kind incurred from the views or opinions articulated in this book.
Finally, it goes without saying that the Authors' views and opinions should never be regarded by the readers as a substitute for the exercise of their own judgement. As every investor has different investment objectives, goals, strategies, risk tolerances, time frames and financial situation, you are advised to perform your own independent checks, research or study before making any investment decisions.
Always remember, YOU are ultimately responsible for your own investments.
Note: The Authors have investment positions in some of the companies discussed in this book.
Everyone wants to buy a dollar-worth of assets for 50 cents. That is at the very heart of value investing – to buy an asset at a price that could be valued at significantly more. But what exactly is value?
Are they always shares that are trading below the sum of their net assets? Or are they shares in stable companies that have been underappreciated by the market? There is another way of looking at value – they could be shares in fast-growing companies where the potential for growth has been underestimated for a variety of reasons.
The concept of separating price and value is handled with surgical precision by Lim Peir Shenq and Cheong Mun Hong. They draw on their vast stock market experience to take readers on a whistle-stop tour around six Asian bourses in search of value investments. They touch on the thorny topic of corporate governance and why it should matter when we invest.
Peir Shenq and Mun Hong pay special attention to the use of strategies. While there is no one-size-fits-all approach for value investing, the use of a consistent approach to identifying value cannot be stressed strongly enough. In other words, if you don't know what you are looking for, then how can you possibly know when you have found it?
The two writers cleverly categorise value under three main headings, namely, asset value, current earning power value and growth value. Through a step-by-step process, they provide a useful guide to help readers to understand the different ways to identify value and when a company could be considered to be undervalued.
There is also a useful discussion of screens and how they can be used with good effect to help separate out the wheat from the chaff. Peir Shenq and Mun Hong also provide some useful tips on how to reduce the number of shares that need to be filtered.
The 5-Finger Rule is a clever way that they have developed to remember the basics of investing, and not just value investing. The rule behind the Rule is that an investor should only consider investigating a business further if it fulfills at least half the criteria.
There is a very instructive chapter on how to read annual reports. Most investors can find the once-a-year tome from companies quite a chore to plough through. But Peir Shenq and Mun Hong show you how to get to the nub of any report quickly. What exactly should we look out for when we read the letter to shareholders? How honest and candid is the letter? Does it tell shareholders everything that has gone on at the company, warts and all?
The two writers pepper the book generously with real examples that readers can use as case studies for their own investments. This is not just a book about value investing. Instead, it is a manual for value investing with an Asian twist that investors with an eye on the fastest-growing region in the world will reach for whenever they have questions that need answers.
David Kuo
CEO, The Motley Fool Singapore Pte. Ltd.
The stock market is filled with individuals who know the price of everything, but the value of nothing.
– Philip A. Fisher
If we compare what generally happens in a stock market to the real world, it would be like being in the largest casino ever. Think Macau, the gaming capital of the world, only bigger. Players and speculators all over the place, goading one another to ever-higher bets. Frenzy surrounding the tables which players deem “hot”. Everyone jostling for a seat at those tables. Greed and manipulation are the names of the game.
In Asia, many still view the stock market as a speculative pursuit, associating equity investments with gambling. Those “not in the game” might be confused with the market's sudden highs and lows, where “hot” companies are valued astronomically and “boring” ones are priced as though the business and its assets are worth nothing.
The casino operator, in this case the stock exchange, does not bet with or against any players. It is merely a place to hold these games, a platform for players to play. It earns not from the winners or losers of the game, but simply from the number of games inside its door. However, in this stock-market casino, there is also something more unique. Every game taking place is like a game of poker.
This is because, like poker, when we invest, we are not playing with the house (stock exchange), we are playing against the player on the other side of the table. As we know, there are two ways to play a game of poker, based on pure luck or based on skill and probabilities. For players who base their play on skill, there is a higher chance that they might walk out of this “casino” richer than before.
This book is a guide for that journey, the journey of how to enter the stock market based on skill and probabilities. It is about understanding the difference between gambling and investing, and how to go about investing. It is about how to keep our heads level during the game, and invest logically, instead of emotionally. This is the journey where we show you how to find value in our speculative world.
This is the key concept we hope to drive home about the stock market. Yes, in many ways, it is still a casino. Yes, you can, and many players do, play with nothing other than luck. But you can choose how you want to play the game. Instead of relying on luck, you can learn how to earn serendipity, how to create luck by stacking the odds in your favour.
Investing in the stock market, like poker, is a game of both skill and luck. If you take the time to learn the skills needed and keep your emotions in check, if you can “keep your head when all around you are losing theirs”, there is a good chance that you will be able to walk out of the stock market wealthier than before.
This is not a “get rich quick” book. It is not a book about making millions overnight. This book is about understanding the skills needed to play the game intelligently and for the long term. This is a book about learning how to play the stock market game with skill and not luck, arming you with a framework for your investment journey and allowing you to tailor it to suit your needs.
Also, this book does not attempt to predict how markets will behave in the future. Instead of showing you how the “perfect” market should be, we want to show you how it really is, and how you can navigate through these waters. In this imperfect market, we feel that our investment process will help you make sense of, and benefit from the market.
The reason why we need such a process is simple. In this time and age, there is simply an overload of information and we need a process to help us to separate what's important from the noise. We believe that investors looking towards Asia are in need of a locally constructed framework to assess both the quantitative and qualitative sides of equity investments.
Investing is both an art and a science. We strongly believe that with both the “right” mindset and an appropriate investment process, investors willing to put in the effort might find the experience of investing in Asia to be both exciting and wildly rewarding. It certainly has been the case for us.
To demonstrate that this is not just nice-sounding theoretical stuff with no practical applications, we have included plenty of case studies, together with our personal experience. We hope that the lessons learned from these case studies will bring these experiences to life and translate into practical applications for you in your investment journey.
Moreover, we have produced additional bonus chapters for you. These are meant to prepare you for the next stage of your investing journey after you have completed this book. Feel free to view your bonus chapters at https://www.valueinvestasia.com/valueinvestingbook/.
No one can make you rich or successful in investing. All we can do is provide the tools for you to make intelligent decisions. Such is the purpose of this book.
Thank you, and let's begin our journey.
This book is only possible with the effort of so many people. First and foremost, we are extremely grateful to the team at John Wiley & Sons. We would like to thank Thomas Hyrkiel and his team for accepting our proposal; we can never thank you enough for believing in us. Next, our project editor, Jeremy Chia, who has spent countless hours helping us with the publishing process. If it were not for Jeremy, you would not be reading our book right now. We would also like to thank Gladys (Syd) Ganaden, who helped us, two hopeless designers, immensely in the coordination of the design of the book, as well as Tan Chin Hwee, who kick-started our Wiley journey by introducing us to Thomas and his team.
We became evangelists for value investing through books written by Benjamin Graham, David Dodd, Philip Fisher, Robert Hagstrom, Barton Biggs and Bruce Greenwald. Without their books, we would not be who we are as investors today. These are the men who planted the trees for us to sit under, and we hope to be able to spread their wisdom here in Asia.
We are also deeply appreciative that the following individuals were willing to share years of their investment wisdom for this book. Their perspectives broadened our understanding on the Asian investing climate and we hope you will benefit from their advice as much as we did from them: David Kuo, Tan Chong Koay, Wong Kok Hoi, Yeo Seng Chong, Wong Seak Eng, Kevin Tok and Eric Kong.
Over the years, we have formed a close-knit investment community here. There is a saying that hanging out with smarter people makes you smarter. This definitely holds true for us. We have learned so much from being in your company over the past few years. We have immensely benefited from your investment wisdom, and more importantly your friendship, and we hope that will carry on for years to come.
Also, not forgetting Willie Keng, co-founder of ValueInvestAsia.com and our investment group; we always remember the times when it was just the three of us.
Lastly, after years of experimenting, we also like to thank Mr Market for his mood swings over the years, without which we would not have been able to benefit.
Firstly, I would like to thank David Kuo for being a mentor to me. Through working for him, I have learnt so much on how to invest better, write better and communicate better.
I am forever grateful to my parents; my dad for teaching me all he knows about business through all his life stories of being an entrepreneur since the age of eight. To my mum, who has been there to ensure I stay on the right track in life.
Lastly, to my wife, Wendy, who has been the pillar of my life for the past decade.
To my wife, Sze Wing, thank you for always believing in me. Any day with you is my favorite day, and I look forward to many more years together. It is written that houses and wealth are inherited from parents, but a prudent wife is from the Lord. I could not ask for a better wife.
To my parents, I am forever grateful to you for bringing me up well. Especially my dad; if I could be as good a father as my dad was to me, that would be one of my greatest achievements.
In my professional career, I would like to thank Samuel for taking a chance on me, for taking me under his wing. Time and time again, he has selflessly imparted his wisdom, and continually opened doors for me.
Stanley Lim Peir Shenq, CFA, has spent the last decade in the investment industry. Over the course of his career, he has kick-started a few businesses, worked in the family office industry and most recently in the investment advisory industry. He has been a writer and analyst for The Motley Fool Singapore from 2013 to 2017. During his time at The Motley Fool, he was one of the pioneer staff in building up the business and has successfully launched three products with the company.
Throughout his career, he has written close to 2,000 articles online, on investment education and market analysis. Over the last decade, he has gained valuable practical experiences in investing across a wide range of asset classes, ranging from Asian equities and properties to start-ups and venture capital.
Stanley has also been interviewed by media outfits such as Channel News Asia and the Manual of Ideas. He is the co-founder of ValueInvestAsia.com.
Stanley is a CFA Charterholder.
Cheong Mun Hong, CFA, started his investment career as an investment analyst at a Singapore licensed Trust Company. Over the course of his work, he has dealt with investments involving public and privately held entities. Mun Hong sits on the boards of listed companies.
He studied mechanical engineering at Nanyang Technological University and graduated with a minor in Business. Mun Hong has been involved in equity investments for close to a decade. He is the co-founder of ValueInvestAsia.com.
Mun Hong is a CFA Charterholder.
You're looking for a mispriced gamble. That's what investing is. And you have to know enough to know whether the gamble is mispriced. That's value investing.
— Charlie Munger
We wrote this book to share with you about the practical applications of a value investing approach here in Asia. With many books written on investing 101, introductory concepts of value investing are not the focus of our book. However, we still like to do a quick refresher before heading on to the fun stuff.
Value investing was first made famous by Benjamin Graham, with many considering him as the father of value investing. We believe that walking along this path of value investing will provide you with a disciplined approach in your financial adventures.
To start, we first must draw a clear line between what is an investment and what is a speculation. Even after 80 odd years, the explanation by Benjamin Graham and David Dodd in Security Analysis made the most sense to us. They stated: “An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative”. Nicely put.
From where we stand, speculation is more like guesswork without evidence. With its negative long-term expected return, a good example of speculation is a lottery. Buying a lottery ticket and hoping to win is speculation. If you really want to try your luck, no one is stopping you. However, we should not confuse the two.
On the other hand, an investment is something you buy now based on reasons that make sense, and with reasonable confidence that you will receive more money down the road. For us, value investing is simply a strategy of stacking the odds in your favour. Imagine being able to consistently buy a dollar's-worth of asset for 50 cents over and over again. Over the long term, this should work out much better than just buying the lottery ticket and hoping for the best.
With that said, here is what we think value investing is all about.
Great investors come from across a spectrum of investing styles – from legends like Warren Buffett, Walter Schloss and Irving Kahn to fund managers like David Einhorn, Guy Spier and Joel Greenblatt. Even in Asia we have famous investors like Target Asset Management's Teng Ngiek Lian, APS Asset Management’s Wong Kok Hoi, Pheim Asset Management's Dr Tan Chong Koay and Value Partners Group's Cheah Cheng Hye and Yeh V-Nee. Value Partners Group Limited is the first independent asset management firm to be listed on the Hong Kong Stock Exchange – and one of Asia's largest.1
The differences in strategy and style among value investors are countless. Some go for large-cap stocks while others spend their whole careers in small-cap stocks. There are successful investors who invest domestically in just their home market, while many venture overseas as well.
Although the practical application of value investing differs among individuals, the common underlying theme is similar. At the end of the day, everyone tries to find discrepancies between the market price of the stock and their estimated value of the company, commonly known as intrinsic value.
Even with the diversity, there are some fundamental characteristics common among most value investors. They
In a nutshell, value exists when you think that the asset is worth more than its market price with the probability of this asset appreciating in value being more likely than not.
Two of the most important concepts regarding value investing are best described in the book The Intelligent Investor by Benjamin Graham, specifically in Chapters 8 (how the investor should view market fluctuations) and 20 (margin of safety). These were the two chapters recommended by Warren Buffett so that “you will not get a poor result from your investments”.
Most of us hold the misconception that the market price of a stock is the intrinsic value of the company. However, these two terms are as different as day and night. Market price is easy to understand; it refers to the current market price of the asset. On the other hand, value is what that investment is worth to you. And this is when things start to get confusing, because value is a matter of opinion and can differ greatly between investors.
John Burr Williams, one of the pioneers on investment valuation and the author of The Theory of Investment Value, stated: “The market can only be an expression of opinion, not a statement of fact. Today's opinion will make today's price; tomorrow's opinion, tomorrow's price.”
At any time, market price simply reflects the opinions of the most optimistic non-owner (bid) and the most pessimistic owner (ask). To put it simply, price fluctuations are nothing more than the consequence of supply and demand between the buyer and the seller, and market price is nothing more than the result of the marginal opinion. When asked about what the stock market would do next, John Pierpont Morgan (better known as J.P. Morgan) simply replied, “It will fluctuate.”2
Yet why do so many investment professionals still relate price volatility to investment risk? If you think about it, all volatility symbolises is the changing opinions of the market. It is worth thinking about this logic while reading this book. To us, this logic is pretty illogical. Interestingly, this irrational volatility is also how most value investors can hunt for bargains within the stock market.
To better appreciate how the market works, we like to introduce you to Mr Market, a metaphor coined by Benjamin Graham in The Intelligent Investor. Mr Market is a representation of how the market works. But who exactly is this Mr Market?
Mr Market is an imaginary, highly emotional investor driven by panic, euphoria, greed and apathy. Basically, Mr Market is an emotionally unstable person who approaches investing based on emotion rather than through analysis. Think of him as your business partner in the company you invested in. Every day he tells you what he thinks your interest in the business is worth and offers to buy your share or sell you more shares. Sometimes his offer appears reasonable while at other times he lets his enthusiasm or fears dictate his offer and to the point of being ridiculous. Does this remind you of anyone? Not so imaginary now, is he? This, guys, is how the market works.
Benjamin Graham famously said, “In the short run, the market is a voting machine, but in the long run, it is a weighing machine.” In the long term, prices should reflect business value. However, short-term price movements tend to have little to do with the fundamentals of a business. Sometimes prices move on fundamental reasons and sometimes just for the fun of it. Why? Just because they can. Therefore, as investors, we should stick to the business over the long term instead of worrying about the emotions of the market in the short term.
However, due to our strong need to make sense of the world, we cannot help but try to make sense of every single price movement in the market. Notice the number of pundits that will take a shot at finding a reason for every single price movement. Seeing three pigeons on your roof just before the Hang Seng Index tanks by 10% does not mean that those three crafty-looking pigeons perching on your roof evaporated those billions!
This might have been why theories like the efficient market hypothesis grew to become the main school of thought in the finance world. Most of these theories within efficient market hypothesis work well in a perfect and hypothetical world. Working most of the time and working all the time are two different things. Unfortunately, our world is much more unpredictable than finding out what is inside a Kinder Surprise. In theory there is no difference between theory and practice; in practice, there clearly is.
On a personal note, our experiences during the Global Financial Crisis in 2008 taught us how hard it is not to join in the irrationality of the market during times of panic. Saying that market prices did not seem to reflect reality during that period was an understatement. Even a “Blue Chip” like one of Singapore's largest listed company, Singapore Telecommunications Limited (“SingTel”), saw over 40% of its share value wiped out in just two months. But did SingTel lose 40% of their customers in those two months? We do not think so. That said, although it is easy to spot the irrationality of the market, it is extremely difficult not to get sucked into the vortex of negativity.
Essentially, most of these modern market theories assume that we are all rational and can make the most efficient choice in every situation. This implies that we are both emotionless and have perfect information to make logical decisions. Doesn't this sound like something out of a fairy tale? That's what Snow White and her seven dwarfs thought as well.
In reality, our decision-making process typically involves making sense of the situation based on what we know, how we feel and our past experiences. That is why the price of the stock can differ from our estimated value of the company.
We should always remember that Mr Market is just here to provide us with options. It is 100% up to you to decide if it is to your advantage to act on them. As investors, the advantage we have is patience. No one can force us to act. All we should do is sit patiently and wait for the right hand before striking. We can take advantage of Mr Market's over-optimism and his panic desperations.
To round up our discussion on Mr Market, we will leave you with the wisdom of Howard Marks – “If you think markets are logical and investors are objective and unemotional, you're in for a lot of surprises. In tough times, investors often fail to apply discipline and discernment; psychology takes over from fundamentals; and ‘all correlations go to one’ as things that should be distinguished from each other aren't.”3
We like to start with a quote by a former United States Secretary of the Treasury, Timothy Geithner, in his book Stress Tests: Reflections on Financial Crises: “Even the best forecasts, I learned, were just educated guesses. They could tell a story about how the economy might evolve, but they couldn't predict the future.”4
Even though Timothy Geithner referred to economic forecasts, we felt that this also applied to our expectations of a company, especially when it comes to valuation. When reading through equity reports, we are frequently amused that an exact value (sometimes even down to two decimal places!) can be pegged on a business, especially when the valuations are based on so many assumptions! Remember, forecasts tell us more about the forecaster than the company, thus it is important for us always to read the assumptions made for a valuation exercise.
Given the large number of assumptions we need to make during a valuation exercise, we believe that at best valuation can be narrowed down to a range. Herein lies the essence of value investing: the importance of having a margin of safety. A discussion of value investing is not complete without a margin of safety. With a margin of safety, you need not know the exact value of a company to conclude that it's undervalued. You do not need to understand every single detail to survive in the world of investment.
A margin of safety is a way for investors to control the risk of investing by having a safety gap between the market price of a company and our estimated intrinsic value. A good analogy is an engineer's safety factor calculation. When constructing a bridge to handle a load of 1,000 tonnes, an engineer doesn't build it just for 1,000 tonnes; this bridge might be built to hold 2,000 tonnes, 3,000 tonnes or more. Why? Because in the real world, unexpected things happen, so it's always better to be conservative.
Thus, having a margin of safety makes it unnecessary for us to need a crystal ball when analysing a company. Here is an example that shows why.
Let us assume that Singapore-listed CapitaLand Limited, the largest property developer in Southeast Asia, was priced at S$8 billion in the stock market, and you have estimated the company's value at somewhere between S$10 and 14 billion. At S$8 billion, you would have at least a 20% margin of safety even in your “worst case” scenario.
In the context of investing, this is like having a buffer between what you think the asset is worth and what the asset is priced at. Based on your data and analysis, if you think that this company is worth $2 and you get it at $1, you have a margin of safety of 50%. This means that if your estimates are off by 50% you might still be able to protect yourself from making a loss in your investment.
Unlike the “perfect economic man”, who makes perfect and logical decisions every time, we are more than capable of making mistakes. Some might even say that we are well versed at it. Therefore, only by insisting on a margin of safety before we make an investment are we able to minimise the risk of making an expensive mistake by not overpaying. Remember, the best investment is one bought at a good price.
We hope that appreciating Mr Market and the concept of having a margin of safety will help you as much as they have helped us. A good start to having a successful value investing journey is to have the right mindset in place. However, this is just the beginning. Like everything else, we need to train ourselves before we can be good at something. Investing is no different. We definitely do not want to shoot ourselves in the foot by assuming that as long as we have the right idea, we can throw everything else aside. We cannot just will ourselves to get up and run a marathon without training for it. That will not end well.
Every boom and bust in the financial markets might be different, but what many don't notice is that history tends to repeat itself and investors never seem to learn. The more things change, the more they tend to stay the same. Ironically, this irrationally provides us with windows of opportunity. For most publicly traded companies, there will be times of under- and overvaluation, simply because shareholders do panic and act irrationally from time to time. When the right opportunity arises, we just have to exercise conviction in our judgements.
Thus, Rudyard Kipling's famous words, “If you can keep your head when all about you are losing theirs. . .”, ring true for a level-minded value investor if they are to take advantage of what Mr Market has to offer. And this unchanging aspect of human emotions is what makes value investing work. The key attraction of value investing is its logical and commonsense approach. In the stock market, you will soon realise, common sense is not really that common.
Instead of trying to predict the future, we should spend our time trying to find value from the realm that is relatively more knowable – companies, industries and securities – rather than basing our investment decisions solely on, as Howard Marks puts it, “the less-knowable macro world of economies and broad market performance”.
If you still have doubts on the utility of value investing, we recommend that you look at the short story “The Superinvestors of Graham-and-Doddsville” in The Intelligent Investor. This was from an edited transcript of a Columbia University talk in 1984 by Warren Buffett commemorating the 50th anniversary of Security Analysis. Buffett presents a group of investors who have, year in and year out, beaten the Standard & Poor's 500 stock index. Perhaps his story may lay your doubts to rest.
For the rest of us, let's get to work. Here are the three types of value you can find in the stock market.
Before exploiting any opportunity, we must first know what we are looking for. We can start by understanding the different types of value to be found in the market. Otherwise, we may be as confused as Alice when she just arrived in Wonderland.
Before diving in to estimate the intrinsic values of companies, we need to be able to differentiate between the types of opportunities before us. As investors, we want to know where we are going, and we believe that there are three major areas where value can be found in the market.
First, value may be realised from companies trading at levels significantly below their asset value. Asset value can be the liquidation value of the company, the replacement value of the business or just the sum of its net assets. This generally applies to companies in capital-intensive industries with assets underappreciated by the market.
Typical companies with value under this segment could include utilities-related companies, property-related companies, Real Estate Investment Trusts or even conglomerates.
Value can be found in companies with strong and stable earnings. Some of these companies might be trading at a deep discount compared to the estimated intrinsic value. Bear in mind that we focus mainly on the current earnings when estimating intrinsic value for these companies. This means that we might assume zero to moderate growth in these companies. These possible undervalued gems turn up when our estimates of their value are much higher than their market price.
Typical companies with value under this segment could include companies in industries with a decently long history of profitability that are operated in conditions that are unlikely to be massively disrupted. Examples include consumer staples and healthcare.
This type of value is based primarily on projecting the future. Generally, these investments are considered relatively riskier, given the uncertainty in the future. However, this segment can also present to you the highest potential in returns compared to the other two segments. This is because companies with undervalued assets or current earnings potential tend to have a limit on how much the value can be. However, a company with future growth potential can theoretically have unlimited growth potential in the future. After all, who would have thought that Apple Inc., with an initial public offering value of close to US$1 billion back in 1980,5 would grow to a size of about US$600 billion by the end of 2016?6
To illustrate the diversity of values, consider these two companies. The first is Hong Kong-listed Orient Overseas (International) Limited (“OOIL”), an asset-heavy container shipping company in a cyclical industry currently in a down-cycle. The second is NASDAQ-listed Baidu Inc., a Chinese web service company with a huge growth potential. Both these companies can turn out to be great investments in their own rights. However, it is obvious that the method we use to estimate the intrinsic value for OOIL should be vastly different from the way we value Baidu Inc.
Under the appropriate circumstances, OOIL might appear undervalued relative to its asset value. On the other hand, the bulk of value from Baidu Inc. might potentially be derived from the future growth of the business.