How can one determine whether a stock or fund is overvalued or undervalued in investment? From which dimensions can we conduct a comprehensive analysis to arrive at an integrated assessment of its valuation?

I. Liquidity Conditions M2 growth rate, social financing growth rate, DR007, LPR, etc. A-share market liquidity: Net inflow of northbound funds, margin trading balance, scale of newly issued funds, etc. When liquidity is abundant, asset prices and valuations tend to rise. Therefore, you must assess whether this round of market activity is characterized by ample or constrained liquidity—and whether it is a broad-based bull market or a narrow, sector-specific rally. Abundant liquidity raises the overall valuation ceiling; limited liquidity depresses it. Relying solely on the valuation range from the previous market cycle is akin to 'carving a mark on a boat to locate a lost sword'—an outdated and inappropriate approach. II. Industry Life Cycle Industries at different stages of their life cycles require fundamentally distinct valuation methodologies—applying PE ratios designed for mature industries to early-stage sectors, or using PB ratios to evaluate light-asset businesses, will inevitably yield erroneous conclusions. 1. Matching Valuation Methods with Industry Life Stages • Startup Stage (e.g., early AI, quantum computing): Profits have not yet materialized; firms may even be operating at a loss. PE and PB are ineffective. Focus instead on PS (Price-to-Sales ratio) + technological barriers. • Growth Stage (e.g., new energy, semiconductor equipment): Earnings grow rapidly. Key metrics: PEG (PE divided by net profit growth rate) + market share. • Maturity Stage (e.g., banking, home appliances): Earnings are stable but growth slows. Core metrics: PE (historical percentile), PB (Price-to-Book ratio), and dividend yield. • Decline Stage (e.g., traditional coal, steel): Earnings decline persistently. Key metrics: PB (reflecting liquidation value) + inflection point in industry cyclical momentum. III. Industry Comparison The valuation of a single company cannot be assessed in isolation—it must be benchmarked against its competitive landscape within the industry. The core considerations are valuation premiums or discounts arising from 'moats' (competitive advantages) and market position. 1. Valuation Divergence Logic Within an Industry • Premium for Industry Leaders: Market-leading firms typically command valuation premiums due to economies of scale, brand moats, and stable cash flows. Investing in 'core assets' rests precisely on this rationale.

Interpretation of Financial Metrics (Updated)

Metric Name Formula Meaning & Interpretation How to Read / Reference Standards I. Per-Share Metrics Basic Earnings Per Share (EPS) Net profit attributable to parent company ÷ total number of shares The most fundamental profitability metric—measures how much profit is generated per share Higher is better; YoY growth matters more; e.g., Jiahua: 0.74, Luotuo: 0.71 Diluted EPS Net profit attributable to parent company ÷ (total shares + potential shares from convertible bonds/options) A more conservative EPS figure, accounting for possible future share dilution from conversions A large gap between diluted and basic EPS signals significant potential for share dilution via convertible instruments Book Value Per Share (BVPS) Total equity ÷ total number of shares The book value ('net worth') attributable to each share PB = Stock price ÷ BVPS; PB < 1 indicates 'trading below book value'—i.e., market price is lower than accounting value Operating Cash Flow Per Share Net operating cash flow ÷ total number of shares Actual cash generated per share—harder to manipulate than EPS Compare with EPS; persistently lower operating cash flow per share versus EPS suggests low earnings quality ('low cash content') Retained Earnings Per Share Cumulative retained earnings ÷ total number of shares How much the company has 'saved up' for future dividends or reinvestment Higher values imply greater dividend potential; persistently high retained earnings without dividends may signal lack of attractive investment opportunities Reserve Per Share Capital reserve ÷ total number of shares Primarily derived from share issuance premiums; usable for share capital increases (e.g., bonus issues) High reserves indicate potential for 'high bonus share issuance'; reserves cannot be used for cash dividends II. Profitability Metrics Total Operating Revenue Sum of all operating revenues Measures the company’s business scale and industry standing Assess growth via YoY/QoQ comparisons; absolute value alone has limited meaning Profit Before Tax Operating profit + non-operating income/expenses (pre-tax) Earnings after all costs and expenses—but before tax Compare with net profit to gauge tax burden impact Net Profit Attributable to Parent Company Net profit attributable to shareholders of the parent company The most critical profit figure—the actual profit available to shareholders Compare with non-recurring net profit to assess earnings quality Non-Recurring Net Profit Net profit attributable to parent company − non-recurring gains/losses Profit excluding one-off items such as asset sales, government subsidies, or investment gains More reflective of sustainable operations; if net profit is high but non-recurring net profit is low, profits are likely propped up by one-time items—a key red-flag indicator III. Profitability Ratios Return on Average Equity (ROE) Net profit ÷ average equity (average of beginning and ending equity) Warren Buffett’s most favored metric—measures how much profit $100 of shareholder equity generates >15%: excellent; 10–15%: good; 5–10%: fair; <5%: poor (red-flag threshold); using average equity yields a more accurate result Diluted ROE Net profit ÷ ending equity ROE calculated using end-of-period equity only—more conservative than average ROE If difference between the two is small, either is acceptable; a large difference implies significant intra-year equity changes Gross Profit Margin (Revenue − Cost of Goods Sold) ÷ Revenue For every $100 of revenue, how much remains after deducting direct production costs—reflects product competitiveness and pricing power Higher is better; e.g., Kweichow Moutai >90%, steel industry 5–10%; inter-industry comparisons are meaningless—only intra-industry comparisons are valid

DuPont de Nemours Inc (DD) Stock Up 3.1% but GF Value Says Overvalued

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DuPont de Nemours Inc shares rose 3.1% to $141.28, yet GuruFocus values indicate significant overvaluation with a forward P/E of 19.8x versus a 5-year median of 6.6x.

GuruFocus

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DuPont’s Electronics Spinoff Qnity Prices $4.1B Debt Deal Ahead of November Split

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RBC Adjusts Price Target on DuPont de Nemours to $56 From $60, Maintains Outperform Rating

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Morgan Stanley Adjusts DuPont de Nemours Price Target to $52 From $44, Maintains Equal Weight Rating