 Good day, fellow investors. Let's continue with our analysis of Chinese growth stocks and today's company is 51job.com. So it's an online job provider, CV database for Chinese people that are looking for jobs and connecting them, outsourcing them to big companies. It's an online store, it's going also offline so a lot of growth there, a lot of acquisitions. Let's see if the company is overvalued or undervalued. We're going to give a short company overview. We're going to discuss the fundamentals, we're going to discuss how the convertible bonds that they have issued are affecting their net income and distorting the ratios. If you look at the ratios, then we're going to discuss their growth strategy and then we're going to put all those numbers, all what we found out in our quick earnings valuation model to see whether the stock is overvalued or undervalued. Let's start. So human resources business from China, doing things mostly online but has also offices through the country. Revenue growth has been very positive especially over the last quarters. The company revenue growth over the past five years has been 15% per year but the current growth is 32% per year. If we look at the fundamentals, very positive fundamentals, revenue growth, very strongly operating income also growing fastly. The number of shares pretty stable, no dilution, not much dilution there. The book value has been growing, a Buffett indicator that he always likes and what's even more important, the cash flows. The free cash flows are much higher than the net income. So another positive here, the company is a cash flow machine. So all good, good indicators and good numbers. However, those good numbers don't come cheap. And unfortunately the market recognized that stock beginning of 2016-2017 and then really the lately it exploded on the increased growth and outlook. Over the last quarter revenue grew at 34% which is much higher than the average historical average of 50-15% and that is the main reason for the stock price jump. The key growth initiatives for the management are to increase what the customers are spending, upselling, cross-selling, online courses for improvement of all the 100 million something CVs that they have in their database, of course, grow alongside the economy, etc. etc. The key here is to understand that China is shifting for a more manufacturing economy to a more service-oriented economy, which means there will be more demand for white-collar workers, which means that 51 jobs should do better, better and better. However, their growth is really a big deal coming from acquisitions, so the faster growth that's going on now. So that's something to watch, watch the intangibles and think about, okay, if there is a slowdown, what will happen to a company like this? What is the margin of safety? We'll see later in the earnings model. However, before we go to that, if you have seen the financials, there is a negative on net income lately and that skews a lot of earnings because that negative comes from convertible bonds. As the stock price exploded, a lot of the convertible bonds that the company had issued in the past are now, can now be converted into new stocks, which means that the company has to issue stocks to cover those for those conversions and there will be dilution. But that issuance of stocks, the company could issue stocks and get cash. So it is actually a loss. It is a cost to the business, but it's not a cash cost and that's something that has to be adjusted in earnings when looking at this company. Let's dig a bit deeper into this matter. So as you can see, the stock price really exploded in the first quarter and the second quarter of 2018, hitting a high somewhere in June at the end of the second quarter. So this means that during that period, if there was a convertible bond issued where the conversion price was below the high at the close of the second quarter, a trading close at the second quarter, the last day in June, it means that the company will have to issue stocks that are now much more valuable than those have been in December 2017. And if you look at the gap income, it is negative line one here, 43 million. However, when you adjust that for the change in fair value of convertible senior notes, 135 million have those increased in value, which is the value that the company will give to the bondholders. Now a little bit different because the stock price has fallen, but that will be a positive then in the third quarter. And that adjust the gap net income to 90 million, which leads to positive earnings per share of $1.5 over the past six months. So convertible bonds are often a thing with Chinese companies, so that's something just to keep in mind, adjust for what's going on, check my convertible bonds video that's coming where I explain this a little bit more in detail, but something to keep in mind because there is potential for dilution 10-20% and the earnings can be skewed as it is the case with jobs. If we put things in our model at the 15% growth rate with the valuation of 10 in 2023, the present value of the business is $22 per share compared to the current stock price of 66, the company is overvalued. What needs to happen for the company to be properly valued? They have to grow at 25.1% per year and if I give it a valuation of 20 in 2023, then the company is undervalued because then we would see a stock price of 134. So a growth stock put this number into a comparison with other companies that you have and then you see where you are, whether you like this company. It's a good company, it looks like having a good mode, the earnings will be much positive into Q3 2018, even not adjusted earnings because the stock price dropped and perhaps it dropped below the conversion price, I didn't check that, but it's something to keep in mind and perhaps it will pop out into the valuation screens that people run. So on the business I think it's a good business, however if you want to dig deeper, dig deeper into the acquisitions, into the goodwill and into what's really fueling this stock. For me it's simply overvalued no matter what happened and only if it comes to 20 I will take another look, if not okay I have other fish to fry. Thank you for watching, looking forward to your comments and I'll see you in the next video.