Low valuation: define the denominator before ranking

Chinese version

There is no single “lowest valuation” ranking. PE compares price with earnings; PB compares it with recorded equity. Excluding nonrecurring earnings or recorded intangible assets changes the question and can change the order. The six-name illustration below demonstrates the definitions, not future returns or a market-wide stock screen.

Evidence stage: reviewed current-snapshot arithmetic, observed on 2026-10-18. Prices are from 2026-10-16. Financial records were retrieved on October 17 UTC (October 18 in China), including an October 17 disclosure for 002415.SZ. These inputs cannot be represented as available at the October 16 close. No historical strategy return has been calculated.

Definition table

Let M be total common-equity market value in yuan; P the parent-attributable profit over the last twelve months; D the parent-attributable profit excluding nonrecurring items; E the equity attributable to common shareholders; G and I the corresponding attributable goodwill and other recorded intangible assets.

Measure	Intended definition	What must be fixed before comparison
PE TTM	M / P	Consolidated parent-attributable earnings, not total group profit; trailing year, not annualized half-year
PE excluding nonrecurring items	M / D	Same parent scope and trailing periods; removing nonrecurring items is not the same as removing all investment income
PB	M / E	Parent equity, excluding minority and any senior equity claims where applicable; a single balance-sheet date, not four-quarter sum
PB excluding goodwill	M / (E − G)	Ownership scope, goodwill definition and impairment version
PB excluding goodwill and intangibles	M / (E − G − I)	Recorded intangible scope, ownership allocation, and whether capitalized development costs are additionally excluded

TTM at an interim date is current cumulative YTD + previous full year − matching previous YTD. An annual report uses its full-year value directly. Missing legs leave the result unavailable. Earnings, equity and deductions must use the same consolidated reporting scope; do not mix parent-company-only statements with consolidated parent-attributable data.

M must cover the same equity claim as the denominator. This illustration deliberately chooses six A-only issuers, without inferring a general treatment for A/H, B shares, preference shares or convertible instruments. An A-share price multiplied by all classes’ shares is not automatically the economic value of every class. Circulating market value is also unsuitable against full-company earnings/equity.

Data mapping and important qualifications

The script maps daily_basic.total_mv × 10,000 to yuan, income.n_income_attr_p to P, fina_indicator.profit_dedt to a supplier-defined nonrecurring-profit proxy, and balancesheet.total_hldr_eqy_exc_min_int to parent equity. The supplier’s profit_dedt label does not independently certify its parent/common-share scope for every issuer. Source reports and preference-share allocations have not been independently checked; therefore the sample’s PB is labelled parent-equity PB and its nonrecurring PE remains provisional.

goodwill and intan_assets are group-consolidated asset balances, while the equity field excludes minority interests. Their full deduction from parent equity is an unallocated asset-deduction proxy, not certified parent tangible equity. There is no assumed pro-rata minority allocation. The two source fields are treated separately; capitalized development costs, deferred tax consequences, off-balance-sheet intangibles and future liquidation recoveries are not included. A recorded asset’s book value is not its liquidation value. The sample does not claim intangible-intensive firms are economically worse.

Missing goodwill or intangible values remain missing; they are never silently replaced by zero. A nonpositive denominator is unavailable for positive-multiple cheapness rankings, with loss/negative-equity cases requiring separate analysis. This convention does not mean such companies have no economic value. In this sample Moutai has an unavailable goodwill field and is excluded from the common ranking rather than assigned zero goodwill.

Six-name illustration

Purposively chosen issuers span several business models and are not a representative cross-section. Multiples below share each issuer’s latest period available across income, indicator and balance-sheet sources. Report periods may differ between issuers. Figures are rounded only for display. On narrow screens, scroll the numeric tables horizontally.

Code	Issuer	Report period	PE TTM	Nonrecurring PE proxy	Parent PB	Ex-goodwill PB proxy	Ex-goodwill/intangibles PB proxy
000651.SZ	Gree	20260630	7.94	8.36	1.49	1.50	1.61
002027.SZ	Focus Media	20260630	21.86	29.28	5.33	5.39	5.43
002415.SZ	Hikvision	20260930	17.34	17.70	3.66	3.67	3.75
300059.SZ	East Money	20260630	19.65	20.28	2.91	3.00	3.00
600519.SH	Kweichow Moutai	20260630	20.40	20.42	6.61	—	—
600900.SH	China Yangtze Power	20260630	19.86	20.81	3.33	3.34	3.77

For Focus Media, removing the supplier-defined nonrecurring component changes PE from 21.86 to 29.28. In the five-name common sample, Hikvision and Yangtze Power reverse their relative PB order after goodwill and recorded intangibles are deducted. Neither observation establishes better subsequent returns.

Same-sample ranks

All five columns below use exactly the same five issuers with positive finite denominators in every measure. Rank 1 is the lowest multiple in this small sample; ties use the minimum rank. The sixth issuer’s available PE and PB values are still shown above, but it receives no rank in any common-sample column. Cross-industry ranks here illustrate arithmetic only.

Code	PE	Nonrecurring PE proxy	Parent PB	Ex-goodwill proxy	Ex-goodwill/intangibles proxy
000651.SZ	1	1	1	1	1
002027.SZ	5	5	5	5	5
002415.SZ	2	2	4	4	3
300059.SZ	3	3	2	2	2
600519.SH	—	—	—	—	—
600900.SH	4	4	3	3	4

Availability, revisions and reproduction

The analysis checks the owner archive seal, normalized child-manifest hashes and data hashes before reading selected issuers. It admits only report type 1 cumulative consolidated statements, selects the latest disclosed/observed version for each issuer-period, and requires date-only disclosures to precede the current local calendar day. Ambiguous same-version duplicates fail. The dated input archive was obtained through the owner’s configured TuShare route; no new supplier request or production alias change was needed.

Those integrity checks prove the retained files match their recorded hashes. They do not prove that older report values were available in their original historical form, that supplier restatements are complete, or that the supplier’s economic definitions are correct. Old legs in a current TTM calculation may reflect subsequently revised comparatives. The result is a weekend observed snapshot using the previous session’s prices; it is not a Friday-close historical signal.

Reproduction uses scripts/analyze_valuation_definitions.py with --vintage pointing to an owner sealed vintage, --daily-basic to one retained daily partition, and --output to a new directory outside the repository. The reviewed derived JSON includes hashes, calculation dates, report periods and source observation/disclosure dates, without raw supplier financial amounts or price bars. The script checks the six fixed sample names and leaves missing deductions unavailable. Reproduction on another vintage is a new observation, not the same snapshot.

What was already published, and what remains

The PB/ROE study already compares profitability added to PB; the market-research companion retains its historical results and qualification. It does not compare all five denominators defined here. This definitions note and current arithmetic illustration belong to market-research; a standardized factor study may later be admitted to the observatory through its existing publication contract.

Next, freeze a historical observation ledger and full-universe eligibility rules, compare measures on common and measure-specific samples, and report missingness by sector and year. Separate financial and nonfinancial sectors, control size/industry/profitability, and retain later-delisted issuers. Only after fixing formation, execution, benchmark, revisions and costs should a paired return study estimate whether any denominator adds value. There is no all-market “cheapest stock” list or performance claim in this release.

Primary field references

• TuShare daily indicators: market-value unit and field mapping.
• TuShare income statements: parent-attributable earnings and report types.
• TuShare balance sheets: equity, goodwill and recorded intangible fields.
• TuShare financial indicators: supplier nonrecurring-profit field.