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  • Hi Candi, Thanks for this rich and very complete course. I have one general question please. You said that people need to read a lot in order to master the art of value investing. Could you please share with us some interesting books or articles to read ? you mean only value investing books or it can also be corporate finance and accounting books ? Also should we often analyze companies financials data? Should we adopt some routines. Thanks again Hamid
    hello Hamid. thanks for your message and happy that you like the course. let me share my thoughts on the various questions you have : 1) first of all on reading routing there is a general reading routine you need to build up reading annual & quarterly reports (for US companies 10K & 10Q reports). This allows you to become fluent in the terminology, train your eye & brain on the various financial terms & general lingo used in those reports 2) on top of that I very very strongly recommend and of course if you can afford it to develop your general knowledge by reading books. If you go on my LinkedIn profile you can see that per quarter I read around 10 new books at least. The books range from general knowledge books, technology books, biographies, etc. As an example even after my last publication on LinkedIn where I shared my books for the summer I have in the meantime bought books about NFT, metaverse, a book called "The world for sale" around resources, a book about the luxury industry, etc. I must admit I am book worm but I believe that by having developed that routine since many years it allows me to be a better investor. Remember that Warren Buffett spends 6 hours per day reading. This effort of reading will compound over time and you will become pretty strong about many domains 3) on your question about analysing company financials data : for the companies I own which are currently 9 in my portfolio, I obliged myself to do a quarterly review of their financial data + it is mandatory that I recalculate the intrinsic value every quarter to make sure that my assumptions when I bought the company and estimated the initial IV at purchase time have not changed. So in a nutshell my routine is quarterly on this 4) last but not least on accounting and corporate finance books. Yes you need to become a minimum knowledgeable and reading company financial statements specifically the 3 main ones being balance sheet, income statement & cash flow statement. As it is a pretty hard task I am in fact writing as we speak 2 new courses, one being specifically "Understanding IFRS & US GAAP financial statements" to help exactly on that matter. I hope to publish it by end of year and all my current students will get access to it. But otherwise yes you need a little bit of corporate finance understanding (not accounting). hope it answers your question(s) and do not hesitate to come back to me for any further question or information of course, happy to help thanks Candi
  • Hi Candi - so far so good however I am stuck on the DDM and GGM models - it got confusing when you showed the table with the discount rate. Prior to that it was all making sense. How did you get the discount rate figures? Is the discount rate the cost of capital rate of 6% we used on the formulas? You have 0.94 0.89 0.84 and so on. How is the present value of dividends per share worked out in your table.
    hi Raj, thanks for your question. The tables of DDM & GGM are there to prove mathematically that while appearing simple, the formulates calculate the sum of the present value of the dividends to eternity. The 7.88 cumulated sum after 50 years is still below 8.33 which is normal because 7.88 is the sum of 50 years of dividends, while the 8.33 is the sum to eternity of dividends. I just wanted to mathematically prove that such an easy formula indeed calculates the sum of present value of dividends to eternity. For the discount rate figure you need to consider that you are coming from the following formula which is "dividend in year n / ((cost of capital-dividend growth)^n)" with n being the year that you are looking at in the future, what you are asking is how to know the discount rate for one specific year. Let's look for example at 17 years away from 2023 which would be then 2040. So let's imagine that the company does not grow the dividend, hence the dividend growth is 0% (but it would work as explained in the training with growth of course as well). The present value of the 2040 isolated dividend only (not the sum nor trailing sum) is then calculated : "dividend in 2040 /(1 + cost of capital )^17". Be attentive that for calculating the present value for a specific year you are now dividing the dividend by (1+cost of capital)^n and not longer (cost of capital^n). Remember that we are not calculating the total present value but just 1 year and this is what I showing with the discount factor in the training. What you can do mathematically is that instead of having "dividend / (1+cost of capital)^n" with n = 17 in our case, you can write "dividend * (1/(1+cost of capital^n)", that is not changing the value. Proof : 0.5 / (1+0.06)^17 = 0.1856 or isolating the discount factor the calculation goes 0.5 * (1 / (1+0.06)^17)" = 5 * 0.3713 = 0.1856. On your question what the formula tells us about the IV based on dividends, is that the company is worth 8.33 USD based on DDM valuation methods. If the market is giving you the company at 6 USD you may have the necessary margin of safety BUT again remember that you are not buying one company based on one single valid test. It has to be a combination of many (L1 tests, L2 will give you a range of IV). For level 2 tests, looking at the Richemont example in the session, the various IV methods were giving me a range of 68-76 CHF per share. The IV is not a precise figure as you will be using various methods. If the company is not providing any dividend growth DDM, GGM and TSR will be the same value. But if the company increases its dividends then forget about DDM, use GGM as the right valuation method. If the company does not pay out any dividends nor share buybacks all those DDM, GGM & TSR are to be excluded as you will not earn any passive income (which is a NOGO for me). Hope that you see how this is calculated and clarifies how to interprete the calculation result thanks
  • Hi candi This formula ROIC = (NOPAT / Revenue) x (Revenue / Invested Capital) will give me the same result as the ROIC = NOPAT / Invested Capital formula? If i try to use it on the kellogs/merc examples? Also is the display of the ROIC = (NOPAT / Revenue) x (Revenue / Invested Capital) formula just allows us to break down the company operations in terms of what they can improve on? Thanks and sorry for the questions but its imperative I learn all this when I start my investments
    hi Raj, thanks for your question. Yes the formula ROIC = NOPAT/Revenue x Revenue /IC is only there to complement the understanding and to break down the company operations in terms of what they can improve on, that is absolutely correct. The most important thing you need to know in this part is to have a consistent and high ROIC from the companies that you want to invest into. PS : no need to apologize, I prefer you ask questions to avoid any doubts. thanks again
  • Hi Candi I dont understand whats happened to Amazon relating to the loss - when you asked to practise looking at financial statements, Amazon was the one I looked at and I too noticed this peculiar loss in this year. What was your interpretation of this I would like to know for my own practise please.
    hi Raj, so when you look at the Amazon 10K report 2022 (link here : you can see that the issue is coming from the operating income. My interpretation is the following : while revenue has been growing by 44BUSD (513BUSD in 2022 vs 469 BUSD in 2021) their operating expenses increased by 57BUSD (501 BUSD in 2022 vs (444BUSD in 2021) which is a clear statement that growth alone is not creating value for shareholders but that profitable growth is the one that creates value for shareholders. I would need to read more in detail their annual report but they are trying to give some explanations on page 24 of their annual report while the explanations make a statement that lower profitability is linked to investments and a combination of many other factors including shipping costs, wages, etc. So when I read such a statement about investments, my first reaction is to look at their cash flow statement and on page 36 I do see 2 lines in the investing cash flow : 1) the purchase of PP&E is only 2BUSD higher vs previous year so that is not the explanations, the 2) acquisitions indeed have increased to 8.3BUSD from 1.9BUSD previous year so ok they have spent 6BUSD on acquisitions more vs previous year but the other 6.5BUSD (operating income went down from 24BUSD to 12BUSD) are linked to increase in their costs. Just by looking at that information you can understand why probably Amazon decided to layoff unfortunately for the people impacted a substantial amount of people. Just make the math 20.000 people laid off and you would suppose an average salary of 100kUSD per year that is 2BUSD in savings. Of course if I would be sitting at the Board of Directors I would ask 1) who will do the work of those people and 2) if we can as easy as that layoff 20.000 people why haven't we done this before or stopped hiring because laying off people and/or hiring people has hidden costs to the organization as well that are pretty high. So from a management stewardship I would have some questions to the CEO in fact. hope this explanation helps a little bit how I look at it. with thanks
  • Hi Candi Just ordered the first book you recommended. A newer version is out and looks very thorough. I have read intelligent investor but it did leave me thinking that "yes ok but now what - how do i search for the companies now" and many of the chapters were a general overview although there was some very good information regarding how to analyze and compare companies. You mentioned that 2 of the chapters were most important in the Intelligent Investor. Would you mind telling me which ones?
    hi Raj, I'll answer in 2 parts. On the first part how to analyse and compare companies, I have actually been rerecording the course and currently lessons 1-15 have been updated. In the lesson 11, called Blue Chips I am sharing in the rerecorded 2023 version how I setup a "monitoring" investment universe in Morningstar, which variables precalculated by Morningstar I use and how I then export to Excel to apply the first set of level 1 fundamental tests to the Excel file exported from Morningstar. I mention in the lesson that I end up with a couple of companies and the final step is then using the IV calculation file in Excel that I am sharing in this course to then do a manual calculation of the company fundamentals. You can also use websites like (link to the Screener : where you can dynamically apply the level 1 fundamental screens for example filtering on low P/E, low D/E, etc. The second part of my answer related to the Intelligent Investor book question : the 2 most important chapters are 8 and 20, 8 is about The Investor and Market Fluctuations and 20 about the Safety Margin. I like personnaly chapter 7 as well. hope I was able to answer both questions. with thanks, Candi
  • Hi Candi - Im working through this great course and you have mentioned levels a few times. Level 1 and Level 2. What do you mean by these. Thanks
    hi Raj, thanks for your question. when I speak about level 1, level 2 & level 3 I refer in fact to the tests that you are learning through the course and how they are categorized. Level 1 tests are the fundamental tests which are described in chapter 3 from blue chips to solvency/debt to equity. Level 2 tests are a little bit more complex hence categorized separately from level 1 as level 2 require a real calculation (you can use the Excel file for that of course that comes with the course). Level 3 are the tests they are added on top of 1 & 2 for trying to determine the moat of a company. I have separated them from L1 (which are more ratio tests), L2 (which are IV calculation tests) from L3 which is my ongoing work to complement L1 & L2 for moat determination. Hope it clarifies. thanks
  • How retiring treasury share can increase book value of BASF? I don't understand as it should have a net zero effect on book value because crediting treasury stock balance would also cause debit effect on common stock, additional paid in capital and retained earning balance?
    hi Tushar, thanks for your question. When you extinguish treasury shares it does increase the equity of your balance sheet. let me take a very simple example. Let us imagine that the company has a balance sheet of 200kUSD in assets and 200kUSD in liabilities+equity with equity being 100kUSD just for the sake of the example. in the 100k of equity in fact it is 110k of equity & -10k of treasury shares. Remember that treasury shares are carried at negative amounts in the equity part of the balance sheet. When you extinguish those 10k of treasure shares, your equity goes from 110k - 10k to 110k -10k + 10k = 110k. So the company has provided you as shareholder a 10% increase in book value by the extinction of the treasury shares. let's imagine the same company with initially 100k of equity had 10k shares outstanding, the book value before the treasury share extinguishment was of 100K/10k of shares = 10 USD book value a share. Now the calculation is 110k/10k of shares = 11 USD book value per share hence the 11 USD book value compared to the previous 10 USD per share is indeed a +10% increase of book value. Just to be complete in my explanation as some people mix up the share buyback with the extinction of the share buyback. The share buyback reduces the amount of shares outstanding adding a negative amount on the equity. The extinction of share buyback no longer touches the amount of shares outstanding as this was done when the share buyback takes place but the extinction of the previously done share buyback increases the equity without touching the diluted number of shares. Remember that typical cycle on share buybacks is step 1) the company uses cash to buy back shares from other shareholders, carries these shares in the balance sheet and then step 2) the company could do (like BASF, Telefonica) a treasury share extinction. hope this clarifies and answers your question. Do not hesitate to come back to me for any further question or information thanks Candi
  • Hello Candi, i have a question, when calculating dividend cash per share it is dividend amount on financial cash flow section divided by number of outstanding diluted shares and then to get the % of dividend cash per share per year its the result of the previous operation divided by the current share price... but to calculate the % of anual return of buyback how would that work? exacly the same formulas but using the share buyback amount?Thanks in advance
    hello ThaHawaiiaN, thanks for your question and it is a question that crosses my mind when buying or reinforcing existing positions as I do a final sanity check by looking at the curve. When the curve is at its highest point I really try to review if the scope has changed or I miss something. Giving you a concrete example on Daimler : Daimler has spinned out Daimler Truck in the last weeks and obviously the Daimler curve took a hit as they removed around 1/6 of their balance sheet assets into Daimler Truck Group (DTG). If you would not know that you would not understand the story behind the drop in the curve. When some traders only look at curves trying to guess movements & patterns from the curve, they may probably miss to understand / looking into how the balance sheet has evolved. Next example : if Microsoft consolidates the Activision/Blizzard assets in its balance sheet, how will that impact the curve vs looking at the curve before the consolidation of ATVI. The price that could/should reflect the intrinsic value including the new added earnings/cash flows of the ATVI integration should be reflected in how the market prices Microsoft, the new Microsoft + ATVI. So to summarize I tend to have a look and if all attributes are a PASS including underpricing of the share by 25-30% and still the curve is at its maximum, I try to review if I missed sth in the story (if the balance sheet has made movements that could explain the highest point in the curve). If there is nothing tangible that I can find, I will probably still invest into it. For the investments over the last 4-5 years that were close to what you are describing here, I had Nestle & Rio Tinto that were close to it. I bought Nestle at 96 nearly at it highest and Rio Tinto I just made a very substantial investment at approx 74. If you look at the curves of Nestle & Rio Tinto, it may not be precisely their peak but I was not very far away from their peak. hope my explanations helps & it gives you some insights how I think about your question/scenario. thanks Candi
  • What about return on advertisement you can sell a crappy product until enough people start finding out it's crappy with good advertising but without advertising you couldn't sell the best product in the world. What do you think and how would you set that up
    hi Jeffrey, very interesting question. I would call it "Return on Marketing Investment" (ROMI). Actually many companies give to their Marketing leads such a metric as performance measurement on how well Marketing operates. When I have to deal with ROMI there are 2 divisions of ROMI being : 1) you can directly measure ROMI on tangible elements like new customers acquired, variation in Net Promoter Score, generation of sales leads into the sales pipeline, traffic conversion, etc. 2) more difficult measures of ROMI are when direct dollar spent is linked to brand management, untargeted advertisement like in airports, etc. where it is more about brand perception If you are working inside the company you can have access to the necessary information to measure ROMI but otherwise such information will not be shared with shareholders or investors who would read a 10Q/10K report. If you want to give it a try, I would recommend you looking at the income statement and more specifically the SGA part (Sales, General & Administration) and read the financial reporting note linked to SGA to see if the company provides any measure of performance like for example separating total marketing spent. I would then calculate a ROMI = net profit / marketing spent to calculate the performance. Alternative could ROMI = YoY variation of revenues / marketing spent to capture the growth in revenues on the marketing spent. Imagine doing this by product or customer segment/geography but again I am expecting that as external investors we will not get the SGA figures to be able to calculate this. I looked up the latest quarterly reports of AbbVie & GSK and if you search for the term marketing it appears only a couple of times and the SGA notes do not carry any kind of information to be able to calculate this. So as I was expecting this kind of information will not be disclosed by companies hope this fuels your thoughts and thanks for having asked it thanks Candi
  • Hello Candi, First, I want to thank you for this high quality course. I want to know how can get last 10 years financial data for companies. I started to look at some websites like and but they only provide 3 or 4 years data. Do you suggest have some reliable websites that provide more data. Kind regards Youssef
    hi Youssef yes of course feel free to ask any question. On your questions let me reply to you point by point : 1) in the file in fact I have prepared in the Excel file a 2nd scenario where you can only have a different share price and different return. this allows you in the same sheet to have the full current calculation with current share price including all variables that you need to get the calculations of the IV, yield, etc. The 2nd part is just to be able to put a fictious/hypothetical scenario with a hypothetical share price and potentially a different return just in case in the same sheet so that you do not need to switch between 2 Excel sheets. hope it clarifies. 2) I look at 30 years as for the companies I invest into I expect them still to be around in 30 years. This is also what Warren Buffett does. Obviously you can go for 10 or 20 years if you believe the company you are investing into will potentially not be around. Example : I believe that Unilever or Daimler will still be around in 30 years hence I can afford of looking at their 30 year intrinsic value. Obviously if you would invest into companies like Spotify under the assumption that all other value investment criteria are met (passive yield, market is giving you the company with a good safety margin vs intrinsic value, debt, positive earnings history, etc....) probably it would be more reasonable to look at those companies on a 10 year basis. You see that your own judgment is required here but to answer in a short way I take 30 years 3) personnally on the debt line I take a subset of non-current considering that taxes, employment/pension liabilities, etc. are probably marginal I exclude them and really look at the long-term debt that for many companies may come from corporate obligations/bonds. Again judgment is required here. If tax liabilities & pensions are small I take long-term debt only. Obviously you will be on the safer side taking a higher portion of debt if you include the total of non-current liabilities in the balance sheet instead of a subset. By taking a higher portion eventually your Debt to Equity will change between calculating a total non-current liability / equity vs a subset of non-current liabilities / equity. hope it clarifies hope those answers are useful for you. thanks & kind regards Candi
  • How did you come up with the number 4204907 in the discounted earning? When I do my calculations 7% of 4499250 is 314947…. And when I subtract that number from 4499250 I come up with 4184303 for the discounted earnings …. am I doing my calculations wrong or something…? Please help
    hi Galin I have been reviewing the DCF/DFE table with the 4.204.907 figure. If you look 2 slides earlier in the lecture you see the formula that says that DCF uses the Cash flow and DIVIDES it by (1+rate)^n with n being the year. In the year 1 calculation the rate is 7% as you say and the formula will 4.499.250/(1+7%)^1 as n = 1 as year 1 so the formula calculates 4499250/(1,07) = 4204907. If you do the control 4204907/4499250 gives the discount factor of 0.9345 (I put 0.93 in the table). Obviously the figure in year 2 with the same discount rate of 7% will be the earnings of 4.499.250 + the growth rate between both years (assumption is at 3%). hence the formula goes for year 2, the year 2 earnings which are 4.634.228/(1,07)^2 n is now 2 as we are in year 2. so the calculation is 4634228/(1.1449) due to the fact that we discount 2 years (1,07^2) = 1.1449 which gives as a result 4 047 714. This is normal as the same amount of money is worth less in 2 years than next year hence the difference in the discount rate between the 2 years (1,07)^1 for year 1 and (1,07)^2 for year 2, etc. Hope this clarifies. If not obviously do not hesitate to come back to me, happy to go deeper into it. thanks a lot Candi
  • Hi there! I have a question about the way of analysing a company. Or more specifically how many years of financial statements should I put on a test for single company? For example If I have years 2020/2019/2018, should I play the tests only for 2020 because it was the most recent year or should I play the tests for all of them?
    hello Galin, thanks for your question. You need to differentiate tests that are multiyear (like for example the test that looks at earnings consistency for which I try to look at least 5 if not 10 years back) from the tests that are based on the balance sheet. Remember that balance sheet is the stock of wealth of the company since its inception hence it cumulates the good and bad results over time. For example the Debt to Equity test is a single quarter/year test (taking the latest financial report with its balance sheet is enough). Return on Invested Capital or Assets is the same, you take latest income & latest position in the balance sheet. Now for the dividend tests I tend to use a 3 year average to determine the amount of dividends or buybacks the company is paying out. Only exception is for example when the company grows its dividends year over year (dividend king/dividend aristocrat) then I take the last one as the baseline for the DDM and Gordon test. let me know if this helps you already as a first explanation and do not hesitate to ask further here of course. thanks a lot Candi
  • hi - I have finished reading a few warren buffet books (including intelligent investor) however your course on value investing - does it cover reading financial statements or how to analyse them or is your seperate course (The Art of Reading Financial Statements - Practitioner Level) more suited to this. Will your value investing course show where to look for these companies or how to start looking for them and will it show how to work out intrinsic values.
    hi Raj, the course The Art of Value Investing will cover the basic about the elements you have to extract from the financial statements to be able to calculate the intrinsic value. The intention of that course is to be able to apply 3 levels of tests and be able to calculate the intrinsic value of a company by using various methods (book value, adjusted book value, discounted earnings & cash flow, dividend related valuation models). The course gives you access to a valuation file in Excel that calculates the IV based on those methods. Only condition is to provide around a dozen of variables that are explained in the Excel file. The course The Art of Reading Financials Statements is complementary to the The Art of Value Investing and should normally be taken after the first one "The Art of Value Investing". The intention of this practitioner course is not to teach how to calculate the intrinsic value of a company to investors but more providing a left to right view on how to interprete financial statements for investors. Of course it will help value investors to do this training and that is the purpose why I created this financial statement course. The Art of value Investing will describe the attributes of what appears to be sound companies from a financial perspective but also from a moat/uniqueness perspective. You will be able to use most of those attributes and apply them to small cap or mid cap companies as well but you will have use tools/websites similar to or Why am I saying most ? Because value investing is about investing often into companies that have strong brands or strong moats which as an example requires a lot of capital to replicate the company's assets. What I just described is very often not the case for small cap companies as big companies could easily enter or replicate a small cap company's assets as we may be only speaking about a couple of BUSD or BEUR if you see what I mean. In the Art of Value Investing course I discuss as well the mindset of the value investor including the circle of competence that is personal to every investor. Personnally I do not invest into financial services companies nor pharma/biotech as I am not knowledgeable on those 2 verticals and I strongly recommend in an investor's selection process to select first which industries/verticals you feel confortable with and not filterting blindly accross all sectors using the attributes you will learn in the course. so in a nutshell the financial statements should in my opinion be done after doing the Art of Value Investing training and the financial statements will not allow you to calculate the intrinsic value of a company. my apologies for the longer answer but I hope it clarifies with thanks Candi
  • Thank you for the PDF. Question: in the secondary market diagram should there be a registrar for Buyer B? Thanks.
    hello Arev, thank you for the question. in fact the registrar on the diagram is linked to Corp Inc. as Corp Inc. is obliged by corporate law to keep a registry of shareholders either internally or they are allowed to outsource this obligation by buying a registrar service (for example from Compushare). Hence the registrar is not linked to Seller A nor Buyer B but to the company's obligation of keeping a share registry. Hope it answers your question.
  • Does the shareholder of the company knows how many shares (representing equity) are issued ?
    Hi Arev, thanks for your question. Yes shareholders are aware of the amount of shares issued. There will different scenarios to your question in fact : 1) privately owned companies, the answer remains yes as probably there are only a few shareholder 2) publicly-owned companies, any shareholder will always see the reporting of the total amount of shares diluted and each reporting period and I would presume that the shareholder agreement considers that creating new shares is a reserved matter for the general assembly of shareholders 3) when new shares are printed in the event of a capital raise for example, in publicly listed companies the prospectus for the capital increase will mention it. For privately owned companies it will depend on what the shareholder agreement will say for the voting as normally no prospectus exists. hope it answers your question thanks, Candi
  • What would be the best sequence for learning your courses? I have watched the beginner course, would it be dividend or value investing next? Thanks!
    hi Arev, thanks for your question. I consider dividend investing to be a subset of value investing hence for me my recommendation would go to the value investing course as it will give you a broader perspective on the stock market and how to invest with a sound approach. The dividend investing course is more narrow and intended for people who are dividend investor (which is a subset of value investing). hope it clarifies and according I am just honestly sharing my recommendation with you. with thanks, Candi
  • Hi, regarding DCF and FCFE, when you say you want a 25-30% safety margin when looking at the intrinsic value though these 2 methods, you get results for 10, 20 and 30 years and then the intrinsic value is taking into account the IV 30 years, my question is do you look for atleast 25-30% safety margin on IV 30 years even if the first 10 years its giving -40%, 20 years is giving -10% for example and 30 years 25%? or do you expect for example 100% margin safety on iv 30 years and then divide by 3
    hello ThaHawaiiaN. that is a good question indeed and maybe a precision I would need to add to the course when I mention the safety margin as I feel that from your question it maybe not be 100% clear. So yes I look at the IV 30 years; the IV 10 and 20 are just intermediate values and obviously if the 30 years IV gives me 25-30% safety margin the IV10 & IV20 will be even better. You remember that I do NOT add a terminal value vs typical DCF methods as I believe that the terminal value only makes the business case better. By doing that my IV30 without terminal value is always worse than a IV30+terminal value which gives me a safety margin (represented by the lack of terminal value) on top of the 25-30% I am seeking on the IV30. In terms of interpretation what has to be taken into account is that I consider the companies I invest into will still be around at least in 30 years (the risk of disappearing is low but not 0 for mega & large cap blue chips to the contrary of growth companies and/or smaller caps) hence I can defend my position that an IV30 is reasonable estimation. If obviously a growth investor would invest into a company using DFE/DCF methods and would come up with an IV30 valuation, I would politely but firmly challenge the fact that the company still be around in 30 years. At least I would expect then the discount rate to be much much higher than the 6-7% I am having as the risk is higher on growth, PE & obviously VC stocks. I hope it gives you enough explanations how I think about the topic and your question and as always do not hesitate to reach out for further questions/comments you would have. thanks a lot and thanks also for your reviews, much appreciated
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