Intrinsic value of Chemtrade Logistics Income Fund - CHE-UN

Previous Close

$18.52

  Intrinsic Value

$13.97

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  Rating & Target

sell

-25%

Previous close

$18.52

 
Intrinsic value

$13.97

 
Up/down potential

-25%

 
Rating

sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of CHE-UN stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 1.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -5.32
  55.30
  50.27
  45.74
  41.67
  38.00
  34.70
  31.73
  29.06
  26.65
  24.49
  22.54
  20.78
  19.21
  17.79
  16.51
  15.36
  14.32
  13.39
  12.55
  11.79
  11.12
  10.50
  9.95
  9.46
  9.01
  8.61
  8.25
  7.92
  7.63
  7.37
Revenue, $m
  1,067
  1,657
  2,490
  3,629
  5,141
  7,095
  9,557
  12,590
  16,248
  20,579
  25,618
  31,392
  37,916
  45,199
  53,237
  62,025
  71,550
  81,797
  92,748
  104,388
  116,700
  129,672
  143,292
  157,555
  172,456
  187,998
  204,187
  221,032
  238,549
  256,756
  275,677
Variable operating expenses, $m
 
  1,682
  2,487
  3,589
  5,052
  6,942
  9,324
  12,257
  15,796
  19,985
  24,860
  30,366
  36,678
  43,722
  51,498
  59,999
  69,213
  79,125
  89,719
  100,978
  112,888
  125,436
  138,612
  152,408
  166,823
  181,857
  197,517
  213,812
  230,757
  248,369
  266,672
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  1,084
  1,682
  2,487
  3,589
  5,052
  6,942
  9,324
  12,257
  15,796
  19,985
  24,860
  30,366
  36,678
  43,722
  51,498
  59,999
  69,213
  79,125
  89,719
  100,978
  112,888
  125,436
  138,612
  152,408
  166,823
  181,857
  197,517
  213,812
  230,757
  248,369
  266,672
Operating income, $m
  -17
  -24
  3
  40
  89
  153
  234
  333
  452
  594
  758
  1,025
  1,239
  1,476
  1,739
  2,026
  2,337
  2,672
  3,030
  3,410
  3,812
  4,236
  4,681
  5,146
  5,633
  6,141
  6,670
  7,220
  7,792
  8,387
  9,005
EBITDA, $m
  131
  190
  285
  416
  589
  813
  1,095
  1,443
  1,862
  2,358
  2,936
  3,598
  4,345
  5,180
  6,101
  7,108
  8,200
  9,374
  10,629
  11,963
  13,374
  14,861
  16,422
  18,057
  19,764
  21,546
  23,401
  25,331
  27,339
  29,425
  31,594
Interest expense (income), $m
  32
  31
  59
  99
  153
  226
  319
  437
  582
  756
  963
  1,204
  1,480
  1,792
  2,140
  2,524
  2,944
  3,400
  3,889
  4,413
  4,969
  5,558
  6,178
  6,829
  7,510
  8,222
  8,965
  9,739
  10,544
  11,381
  12,251
Earnings before tax, $m
  -79
  -55
  -56
  -59
  -64
  -72
  -85
  -104
  -129
  -163
  -205
  -179
  -242
  -316
  -401
  -498
  -607
  -728
  -860
  -1,003
  -1,157
  -1,322
  -1,497
  -1,682
  -1,877
  -2,082
  -2,296
  -2,519
  -2,752
  -2,994
  -3,247
Tax expense, $m
  -78
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -13
  -55
  -56
  -59
  -64
  -72
  -85
  -104
  -129
  -163
  -205
  -179
  -242
  -316
  -401
  -498
  -607
  -728
  -860
  -1,003
  -1,157
  -1,322
  -1,497
  -1,682
  -1,877
  -2,082
  -2,296
  -2,519
  -2,752
  -2,994
  -3,247

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  15
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  2,162
  3,334
  5,010
  7,302
  10,345
  14,276
  19,230
  25,331
  32,692
  41,406
  51,545
  63,162
  76,290
  90,943
  107,118
  124,800
  143,964
  164,581
  186,616
  210,036
  234,809
  260,909
  288,314
  317,011
  346,994
  378,266
  410,839
  444,733
  479,977
  516,611
  554,682
Adjusted assets (=assets-cash), $m
  2,147
  3,334
  5,010
  7,302
  10,345
  14,276
  19,230
  25,331
  32,692
  41,406
  51,545
  63,162
  76,290
  90,943
  107,118
  124,800
  143,964
  164,581
  186,616
  210,036
  234,809
  260,909
  288,314
  317,011
  346,994
  378,266
  410,839
  444,733
  479,977
  516,611
  554,682
Revenue / Adjusted assets
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
  0.497
Average production assets, $m
  1,172
  1,819
  2,734
  3,985
  5,645
  7,790
  10,494
  13,824
  17,840
  22,595
  28,128
  34,468
  41,632
  49,628
  58,455
  68,104
  78,562
  89,813
  101,837
  114,618
  128,137
  142,380
  157,335
  172,995
  189,357
  206,422
  224,197
  242,693
  261,927
  281,918
  302,693
Working capital, $m
  10
  48
  72
  105
  149
  206
  277
  365
  471
  597
  743
  910
  1,100
  1,311
  1,544
  1,799
  2,075
  2,372
  2,690
  3,027
  3,384
  3,760
  4,155
  4,569
  5,001
  5,452
  5,921
  6,410
  6,918
  7,446
  7,995
Total debt, $m
  850
  1,597
  2,674
  4,145
  6,098
  8,622
  11,802
  15,720
  20,446
  26,039
  32,549
  40,007
  48,435
  57,842
  68,227
  79,578
  91,882
  105,118
  119,264
  134,300
  150,204
  166,960
  184,555
  202,978
  222,227
  242,304
  263,216
  284,975
  307,603
  331,122
  355,563
Total liabilities, $m
  1,393
  2,140
  3,217
  4,688
  6,641
  9,165
  12,345
  16,263
  20,989
  26,582
  33,092
  40,550
  48,978
  58,385
  68,770
  80,121
  92,425
  105,661
  119,807
  134,843
  150,747
  167,503
  185,098
  203,521
  222,770
  242,847
  263,759
  285,518
  308,146
  331,665
  356,106
Total equity, $m
  769
  1,194
  1,794
  2,614
  3,703
  5,111
  6,884
  9,069
  11,704
  14,823
  18,453
  22,612
  27,312
  32,558
  38,348
  44,678
  51,539
  58,920
  66,809
  75,193
  84,062
  93,405
  103,216
  113,490
  124,224
  135,419
  147,080
  159,214
  171,832
  184,947
  198,576
Total liabilities and equity, $m
  2,162
  3,334
  5,011
  7,302
  10,344
  14,276
  19,229
  25,332
  32,693
  41,405
  51,545
  63,162
  76,290
  90,943
  107,118
  124,799
  143,964
  164,581
  186,616
  210,036
  234,809
  260,908
  288,314
  317,011
  346,994
  378,266
  410,839
  444,732
  479,978
  516,612
  554,682
Debt-to-equity ratio
  1.105
  1.340
  1.490
  1.590
  1.650
  1.690
  1.710
  1.730
  1.750
  1.760
  1.760
  1.770
  1.770
  1.780
  1.780
  1.780
  1.780
  1.780
  1.790
  1.790
  1.790
  1.790
  1.790
  1.790
  1.790
  1.790
  1.790
  1.790
  1.790
  1.790
  1.790
Adjusted equity ratio
  0.351
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358
  0.358

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -13
  -55
  -56
  -59
  -64
  -72
  -85
  -104
  -129
  -163
  -205
  -179
  -242
  -316
  -401
  -498
  -607
  -728
  -860
  -1,003
  -1,157
  -1,322
  -1,497
  -1,682
  -1,877
  -2,082
  -2,296
  -2,519
  -2,752
  -2,994
  -3,247
Depreciation, amort., depletion, $m
  148
  214
  283
  376
  500
  660
  862
  1,110
  1,410
  1,765
  2,178
  2,572
  3,107
  3,704
  4,362
  5,082
  5,863
  6,702
  7,600
  8,554
  9,562
  10,625
  11,741
  12,910
  14,131
  15,405
  16,731
  18,111
  19,547
  21,039
  22,589
Funds from operations, $m
  104
  159
  226
  317
  436
  587
  776
  1,006
  1,280
  1,602
  1,972
  2,393
  2,865
  3,388
  3,961
  4,584
  5,256
  5,975
  6,740
  7,551
  8,405
  9,303
  10,244
  11,228
  12,254
  13,323
  14,436
  15,592
  16,795
  18,044
  19,342
Change in working capital, $m
  -49
  17
  24
  33
  44
  57
  71
  88
  106
  126
  146
  167
  189
  211
  233
  255
  276
  297
  318
  338
  357
  376
  395
  414
  432
  451
  469
  489
  508
  528
  549
Cash from operations, $m
  153
  142
  202
  284
  392
  531
  705
  918
  1,174
  1,476
  1,826
  2,226
  2,676
  3,177
  3,728
  4,329
  4,979
  5,678
  6,422
  7,213
  8,048
  8,927
  9,849
  10,814
  11,822
  12,872
  13,966
  15,104
  16,287
  17,516
  18,794
Maintenance CAPEX, $m
  0
  -87
  -136
  -204
  -297
  -421
  -581
  -783
  -1,032
  -1,331
  -1,686
  -2,099
  -2,572
  -3,107
  -3,704
  -4,362
  -5,082
  -5,863
  -6,702
  -7,600
  -8,554
  -9,562
  -10,625
  -11,741
  -12,910
  -14,131
  -15,405
  -16,731
  -18,111
  -19,547
  -21,039
New CAPEX, $m
  -57
  -648
  -915
  -1,251
  -1,660
  -2,145
  -2,703
  -3,330
  -4,017
  -4,755
  -5,533
  -6,340
  -7,164
  -7,996
  -8,827
  -9,649
  -10,458
  -11,251
  -12,025
  -12,780
  -13,519
  -14,243
  -14,955
  -15,660
  -16,362
  -17,065
  -17,775
  -18,496
  -19,233
  -19,991
  -20,775
Cash from investing activities, $m
  -51
  -735
  -1,051
  -1,455
  -1,957
  -2,566
  -3,284
  -4,113
  -5,049
  -6,086
  -7,219
  -8,439
  -9,736
  -11,103
  -12,531
  -14,011
  -15,540
  -17,114
  -18,727
  -20,380
  -22,073
  -23,805
  -25,580
  -27,401
  -29,272
  -31,196
  -33,180
  -35,227
  -37,344
  -39,538
  -41,814
Free cash flow, $m
  102
  -593
  -848
  -1,171
  -1,566
  -2,036
  -2,580
  -3,195
  -3,874
  -4,610
  -5,393
  -6,213
  -7,060
  -7,926
  -8,802
  -9,682
  -10,561
  -11,436
  -12,305
  -13,167
  -14,024
  -14,878
  -15,731
  -16,587
  -17,450
  -18,324
  -19,214
  -20,123
  -21,058
  -22,022
  -23,020
Issuance/(repayment) of debt, $m
  -4
  762
  1,076
  1,471
  1,953
  2,524
  3,180
  3,917
  4,726
  5,594
  6,509
  7,458
  8,428
  9,407
  10,384
  11,352
  12,304
  13,236
  14,147
  15,036
  15,904
  16,756
  17,594
  18,424
  19,249
  20,077
  20,912
  21,760
  22,627
  23,519
  24,441
Issuance/(repurchase) of shares, $m
  0
  480
  656
  879
  1,153
  1,480
  1,859
  2,289
  2,765
  3,282
  3,835
  4,338
  4,942
  5,561
  6,192
  6,828
  7,468
  8,109
  8,748
  9,387
  10,026
  10,666
  11,308
  11,956
  12,611
  13,277
  13,957
  14,653
  15,370
  16,109
  16,876
Cash from financing (excl. dividends), $m  
  -12
  1,242
  1,732
  2,350
  3,106
  4,004
  5,039
  6,206
  7,491
  8,876
  10,344
  11,796
  13,370
  14,968
  16,576
  18,180
  19,772
  21,345
  22,895
  24,423
  25,930
  27,422
  28,902
  30,380
  31,860
  33,354
  34,869
  36,413
  37,997
  39,628
  41,317
Total cash flow (excl. dividends), $m
  90
  649
  884
  1,180
  1,541
  1,968
  2,459
  3,011
  3,616
  4,266
  4,952
  5,583
  6,309
  7,042
  7,774
  8,498
  9,211
  9,908
  10,590
  11,256
  11,906
  12,544
  13,171
  13,792
  14,410
  15,029
  15,655
  16,290
  16,939
  17,606
  18,297
Retained Cash Flow (-), $m
  112
  -480
  -656
  -879
  -1,153
  -1,480
  -1,859
  -2,289
  -2,765
  -3,282
  -3,835
  -4,338
  -4,942
  -5,561
  -6,192
  -6,828
  -7,468
  -8,109
  -8,748
  -9,387
  -10,026
  -10,666
  -11,308
  -11,956
  -12,611
  -13,277
  -13,957
  -14,653
  -15,370
  -16,109
  -16,876
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  169
  228
  301
  388
  488
  601
  723
  852
  984
  1,116
  1,245
  1,368
  1,481
  1,582
  1,670
  1,742
  1,800
  1,842
  1,868
  1,880
  1,878
  1,863
  1,836
  1,799
  1,753
  1,698
  1,636
  1,569
  1,497
  1,421
Discount rate, %
 
  7.80
  8.19
  8.60
  9.03
  9.48
  9.95
  10.45
  10.98
  11.52
  12.10
  12.71
  13.34
  14.01
  14.71
  15.44
  16.22
  17.03
  17.88
  18.77
  19.71
  20.70
  21.73
  22.82
  23.96
  25.16
  26.41
  27.73
  29.12
  30.58
  32.11
PV of cash for distribution, $m
 
  157
  195
  235
  274
  310
  340
  360
  370
  369
  356
  334
  304
  269
  232
  194
  157
  124
  95
  71
  51
  36
  25
  16
  10
  6
  4
  2
  1
  1
  0
Current shareholders' claim on cash, %
  100
  78.1
  62.6
  51.3
  42.8
  36.3
  31.2
  27.1
  23.9
  21.2
  19.0
  17.2
  15.6
  14.3
  13.2
  12.2
  11.4
  10.6
  9.9
  9.4
  8.8
  8.3
  7.9
  7.5
  7.2
  6.8
  6.5
  6.3
  6.0
  5.8
  5.5

Chemtrade Logistics Income Fund (Chemtrade) provides industrial chemicals and services. Chemtrade operates in four business segments: Sulphur Products & Performance Chemicals (SPPC), Water Solutions & Specialty Chemicals (WSSC), International (Intl) and Corporate (Corp). Its SPPC segment markets, removes and produces merchant, regenerated sulfuric acid, liquid sulfur dioxide, sodium hydrosulfite, elemental sulfur, hydrogen sulfide, and sodium bisulfite and other processing services. Its WSSC segment manufactures and markets a range of inorganic coagulants used in water treatment, including aluminum sulfate, aluminum chlorohydrate, polyaluminum chloride and ferric sulfate, and various specialty chemicals. The Company's Intl segment provides removal and marketing services for elemental sulfur and sulfuric acid. Its Corp segment provides centralized services, such as treasury, finance, information technology, human resources, legal and risk management.

FINANCIAL RATIOS  of  Chemtrade Logistics Income Fund (CHE-UN)

Valuation Ratios
P/E Ratio -98.5
Price to Sales 1.2
Price to Book 1.7
Price to Tangible Book
Price to Cash Flow 8.4
Price to Free Cash Flow 13.3
Growth Rates
Sales Growth Rate -5.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -10.9%
Cap. Spend. - 3 Yr. Gr. Rate 2.7%
Financial Strength
Quick Ratio 0
Current Ratio 0.2
LT Debt to Equity 105.9%
Total Debt to Equity 110.5%
Interest Coverage -1
Management Effectiveness
Return On Assets -0.6%
Ret/ On Assets - 3 Yr. Avg. 0.3%
Return On Total Capital -0.8%
Ret/ On T. Cap. - 3 Yr. Avg. -0.6%
Return On Equity -1.6%
Return On Equity - 3 Yr. Avg. -1.2%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 7.8%
Gross Margin - 3 Yr. Avg. 8%
EBITDA Margin 9.5%
EBITDA Margin - 3 Yr. Avg. 10.5%
Operating Margin -1.6%
Oper. Margin - 3 Yr. Avg. -1.4%
Pre-Tax Margin -7.4%
Pre-Tax Margin - 3 Yr. Avg. -6.4%
Net Profit Margin -1.2%
Net Profit Margin - 3 Yr. Avg. -1.2%
Effective Tax Rate 98.7%
Eff/ Tax Rate - 3 Yr. Avg. 62.7%
Payout Ratio -638.5%

CHE-UN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CHE-UN stock intrinsic value calculation we used $1067 million for the last fiscal year's total revenue generated by Chemtrade Logistics Income Fund. The default revenue input number comes from 2016 income statement of Chemtrade Logistics Income Fund. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CHE-UN stock valuation model: a) initial revenue growth rate of 55.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 7.8%, whose default value for CHE-UN is calculated based on our internal credit rating of Chemtrade Logistics Income Fund, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Chemtrade Logistics Income Fund.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CHE-UN stock the variable cost ratio is equal to 104.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for CHE-UN stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.7% for Chemtrade Logistics Income Fund.

Corporate tax rate of 27% is the nominal tax rate for Chemtrade Logistics Income Fund. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CHE-UN stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CHE-UN are equal to 109.8%.

Life of production assets of 13.4 years is the average useful life of capital assets used in Chemtrade Logistics Income Fund operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CHE-UN is equal to 2.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $769 million for Chemtrade Logistics Income Fund - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 92.333 million for Chemtrade Logistics Income Fund is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Chemtrade Logistics Income Fund at the current share price and the inputted number of shares is $1.7 billion.

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Financial statements of CHE-UN
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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