Intrinsic value of Chartwell Retirement Residences - CSH-UN

Previous Close

$15.92

  Intrinsic Value

$0.98

stock screener

  Rating & Target

str. sell

-94%

Previous close

$15.92

 
Intrinsic value

$0.98

 
Up/down potential

-94%

 
Rating

str. sell

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

We calculate the intrinsic value of CSH-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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  10.50
  7.30
  7.07
  6.86
  6.68
  6.51
  6.36
  6.22
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
  5.58
  5.53
  5.47
  5.43
  5.38
  5.35
  5.31
  5.28
  5.25
  5.23
  5.20
  5.18
  5.17
  5.15
  5.13
  5.12
  5.11
Revenue, $m
  758
  813
  871
  931
  993
  1,057
  1,125
  1,195
  1,267
  1,343
  1,422
  1,505
  1,591
  1,681
  1,775
  1,873
  1,976
  2,083
  2,195
  2,312
  2,435
  2,563
  2,698
  2,839
  2,987
  3,142
  3,304
  3,474
  3,652
  3,839
  4,036
Variable operating expenses, $m
 
  727
  779
  832
  888
  945
  1,005
  1,068
  1,133
  1,201
  1,272
  1,345
  1,422
  1,503
  1,587
  1,674
  1,766
  1,862
  1,962
  2,067
  2,177
  2,292
  2,412
  2,538
  2,670
  2,809
  2,954
  3,106
  3,265
  3,432
  3,608
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
  682
  727
  779
  832
  888
  945
  1,005
  1,068
  1,133
  1,201
  1,272
  1,345
  1,422
  1,503
  1,587
  1,674
  1,766
  1,862
  1,962
  2,067
  2,177
  2,292
  2,412
  2,538
  2,670
  2,809
  2,954
  3,106
  3,265
  3,432
  3,608
Operating income, $m
  76
  86
  92
  99
  105
  112
  119
  127
  134
  142
  151
  160
  169
  178
  188
  199
  209
  221
  233
  245
  258
  272
  286
  301
  317
  333
  350
  368
  387
  407
  428
EBITDA, $m
  223
  244
  261
  279
  298
  317
  337
  358
  380
  403
  427
  451
  477
  504
  532
  562
  592
  625
  658
  693
  730
  769
  809
  851
  896
  942
  991
  1,042
  1,095
  1,151
  1,210
Interest expense (income), $m
  73
  73
  79
  85
  91
  98
  105
  112
  119
  127
  135
  143
  152
  161
  170
  180
  190
  201
  212
  224
  236
  249
  263
  277
  292
  307
  324
  341
  358
  377
  397
Earnings before tax, $m
  -1
  13
  13
  14
  14
  14
  15
  15
  15
  16
  16
  17
  17
  18
  18
  19
  19
  20
  20
  21
  22
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
Tax expense, $m
  0
  4
  4
  4
  4
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  5
  5
  6
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
Net income, $m
  5
  10
  10
  10
  10
  10
  11
  11
  11
  11
  12
  12
  12
  13
  13
  14
  14
  14
  15
  15
  16
  16
  17
  18
  18
  19
  19
  20
  21
  22
  23

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  30
  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
  2,797
  2,968
  3,178
  3,396
  3,623
  3,859
  4,104
  4,360
  4,626
  4,903
  5,192
  5,493
  5,807
  6,135
  6,478
  6,836
  7,210
  7,601
  8,010
  8,438
  8,887
  9,356
  9,847
  10,362
  10,901
  11,466
  12,058
  12,679
  13,330
  14,013
  14,728
Adjusted assets (=assets-cash), $m
  2,767
  2,968
  3,178
  3,396
  3,623
  3,859
  4,104
  4,360
  4,626
  4,903
  5,192
  5,493
  5,807
  6,135
  6,478
  6,836
  7,210
  7,601
  8,010
  8,438
  8,887
  9,356
  9,847
  10,362
  10,901
  11,466
  12,058
  12,679
  13,330
  14,013
  14,728
Revenue / Adjusted assets
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
Average production assets, $m
  2,543
  2,728
  2,921
  3,121
  3,330
  3,546
  3,772
  4,007
  4,251
  4,506
  4,771
  5,048
  5,337
  5,638
  5,953
  6,282
  6,626
  6,985
  7,361
  7,755
  8,167
  8,598
  9,049
  9,522
  10,018
  10,537
  11,081
  11,652
  12,250
  12,877
  13,535
Working capital, $m
  -206
  -98
  -105
  -113
  -120
  -128
  -136
  -145
  -153
  -163
  -172
  -182
  -193
  -203
  -215
  -227
  -239
  -252
  -266
  -280
  -295
  -310
  -326
  -344
  -361
  -380
  -400
  -420
  -442
  -465
  -488
Total debt, $m
  1,814
  1,926
  2,073
  2,226
  2,385
  2,551
  2,723
  2,903
  3,089
  3,284
  3,486
  3,698
  3,919
  4,149
  4,389
  4,641
  4,903
  5,178
  5,465
  5,766
  6,080
  6,410
  6,755
  7,116
  7,494
  7,891
  8,307
  8,743
  9,200
  9,679
  10,181
Total liabilities, $m
  1,972
  2,084
  2,231
  2,384
  2,543
  2,709
  2,881
  3,061
  3,247
  3,442
  3,644
  3,856
  4,077
  4,307
  4,547
  4,799
  5,061
  5,336
  5,623
  5,924
  6,238
  6,568
  6,913
  7,274
  7,652
  8,049
  8,465
  8,901
  9,358
  9,837
  10,339
Total equity, $m
  825
  885
  947
  1,012
  1,080
  1,150
  1,223
  1,299
  1,378
  1,461
  1,547
  1,637
  1,730
  1,828
  1,930
  2,037
  2,149
  2,265
  2,387
  2,515
  2,648
  2,788
  2,934
  3,088
  3,248
  3,417
  3,593
  3,778
  3,972
  4,176
  4,389
Total liabilities and equity, $m
  2,797
  2,969
  3,178
  3,396
  3,623
  3,859
  4,104
  4,360
  4,625
  4,903
  5,191
  5,493
  5,807
  6,135
  6,477
  6,836
  7,210
  7,601
  8,010
  8,439
  8,886
  9,356
  9,847
  10,362
  10,900
  11,466
  12,058
  12,679
  13,330
  14,013
  14,728
Debt-to-equity ratio
  2.199
  2.180
  2.190
  2.200
  2.210
  2.220
  2.230
  2.230
  2.240
  2.250
  2.250
  2.260
  2.260
  2.270
  2.270
  2.280
  2.280
  2.290
  2.290
  2.290
  2.300
  2.300
  2.300
  2.300
  2.310
  2.310
  2.310
  2.310
  2.320
  2.320
  2.320
Adjusted equity ratio
  0.287
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  5
  10
  10
  10
  10
  10
  11
  11
  11
  11
  12
  12
  12
  13
  13
  14
  14
  14
  15
  15
  16
  16
  17
  18
  18
  19
  19
  20
  21
  22
  23
Depreciation, amort., depletion, $m
  147
  158
  169
  180
  192
  205
  218
  232
  246
  260
  276
  292
  308
  326
  344
  363
  383
  404
  426
  448
  472
  497
  523
  550
  579
  609
  641
  674
  708
  744
  782
Funds from operations, $m
  87
  167
  179
  190
  203
  215
  229
  243
  257
  272
  288
  304
  321
  339
  357
  377
  397
  418
  440
  464
  488
  513
  540
  568
  597
  628
  660
  694
  729
  766
  805
Change in working capital, $m
  -71
  -7
  -7
  -7
  -8
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
Cash from operations, $m
  158
  174
  186
  198
  210
  223
  237
  251
  266
  281
  297
  314
  331
  350
  369
  389
  409
  431
  454
  478
  503
  529
  556
  585
  615
  647
  680
  714
  751
  789
  829
Maintenance CAPEX, $m
  0
  -147
  -158
  -169
  -180
  -192
  -205
  -218
  -232
  -246
  -260
  -276
  -292
  -308
  -326
  -344
  -363
  -383
  -404
  -426
  -448
  -472
  -497
  -523
  -550
  -579
  -609
  -641
  -674
  -708
  -744
New CAPEX, $m
  -254
  -185
  -193
  -200
  -208
  -217
  -225
  -235
  -244
  -255
  -265
  -277
  -289
  -301
  -315
  -329
  -344
  -360
  -376
  -393
  -412
  -431
  -452
  -473
  -496
  -519
  -544
  -571
  -598
  -627
  -658
Cash from investing activities, $m
  -232
  -332
  -351
  -369
  -388
  -409
  -430
  -453
  -476
  -501
  -525
  -553
  -581
  -609
  -641
  -673
  -707
  -743
  -780
  -819
  -860
  -903
  -949
  -996
  -1,046
  -1,098
  -1,153
  -1,212
  -1,272
  -1,335
  -1,402
Free cash flow, $m
  -74
  -158
  -165
  -172
  -179
  -186
  -194
  -202
  -210
  -219
  -229
  -239
  -249
  -260
  -272
  -285
  -298
  -311
  -326
  -341
  -357
  -374
  -392
  -411
  -431
  -452
  -474
  -497
  -521
  -547
  -573
Issuance/(repayment) of debt, $m
  190
  142
  147
  153
  159
  166
  172
  179
  187
  195
  203
  211
  221
  230
  241
  251
  263
  275
  287
  301
  315
  329
  345
  361
  379
  397
  416
  436
  457
  479
  502
Issuance/(repurchase) of shares, $m
  0
  50
  53
  55
  57
  60
  62
  65
  68
  71
  74
  78
  81
  85
  89
  93
  98
  102
  107
  112
  118
  123
  129
  136
  143
  150
  157
  165
  173
  182
  191
Cash from financing (excl. dividends), $m  
  183
  192
  200
  208
  216
  226
  234
  244
  255
  266
  277
  289
  302
  315
  330
  344
  361
  377
  394
  413
  433
  452
  474
  497
  522
  547
  573
  601
  630
  661
  693
Total cash flow (excl. dividends), $m
  110
  33
  35
  36
  38
  39
  41
  43
  44
  46
  48
  50
  53
  55
  57
  60
  63
  65
  68
  72
  75
  78
  82
  86
  90
  95
  99
  104
  109
  114
  120
Retained Cash Flow (-), $m
  -95
  -60
  -63
  -65
  -68
  -70
  -73
  -76
  -79
  -83
  -86
  -90
  -94
  -98
  -102
  -107
  -111
  -117
  -122
  -128
  -134
  -140
  -146
  -153
  -161
  -168
  -176
  -185
  -194
  -203
  -213
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
 
  -26
  -27
  -29
  -30
  -31
  -32
  -33
  -35
  -36
  -38
  -39
  -41
  -43
  -45
  -47
  -49
  -51
  -53
  -56
  -59
  -61
  -64
  -67
  -70
  -74
  -77
  -81
  -85
  -89
  -94
Discount rate, %
 
  10.30
  10.82
  11.36
  11.92
  12.52
  13.15
  13.80
  14.49
  15.22
  15.98
  16.78
  17.62
  18.50
  19.42
  20.39
  21.41
  22.48
  23.61
  24.79
  26.03
  27.33
  28.70
  30.13
  31.64
  33.22
  34.88
  36.62
  38.45
  40.38
  42.40
PV of cash for distribution, $m
 
  -24
  -22
  -21
  -19
  -17
  -15
  -14
  -12
  -10
  -9
  -7
  -6
  -5
  -4
  -3
  -2
  -2
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  98.5
  97.1
  95.7
  94.4
  93.1
  91.9
  90.7
  89.6
  88.4
  87.3
  86.3
  85.2
  84.2
  83.2
  82.2
  81.3
  80.3
  79.4
  78.5
  77.6
  76.7
  75.9
  75.0
  74.2
  73.3
  72.5
  71.7
  70.9
  70.1
  69.3

Chartwell Retirement Residences is an unincorporated, open-ended trust. The Company indirectly owns, manages and operates a range of seniors housing communities from independent living through assisted living to long term care. Its segments include Canadian Retirement Operations and Canadian Long Term Care Operations. It owns and operates senior residences in Canada. Its portfolio of residences includes independent living residences for seniors that include retirement units/townhouses/bungalows providing meals and general services; independent supported living residences for seniors that include retirement units/townhouses/bungalows with household general services; assisted living residences for seniors requiring personal care services; memory care units for seniors having Alzheimer's or other form of dementia and requiring personal care services, and Long term care residences for people requiring professional nursing care on a daily basis and over 24-hour supervision.

FINANCIAL RATIOS  of  Chartwell Retirement Residences (CSH-UN)

Valuation Ratios
P/E Ratio 610.4
Price to Sales 4
Price to Book 3.7
Price to Tangible Book
Price to Cash Flow 19.3
Price to Free Cash Flow -31.8
Growth Rates
Sales Growth Rate 10.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -48.9%
Cap. Spend. - 3 Yr. Gr. Rate 10.8%
Financial Strength
Quick Ratio 0
Current Ratio 0.1
LT Debt to Equity 202.4%
Total Debt to Equity 219.9%
Interest Coverage 1
Management Effectiveness
Return On Assets 2.9%
Ret/ On Assets - 3 Yr. Avg. 9.4%
Return On Total Capital 0.2%
Ret/ On T. Cap. - 3 Yr. Avg. 4.8%
Return On Equity 0.6%
Return On Equity - 3 Yr. Avg. 20.4%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 34.7%
Gross Margin - 3 Yr. Avg. 32.8%
EBITDA Margin 28.9%
EBITDA Margin - 3 Yr. Avg. 33.5%
Operating Margin 10%
Oper. Margin - 3 Yr. Avg. 9.4%
Pre-Tax Margin -0.1%
Pre-Tax Margin - 3 Yr. Avg. -1.2%
Net Profit Margin 0.7%
Net Profit Margin - 3 Yr. Avg. 17.4%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. -44.3%
Payout Ratio 1660%

CSH-UN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CSH-UN stock intrinsic value calculation we used $758 million for the last fiscal year's total revenue generated by Chartwell Retirement Residences. The default revenue input number comes from 2016 income statement of Chartwell Retirement Residences. 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 CSH-UN stock valuation model: a) initial revenue growth rate of 7.3% 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 10.3%, whose default value for CSH-UN is calculated based on our internal credit rating of Chartwell Retirement Residences, 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 Chartwell Retirement Residences.
    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 CSH-UN stock the variable cost ratio is equal to 89.4%.

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 CSH-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 4.1% for Chartwell Retirement Residences.

Corporate tax rate of 27% is the nominal tax rate for Chartwell Retirement Residences. 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 CSH-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 CSH-UN are equal to 335.4%.

Life of production assets of 17.3 years is the average useful life of capital assets used in Chartwell Retirement Residences 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 CSH-UN is equal to -12.1%. 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 - $825 million for Chartwell Retirement Residences - 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 210.332 million for Chartwell Retirement Residences 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 Chartwell Retirement Residences at the current share price and the inputted number of shares is $3.3 billion.

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