Intrinsic value of Boyd Group Income Fund - BYD-UN

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$85.67

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$85.67

 
Intrinsic value

$281.83

 
Up/down potential

+229%

 
Rating

str. buy

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

We calculate the intrinsic value of BYD-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 1.6

 

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, %
  18.14
  15.00
  14.00
  13.10
  12.29
  11.56
  10.90
  10.31
  9.78
  9.30
  8.87
  8.49
  8.14
  7.82
  7.54
  7.29
  7.06
  6.85
  6.67
  6.50
  6.35
  6.22
  6.09
  5.98
  5.89
  5.80
  5.72
  5.65
  5.58
  5.52
  5.47
Revenue, $m
  1,387
  1,595
  1,818
  2,057
  2,309
  2,576
  2,857
  3,152
  3,460
  3,782
  4,118
  4,467
  4,831
  5,209
  5,602
  6,010
  6,434
  6,875
  7,334
  7,810
  8,306
  8,823
  9,360
  9,921
  10,505
  11,114
  11,749
  12,412
  13,105
  13,829
  14,586
Variable operating expenses, $m
 
  1,150
  1,307
  1,476
  1,654
  1,843
  2,041
  2,249
  2,467
  2,695
  2,932
  3,156
  3,412
  3,679
  3,957
  4,245
  4,545
  4,856
  5,180
  5,517
  5,867
  6,232
  6,612
  7,007
  7,420
  7,850
  8,299
  8,767
  9,257
  9,768
  10,302
Fixed operating expenses, $m
 
  343
  352
  361
  370
  379
  388
  398
  408
  418
  429
  440
  451
  462
  473
  485
  497
  510
  522
  536
  549
  563
  577
  591
  606
  621
  637
  653
  669
  686
  703
Total operating expenses, $m
  1,330
  1,493
  1,659
  1,837
  2,024
  2,222
  2,429
  2,647
  2,875
  3,113
  3,361
  3,596
  3,863
  4,141
  4,430
  4,730
  5,042
  5,366
  5,702
  6,053
  6,416
  6,795
  7,189
  7,598
  8,026
  8,471
  8,936
  9,420
  9,926
  10,454
  11,005
Operating income, $m
  57
  102
  159
  220
  285
  354
  427
  504
  585
  669
  757
  872
  968
  1,068
  1,172
  1,280
  1,392
  1,509
  1,631
  1,758
  1,890
  2,028
  2,172
  2,322
  2,479
  2,642
  2,814
  2,992
  3,180
  3,375
  3,580
EBITDA, $m
  91
  148
  208
  273
  342
  415
  492
  573
  658
  747
  840
  937
  1,038
  1,143
  1,253
  1,367
  1,485
  1,609
  1,737
  1,871
  2,011
  2,156
  2,308
  2,466
  2,631
  2,804
  2,984
  3,172
  3,370
  3,576
  3,792
Interest expense (income), $m
  9
  8
  11
  14
  17
  21
  24
  28
  32
  37
  41
  46
  51
  56
  61
  66
  72
  78
  84
  91
  97
  104
  111
  119
  127
  135
  143
  152
  162
  171
  181
Earnings before tax, $m
  57
  94
  148
  206
  268
  334
  403
  476
  553
  633
  716
  827
  917
  1,012
  1,111
  1,213
  1,320
  1,431
  1,547
  1,667
  1,793
  1,924
  2,061
  2,203
  2,352
  2,508
  2,670
  2,840
  3,018
  3,204
  3,399
Tax expense, $m
  27
  25
  40
  56
  72
  90
  109
  129
  149
  171
  193
  223
  248
  273
  300
  328
  356
  386
  418
  450
  484
  519
  556
  595
  635
  677
  721
  767
  815
  865
  918
Net income, $m
  30
  69
  108
  151
  196
  244
  294
  348
  403
  462
  523
  603
  670
  739
  811
  886
  964
  1,045
  1,129
  1,217
  1,309
  1,404
  1,504
  1,608
  1,717
  1,831
  1,949
  2,073
  2,203
  2,339
  2,481

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  54
  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
  738
  787
  897
  1,014
  1,139
  1,270
  1,409
  1,554
  1,706
  1,865
  2,031
  2,203
  2,382
  2,569
  2,762
  2,964
  3,173
  3,390
  3,616
  3,851
  4,096
  4,350
  4,616
  4,892
  5,180
  5,480
  5,793
  6,121
  6,462
  6,819
  7,192
Adjusted assets (=assets-cash), $m
  684
  787
  897
  1,014
  1,139
  1,270
  1,409
  1,554
  1,706
  1,865
  2,031
  2,203
  2,382
  2,569
  2,762
  2,964
  3,173
  3,390
  3,616
  3,851
  4,096
  4,350
  4,616
  4,892
  5,180
  5,480
  5,793
  6,121
  6,462
  6,819
  7,192
Revenue / Adjusted assets
  2.028
  2.027
  2.027
  2.029
  2.027
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
  2.028
Average production assets, $m
  299
  345
  393
  444
  499
  556
  617
  681
  747
  817
  889
  965
  1,043
  1,125
  1,210
  1,298
  1,390
  1,485
  1,584
  1,687
  1,794
  1,906
  2,022
  2,143
  2,269
  2,401
  2,538
  2,681
  2,831
  2,987
  3,150
Working capital, $m
  6
  -35
  -40
  -45
  -51
  -57
  -63
  -69
  -76
  -83
  -91
  -98
  -106
  -115
  -123
  -132
  -142
  -151
  -161
  -172
  -183
  -194
  -206
  -218
  -231
  -244
  -258
  -273
  -288
  -304
  -321
Total debt, $m
  192
  241
  312
  387
  467
  552
  641
  734
  832
  934
  1,041
  1,151
  1,267
  1,387
  1,511
  1,641
  1,775
  1,915
  2,060
  2,211
  2,369
  2,532
  2,703
  2,880
  3,066
  3,259
  3,460
  3,670
  3,890
  4,120
  4,360
Total liabilities, $m
  457
  506
  577
  652
  732
  817
  906
  999
  1,097
  1,199
  1,306
  1,416
  1,532
  1,652
  1,776
  1,906
  2,040
  2,180
  2,325
  2,476
  2,634
  2,797
  2,968
  3,145
  3,331
  3,524
  3,725
  3,935
  4,155
  4,385
  4,625
Total equity, $m
  281
  281
  320
  362
  407
  454
  503
  555
  609
  666
  725
  786
  850
  917
  986
  1,058
  1,133
  1,210
  1,291
  1,375
  1,462
  1,553
  1,648
  1,746
  1,849
  1,956
  2,068
  2,185
  2,307
  2,434
  2,568
Total liabilities and equity, $m
  738
  787
  897
  1,014
  1,139
  1,271
  1,409
  1,554
  1,706
  1,865
  2,031
  2,202
  2,382
  2,569
  2,762
  2,964
  3,173
  3,390
  3,616
  3,851
  4,096
  4,350
  4,616
  4,891
  5,180
  5,480
  5,793
  6,120
  6,462
  6,819
  7,193
Debt-to-equity ratio
  0.683
  0.860
  0.970
  1.070
  1.150
  1.220
  1.270
  1.320
  1.370
  1.400
  1.440
  1.460
  1.490
  1.510
  1.530
  1.550
  1.570
  1.580
  1.600
  1.610
  1.620
  1.630
  1.640
  1.650
  1.660
  1.670
  1.670
  1.680
  1.690
  1.690
  1.700
Adjusted equity ratio
  0.332
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  30
  69
  108
  151
  196
  244
  294
  348
  403
  462
  523
  603
  670
  739
  811
  886
  964
  1,045
  1,129
  1,217
  1,309
  1,404
  1,504
  1,608
  1,717
  1,831
  1,949
  2,073
  2,203
  2,339
  2,481
Depreciation, amort., depletion, $m
  34
  46
  49
  53
  57
  60
  65
  69
  73
  78
  83
  65
  70
  76
  81
  87
  93
  100
  106
  113
  120
  128
  136
  144
  152
  161
  170
  180
  190
  200
  211
Funds from operations, $m
  90
  115
  158
  204
  252
  304
  359
  416
  477
  540
  606
  668
  740
  814
  892
  973
  1,057
  1,144
  1,235
  1,330
  1,429
  1,532
  1,640
  1,752
  1,869
  1,992
  2,120
  2,253
  2,393
  2,540
  2,693
Change in working capital, $m
  -1
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
Cash from operations, $m
  91
  142
  163
  209
  258
  310
  365
  423
  483
  547
  613
  676
  748
  823
  901
  982
  1,066
  1,154
  1,246
  1,341
  1,440
  1,544
  1,652
  1,764
  1,882
  2,005
  2,134
  2,268
  2,408
  2,556
  2,709
Maintenance CAPEX, $m
  0
  -20
  -23
  -26
  -30
  -33
  -37
  -41
  -46
  -50
  -55
  -60
  -65
  -70
  -76
  -81
  -87
  -93
  -100
  -106
  -113
  -120
  -128
  -136
  -144
  -152
  -161
  -170
  -180
  -190
  -200
New CAPEX, $m
  -12
  -46
  -48
  -51
  -55
  -58
  -61
  -64
  -67
  -70
  -72
  -75
  -79
  -82
  -85
  -88
  -92
  -95
  -99
  -103
  -107
  -112
  -116
  -121
  -126
  -132
  -137
  -143
  -150
  -156
  -163
Cash from investing activities, $m
  -118
  -66
  -71
  -77
  -85
  -91
  -98
  -105
  -113
  -120
  -127
  -135
  -144
  -152
  -161
  -169
  -179
  -188
  -199
  -209
  -220
  -232
  -244
  -257
  -270
  -284
  -298
  -313
  -330
  -346
  -363
Free cash flow, $m
  -27
  76
  91
  131
  174
  219
  267
  318
  371
  427
  486
  541
  604
  671
  740
  812
  887
  966
  1,047
  1,132
  1,220
  1,312
  1,408
  1,508
  1,612
  1,721
  1,835
  1,954
  2,079
  2,209
  2,346
Issuance/(repayment) of debt, $m
  18
  66
  71
  76
  80
  85
  89
  93
  98
  102
  106
  111
  115
  120
  125
  129
  135
  140
  145
  151
  157
  164
  170
  178
  185
  193
  201
  210
  220
  230
  240
Issuance/(repurchase) of shares, $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
  0
Cash from financing (excl. dividends), $m  
  18
  66
  71
  76
  80
  85
  89
  93
  98
  102
  106
  111
  115
  120
  125
  129
  135
  140
  145
  151
  157
  164
  170
  178
  185
  193
  201
  210
  220
  230
  240
Total cash flow (excl. dividends), $m
  -10
  142
  162
  207
  254
  304
  356
  411
  469
  529
  592
  651
  720
  791
  865
  942
  1,022
  1,105
  1,192
  1,283
  1,377
  1,476
  1,578
  1,685
  1,797
  1,914
  2,037
  2,165
  2,298
  2,439
  2,585
Retained Cash Flow (-), $m
  -96
  -37
  -39
  -42
  -44
  -47
  -49
  -52
  -54
  -57
  -59
  -62
  -64
  -67
  -69
  -72
  -75
  -78
  -81
  -84
  -87
  -91
  -95
  -99
  -103
  -107
  -112
  -117
  -122
  -127
  -133
Prev. year cash balance distribution, $m
 
  37
  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
 
  142
  123
  165
  209
  257
  307
  359
  415
  473
  533
  590
  656
  724
  796
  870
  947
  1,028
  1,112
  1,199
  1,290
  1,385
  1,484
  1,587
  1,695
  1,807
  1,925
  2,048
  2,177
  2,311
  2,452
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  136
  112
  143
  172
  199
  223
  243
  259
  271
  279
  280
  280
  275
  267
  255
  241
  224
  205
  185
  164
  143
  123
  104
  86
  70
  56
  44
  34
  25
  18
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Boyd Group Income Fund operates as an unincorporated open-ended mutual fund trust in the United States and Canada. The company, through its operating company, The Boyd Group Inc., operates non-franchised collision repair centers that serve insurance companies, individual vehicle owners, and fleet and lease customers. It offers automotive collision and glass repair, and vehicle glass repair and replacement services. As of March 27, 2015, it operated locations in 5 Canadian provinces under the Boyd Autobody & Glass trade name, as well as in the 17 states of the United States under the Gerber Collision & Glass, Champ's Collision Centers, and Craftmaster Auto Body trade names; and as a retail auto glass operator in the 29 states of the United States under the Gerber Collision & Glass, Glass America, Auto Glass Services, Autoglassonly.com, and Auto Glass Authority trade names. The company also operated approximately 5,500 affiliated glass provider locations and 4,600 affiliated emergency roadside services provider locations in the United States. Boyd Group Income Fund is headquartered in Winnipeg, Canada.

FINANCIAL RATIOS  of  Boyd Group Income Fund (BYD-UN)

Valuation Ratios
P/E Ratio 52.2
Price to Sales 1.1
Price to Book 5.6
Price to Tangible Book
Price to Cash Flow 17.2
Price to Free Cash Flow 19.8
Growth Rates
Sales Growth Rate 18.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 20%
Cap. Spend. - 3 Yr. Gr. Rate 24.6%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity 62.3%
Total Debt to Equity 68.3%
Interest Coverage 7
Management Effectiveness
Return On Assets 5%
Ret/ On Assets - 3 Yr. Avg. 8.8%
Return On Total Capital 6.9%
Ret/ On T. Cap. - 3 Yr. Avg. -1.8%
Return On Equity 12.9%
Return On Equity - 3 Yr. Avg. -4.8%
Asset Turnover 2
Profitability Ratios
Gross Margin 8.9%
Gross Margin - 3 Yr. Avg. 8.6%
EBITDA Margin 7.2%
EBITDA Margin - 3 Yr. Avg. 4.4%
Operating Margin 4.1%
Oper. Margin - 3 Yr. Avg. 1.2%
Pre-Tax Margin 4.1%
Pre-Tax Margin - 3 Yr. Avg. 1.2%
Net Profit Margin 2.2%
Net Profit Margin - 3 Yr. Avg. -0.5%
Effective Tax Rate 47.4%
Eff/ Tax Rate - 3 Yr. Avg. -409.2%
Payout Ratio 30%

BYD-UN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BYD-UN stock intrinsic value calculation we used $1387 million for the last fiscal year's total revenue generated by Boyd Group Income Fund. The default revenue input number comes from 2016 income statement of Boyd Group 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 BYD-UN stock valuation model: a) initial revenue growth rate of 15% 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 4.3%, whose default value for BYD-UN is calculated based on our internal credit rating of Boyd Group 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 Boyd Group 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 BYD-UN stock the variable cost ratio is equal to 72.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $335 million in the base year in the intrinsic value calculation for BYD-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 4.4% for Boyd Group Income Fund.

Corporate tax rate of 27% is the nominal tax rate for Boyd Group 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 BYD-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 BYD-UN are equal to 21.6%.

Life of production assets of 14.9 years is the average useful life of capital assets used in Boyd Group 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 BYD-UN is equal to -2.2%. 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 - $281 million for Boyd Group 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 18.298 million for Boyd Group 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 Boyd Group Income Fund at the current share price and the inputted number of shares is $1.6 billion.


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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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