Intrinsic value of ProMetic Life Sciences Inc. - PLI

Previous Close

$1.60

  Intrinsic Value

$0.05

stock screener

  Rating & Target

str. sell

-97%

  Value-price divergence*

0%

Previous close

$1.60

 
Intrinsic value

$0.05

 
Up/down potential

-97%

 
Rating

str. sell

 
Value-price divergence*

0%

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

We calculate the intrinsic value of PLI 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 1.1

 

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, %
  -36.00
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  16
  16
  17
  17
  18
  18
  19
  19
  20
  21
  22
  22
  23
  24
  25
  26
  28
  29
  30
  32
  33
  34
  36
  38
  40
  41
  43
  46
  48
  50
  52
Variable operating expenses, $m
 
  55
  56
  58
  59
  61
  63
  65
  68
  70
  73
  76
  79
  82
  86
  89
  93
  97
  102
  106
  111
  116
  122
  128
  134
  140
  147
  154
  161
  169
  177
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
  128
  55
  56
  58
  59
  61
  63
  65
  68
  70
  73
  76
  79
  82
  86
  89
  93
  97
  102
  106
  111
  116
  122
  128
  134
  140
  147
  154
  161
  169
  177
Operating income, $m
  -112
  -39
  -40
  -41
  -42
  -43
  -44
  -46
  -48
  -49
  -51
  -53
  -55
  -58
  -60
  -63
  -66
  -69
  -72
  -75
  -78
  -82
  -86
  -90
  -94
  -98
  -103
  -108
  -113
  -119
  -125
EBITDA, $m
  -108
  -33
  -33
  -34
  -35
  -36
  -37
  -39
  -40
  -42
  -43
  -45
  -47
  -49
  -51
  -53
  -55
  -58
  -60
  -63
  -66
  -69
  -72
  -75
  -79
  -83
  -87
  -91
  -95
  -100
  -105
Interest expense (income), $m
  0
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
Earnings before tax, $m
  -117
  -40
  -41
  -42
  -44
  -45
  -47
  -48
  -50
  -52
  -54
  -56
  -59
  -61
  -64
  -67
  -70
  -73
  -77
  -80
  -84
  -88
  -92
  -97
  -102
  -107
  -112
  -117
  -123
  -129
  -136
Tax expense, $m
  -6
  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
  -101
  -40
  -41
  -42
  -44
  -45
  -47
  -48
  -50
  -52
  -54
  -56
  -59
  -61
  -64
  -67
  -70
  -73
  -77
  -80
  -84
  -88
  -92
  -97
  -102
  -107
  -112
  -117
  -123
  -129
  -136

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  39
  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
  265
  230
  235
  241
  248
  255
  264
  273
  282
  293
  304
  316
  329
  343
  357
  373
  389
  406
  425
  444
  464
  486
  508
  532
  558
  584
  612
  641
  672
  705
  739
Adjusted assets (=assets-cash), $m
  226
  230
  235
  241
  248
  255
  264
  273
  282
  293
  304
  316
  329
  343
  357
  373
  389
  406
  425
  444
  464
  486
  508
  532
  558
  584
  612
  641
  672
  705
  739
Revenue / Adjusted assets
  0.071
  0.070
  0.072
  0.071
  0.073
  0.071
  0.072
  0.070
  0.071
  0.072
  0.072
  0.070
  0.070
  0.070
  0.070
  0.070
  0.072
  0.071
  0.071
  0.072
  0.071
  0.070
  0.071
  0.071
  0.072
  0.070
  0.070
  0.072
  0.071
  0.071
  0.070
Average production assets, $m
  182
  186
  190
  195
  200
  206
  213
  220
  228
  237
  246
  255
  266
  277
  288
  301
  314
  328
  343
  358
  375
  392
  411
  430
  450
  472
  494
  518
  543
  569
  597
Working capital, $m
  32
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
Total debt, $m
  49
  45
  48
  52
  55
  60
  64
  69
  75
  81
  87
  94
  101
  109
  117
  125
  135
  144
  155
  165
  177
  189
  202
  215
  229
  244
  260
  276
  294
  312
  331
Total liabilities, $m
  133
  129
  132
  136
  139
  144
  148
  153
  159
  165
  171
  178
  185
  193
  201
  209
  219
  228
  239
  249
  261
  273
  286
  299
  313
  328
  344
  360
  378
  396
  415
Total equity, $m
  132
  101
  103
  106
  109
  112
  116
  119
  124
  128
  133
  138
  144
  150
  156
  163
  170
  178
  186
  194
  203
  213
  223
  233
  244
  256
  268
  281
  295
  309
  324
Total liabilities and equity, $m
  265
  230
  235
  242
  248
  256
  264
  272
  283
  293
  304
  316
  329
  343
  357
  372
  389
  406
  425
  443
  464
  486
  509
  532
  557
  584
  612
  641
  673
  705
  739
Debt-to-equity ratio
  0.371
  0.450
  0.470
  0.490
  0.510
  0.530
  0.560
  0.580
  0.600
  0.630
  0.650
  0.680
  0.700
  0.720
  0.750
  0.770
  0.790
  0.810
  0.830
  0.850
  0.870
  0.890
  0.910
  0.920
  0.940
  0.950
  0.970
  0.980
  1.000
  1.010
  1.020
Adjusted equity ratio
  0.412
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -101
  -40
  -41
  -42
  -44
  -45
  -47
  -48
  -50
  -52
  -54
  -56
  -59
  -61
  -64
  -67
  -70
  -73
  -77
  -80
  -84
  -88
  -92
  -97
  -102
  -107
  -112
  -117
  -123
  -129
  -136
Depreciation, amort., depletion, $m
  4
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
Funds from operations, $m
  -100
  -34
  -35
  -36
  -37
  -38
  -39
  -41
  -42
  -44
  -46
  -48
  -50
  -52
  -54
  -57
  -60
  -62
  -65
  -68
  -72
  -75
  -79
  -82
  -87
  -91
  -95
  -100
  -105
  -110
  -116
Change in working capital, $m
  -2
  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 operations, $m
  -98
  -34
  -35
  -36
  -37
  -38
  -39
  -41
  -42
  -44
  -46
  -48
  -50
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -71
  -75
  -79
  -82
  -86
  -91
  -95
  -100
  -105
  -110
  -116
Maintenance CAPEX, $m
  0
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
New CAPEX, $m
  -16
  -4
  -4
  -5
  -5
  -6
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -26
  -28
Cash from investing activities, $m
  10
  -10
  -10
  -11
  -11
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -29
  -31
  -33
  -34
  -36
  -39
  -40
  -42
  -44
  -47
Free cash flow, $m
  -88
  -44
  -45
  -47
  -49
  -51
  -53
  -55
  -58
  -60
  -63
  -66
  -69
  -72
  -75
  -79
  -83
  -87
  -91
  -95
  -100
  -105
  -110
  -115
  -121
  -127
  -133
  -140
  -147
  -154
  -162
Issuance/(repayment) of debt, $m
  30
  2
  3
  3
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  17
  18
  19
Issuance/(repurchase) of shares, $m
  61
  42
  44
  45
  47
  48
  50
  52
  54
  57
  59
  62
  64
  67
  70
  74
  77
  81
  85
  89
  93
  98
  102
  107
  113
  118
  124
  130
  137
  143
  151
Cash from financing (excl. dividends), $m  
  87
  44
  47
  48
  51
  52
  55
  57
  59
  63
  65
  69
  71
  75
  78
  83
  86
  91
  95
  100
  104
  110
  115
  120
  127
  133
  140
  147
  154
  161
  170
Total cash flow (excl. dividends), $m
  -1
  0
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
Retained Cash Flow (-), $m
  -19
  -42
  -44
  -45
  -47
  -48
  -50
  -52
  -54
  -57
  -59
  -62
  -64
  -67
  -70
  -74
  -77
  -81
  -85
  -89
  -93
  -98
  -102
  -107
  -113
  -118
  -124
  -130
  -137
  -143
  -151
Prev. year cash balance distribution, $m
 
  33
  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
 
  -9
  -42
  -44
  -45
  -47
  -48
  -50
  -52
  -54
  -57
  -59
  -62
  -64
  -67
  -70
  -73
  -77
  -81
  -84
  -88
  -93
  -97
  -102
  -107
  -112
  -118
  -124
  -130
  -136
  -143
Discount rate, %
 
  6.20
  6.51
  6.84
  7.18
  7.54
  7.91
  8.31
  8.72
  9.16
  9.62
  10.10
  10.60
  11.13
  11.69
  12.28
  12.89
  13.53
  14.21
  14.92
  15.67
  16.45
  17.27
  18.14
  19.04
  20.00
  21.00
  22.05
  23.15
  24.30
  25.52
PV of cash for distribution, $m
 
  -8
  -37
  -36
  -34
  -32
  -31
  -29
  -27
  -25
  -23
  -20
  -18
  -16
  -14
  -12
  -11
  -9
  -7
  -6
  -5
  -4
  -3
  -2
  -2
  -1
  -1
  -1
  0
  0
  0
Current shareholders' claim on cash, %
  100
  95.0
  90.1
  85.4
  81.0
  76.7
  72.6
  68.8
  65.1
  61.5
  58.2
  55.0
  52.0
  49.1
  46.4
  43.8
  41.4
  39.1
  36.9
  34.8
  32.8
  31.0
  29.2
  27.6
  26.0
  24.5
  23.1
  21.8
  20.5
  19.4
  18.3

ProMetic Life Sciences Inc., a biopharmaceutical company, develops bio separations, plasma-derived therapeutics, and small-molecule drugs. The company offers its technology platform for large-scale drug purification, drug development, proteomics, and the elimination of pathogens; and develops small molecule therapeutic products targeting unmet medical needs in the fields of fibrosis, autoimmune disease/inflammation, and cancer. It operates in two segments, Small Molecule Therapeutics and Protein Technology. The Small Molecule Therapeutics segmentÂ’s lead product candidate is PBI-4050, which targets unmet medical needs, such as the treatment of fibrosis in patients with chronic kidney diseases and certain cancers, and the side effects associated with chemotherapy. The Protein Technology segment provides Plasma Protein Purification System, a solution for plasma fractionation, as well as for the extraction and purification of therapeutic proteins from human plasma; bioseparation products based on applications of its patented Mimetic Ligand technology; and prion capture/pathogen removal technology platform that improves the safety profile of blood products and blood-derived therapeutics. The company was formerly known as Innovon Life Sciences Holdings Limited and changed its name to ProMetic Life Sciences Inc. in May 1998. ProMetic Life Sciences Inc. was founded in 1992 and is headquartered in Laval, Canada.


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FINANCIAL RATIOS  of  ProMetic Life Sciences Inc. (PLI)

Valuation Ratios
P/E Ratio -9.9
Price to Sales 62.3
Price to Book 7.6
Price to Tangible Book
Price to Cash Flow -10.2
Price to Free Cash Flow -8.7
Growth Rates
Sales Growth Rate -36%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 128.6%
Cap. Spend. - 3 Yr. Gr. Rate 14.9%
Financial Strength
Quick Ratio 7
Current Ratio 0
LT Debt to Equity 32.6%
Total Debt to Equity 37.1%
Interest Coverage 0
Management Effectiveness
Return On Assets -42.1%
Ret/ On Assets - 3 Yr. Avg. -20.6%
Return On Total Capital -63.7%
Ret/ On T. Cap. - 3 Yr. Avg. -32.8%
Return On Equity -82.4%
Return On Equity - 3 Yr. Avg. -41.6%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 62.5%
Gross Margin - 3 Yr. Avg. 65.4%
EBITDA Margin -706.3%
EBITDA Margin - 3 Yr. Avg. -312.6%
Operating Margin -700%
Oper. Margin - 3 Yr. Avg. -336.6%
Pre-Tax Margin -731.3%
Pre-Tax Margin - 3 Yr. Avg. -326.4%
Net Profit Margin -631.3%
Net Profit Margin - 3 Yr. Avg. -269.7%
Effective Tax Rate 5.1%
Eff/ Tax Rate - 3 Yr. Avg. 4.4%
Payout Ratio 0%

PLI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PLI stock intrinsic value calculation we used $16 million for the last fiscal year's total revenue generated by ProMetic Life Sciences Inc.. The default revenue input number comes from 2016 income statement of ProMetic Life Sciences Inc.. 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 PLI stock valuation model: a) initial revenue growth rate of 2% 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 6.2%, whose default value for PLI is calculated based on our internal credit rating of ProMetic Life Sciences Inc., 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 ProMetic Life Sciences Inc..
    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 PLI stock the variable cost ratio is equal to 337.5%.

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 PLI 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 3.5% for ProMetic Life Sciences Inc..

Corporate tax rate of 27% is the nominal tax rate for ProMetic Life Sciences Inc.. 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 PLI 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 PLI are equal to 1137.5%.

Life of production assets of 45.5 years is the average useful life of capital assets used in ProMetic Life Sciences Inc. 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 PLI is equal to -6.3%. 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 - $132 million for ProMetic Life Sciences Inc. - 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 660.099 million for ProMetic Life Sciences Inc. 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 ProMetic Life Sciences Inc. at the current share price and the inputted number of shares is $1.1 billion.

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Stock chart of PLI Financial statements of PLI
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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