Intrinsic value of Asia Pacific Wire&Cable - APWC

Previous Close

$2.95

  Intrinsic Value

$2.44

stock screener

  Rating & Target

hold

-17%

  Value-price divergence*

-77%

Previous close

$2.95

 
Intrinsic value

$2.44

 
Up/down potential

-17%

 
Rating

hold

 
Value-price divergence*

-77%

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

We calculate the intrinsic value of APWC 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 2015), $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 0.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2015(a)
   2016
   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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -13.53
  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
  390
  398
  407
  417
  429
  442
  456
  472
  489
  507
  526
  547
  569
  593
  618
  645
  673
  703
  735
  768
  803
  841
  880
  921
  965
  1,011
  1,059
  1,110
  1,164
  1,220
  1,279
Variable operating expenses, $m
 
  346
  354
  363
  373
  384
  397
  410
  425
  441
  457
  476
  495
  515
  537
  560
  585
  611
  638
  667
  698
  730
  765
  801
  838
  878
  920
  965
  1,011
  1,060
  1,112
Fixed operating expenses, $m
 
  55
  57
  58
  60
  61
  63
  64
  66
  67
  69
  71
  73
  74
  76
  78
  80
  82
  84
  86
  88
  91
  93
  95
  98
  100
  103
  105
  108
  111
  113
Total operating expenses, $m
  392
  401
  411
  421
  433
  445
  460
  474
  491
  508
  526
  547
  568
  589
  613
  638
  665
  693
  722
  753
  786
  821
  858
  896
  936
  978
  1,023
  1,070
  1,119
  1,171
  1,225
Operating income, $m
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -2
  -2
  -1
  0
  1
  2
  3
  5
  6
  8
  10
  12
  14
  17
  19
  22
  25
  29
  32
  36
  40
  45
  49
  54
EBITDA, $m
  3
  -3
  -3
  -3
  -3
  -3
  -3
  -2
  -2
  -1
  0
  1
  2
  3
  5
  6
  8
  10
  12
  14
  17
  19
  22
  25
  29
  32
  36
  40
  45
  49
  54
Interest expense (income), $m
  1
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  10
Earnings before tax, $m
  -9
  -3
  -3
  -4
  -4
  -4
  -3
  -3
  -3
  -2
  -2
  -1
  0
  1
  2
  4
  5
  7
  8
  10
  12
  15
  17
  20
  23
  26
  29
  32
  36
  40
  45
Tax expense, $m
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  2
  2
  3
  3
  4
  5
  5
  6
  7
  8
  9
  10
  11
  12
Net income, $m
  -8
  -3
  -3
  -4
  -4
  -4
  -3
  -3
  -3
  -2
  -2
  -1
  0
  1
  2
  3
  4
  5
  6
  8
  9
  11
  12
  14
  16
  19
  21
  24
  26
  29
  33

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  51
  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
  305
  259
  265
  272
  280
  288
  297
  307
  318
  330
  343
  356
  371
  386
  403
  420
  439
  458
  479
  500
  523
  548
  573
  600
  629
  659
  690
  723
  758
  795
  833
Adjusted assets (=assets-cash), $m
  254
  259
  265
  272
  280
  288
  297
  307
  318
  330
  343
  356
  371
  386
  403
  420
  439
  458
  479
  500
  523
  548
  573
  600
  629
  659
  690
  723
  758
  795
  833
Revenue / Adjusted assets
  1.535
  1.537
  1.536
  1.533
  1.532
  1.535
  1.535
  1.537
  1.538
  1.536
  1.534
  1.537
  1.534
  1.536
  1.533
  1.536
  1.533
  1.535
  1.534
  1.536
  1.535
  1.535
  1.536
  1.535
  1.534
  1.534
  1.535
  1.535
  1.536
  1.535
  1.535
Average production assets, $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
Working capital, $m
  145
  137
  140
  144
  148
  152
  157
  162
  168
  174
  181
  188
  196
  204
  213
  222
  232
  242
  253
  264
  276
  289
  303
  317
  332
  348
  364
  382
  400
  420
  440
Total debt, $m
  39
  2
  5
  8
  12
  16
  21
  26
  32
  38
  45
  52
  59
  67
  75
  84
  94
  103
  114
  125
  137
  149
  162
  176
  191
  206
  222
  239
  257
  276
  296
Total liabilities, $m
  170
  133
  136
  139
  143
  147
  152
  157
  163
  169
  176
  183
  190
  198
  206
  215
  225
  234
  245
  256
  268
  280
  293
  307
  322
  337
  353
  370
  388
  407
  427
Total equity, $m
  135
  126
  129
  133
  136
  141
  145
  150
  155
  161
  167
  174
  181
  189
  197
  205
  214
  224
  234
  244
  255
  267
  280
  293
  307
  321
  337
  353
  370
  388
  407
Total liabilities and equity, $m
  305
  259
  265
  272
  279
  288
  297
  307
  318
  330
  343
  357
  371
  387
  403
  420
  439
  458
  479
  500
  523
  547
  573
  600
  629
  658
  690
  723
  758
  795
  834
Debt-to-equity ratio
  0.289
  0.010
  0.040
  0.060
  0.090
  0.120
  0.150
  0.180
  0.210
  0.240
  0.270
  0.300
  0.330
  0.350
  0.380
  0.410
  0.440
  0.460
  0.490
  0.510
  0.540
  0.560
  0.580
  0.600
  0.620
  0.640
  0.660
  0.680
  0.700
  0.710
  0.730
Adjusted equity ratio
  0.480
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -8
  -3
  -3
  -4
  -4
  -4
  -3
  -3
  -3
  -2
  -2
  -1
  0
  1
  2
  3
  4
  5
  6
  8
  9
  11
  12
  14
  16
  19
  21
  24
  26
  29
  33
Depreciation, amort., depletion, $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
Funds from operations, $m
  17
  -3
  -3
  -4
  -4
  -4
  -3
  -3
  -3
  -2
  -2
  -1
  0
  1
  2
  3
  4
  5
  6
  8
  9
  11
  12
  14
  16
  19
  21
  24
  26
  29
  33
Change in working capital, $m
  8
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  14
  14
  15
  16
  17
  18
  18
  19
  20
Cash from operations, $m
  9
  -6
  -7
  -7
  -8
  -8
  -8
  -8
  -8
  -8
  -8
  -8
  -8
  -7
  -7
  -7
  -6
  -5
  -5
  -4
  -3
  -2
  -1
  0
  1
  3
  4
  6
  8
  10
  12
Maintenance CAPEX, $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
New CAPEX, $m
  -7
  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 investing activities, $m
  -7
  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
Free cash flow, $m
  2
  -6
  -7
  -7
  -8
  -8
  -8
  -8
  -8
  -8
  -8
  -8
  -8
  -7
  -7
  -7
  -6
  -5
  -5
  -4
  -3
  -2
  -1
  0
  1
  3
  4
  6
  8
  10
  12
Issuance/(repayment) of debt, $m
  -13
  3
  3
  3
  4
  4
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
Issuance/(repurchase) of shares, $m
  0
  6
  6
  7
  7
  8
  8
  8
  8
  8
  8
  7
  7
  7
  6
  6
  5
  5
  4
  3
  2
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -15
  9
  9
  10
  11
  12
  13
  13
  14
  14
  14
  14
  14
  15
  14
  15
  14
  15
  15
  14
  14
  13
  13
  14
  15
  15
  16
  17
  18
  19
  20
Total cash flow (excl. dividends), $m
  -18
  2
  3
  3
  4
  4
  4
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  14
  16
  18
  21
  23
  26
  29
  32
Retained Cash Flow (-), $m
  18
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -8
  -8
  -8
  -7
  -7
  -8
  -8
  -8
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
Prev. year cash balance distribution, $m
 
  11
  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
 
  8
  -4
  -4
  -4
  -4
  -4
  -3
  -3
  -2
  -2
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  2
  4
  5
  7
  9
  11
  13
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
 
  7
  -3
  -3
  -3
  -3
  -3
  -2
  -2
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  93.9
  87.5
  81.3
  75.3
  69.7
  64.4
  59.7
  55.5
  51.7
  48.4
  45.6
  43.1
  41.0
  39.1
  37.5
  36.2
  35.1
  34.2
  33.6
  33.2
  32.9
  32.9
  32.9
  32.9
  32.9
  32.9
  32.9
  32.9
  32.9
  32.9

Asia Pacific Wire & Cable Corporation Limited, through its subsidiaries, manufactures and distributes telecommunications, power cable, and enameled and electronic wire products in Thailand, the People’s Republic of China, Singapore, Australia, and other markets in the Asia Pacific region. It offers telecommunications cable products, including copper-based and fiber optic cables for telephone and data transmissions; and armored and unarmored low voltage power transmission cable, which is used to transmit electricity to and within commercial and residential buildings, as well as to outdoor installations, such as street lights, traffic signals, and other signs. The company also provides enameled wire for use in the assembly of a range of electrical products consisting of oil-filled transformers, refrigerator motors, telephones, radios, televisions, fan motors, air conditioner compressors, and other electric appliances; and electronic wires for heat resistant applications in consumer electronics and automotive segments. In addition, it distributes wire and cable products; and offers project engineering services in the supply, delivery, and installation of power cables. It serves government organizations, electric contracting firms, electrical dealers, and wire and cable factories. The company was founded in 1996 and is headquartered in Taipei, Taiwan. Asia Pacific Wire & Cable Corporation Limited is a subsidiary of Pacific Electric Wire & Cable Co., Ltd.

FINANCIAL RATIOS  of  Asia Pacific Wire&Cable (APWC)

Valuation Ratios
P/E Ratio -5.1
Price to Sales 0.1
Price to Book 0.3
Price to Tangible Book
Price to Cash Flow 4.5
Price to Free Cash Flow 20.4
Growth Rates
Sales Growth Rate -13.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 16.7%
Cap. Spend. - 3 Yr. Gr. Rate -8.6%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity -0.7%
Total Debt to Equity 28.9%
Interest Coverage -8
Management Effectiveness
Return On Assets -2%
Ret/ On Assets - 3 Yr. Avg. 0.1%
Return On Total Capital -4.2%
Ret/ On T. Cap. - 3 Yr. Avg. -0.3%
Return On Equity -5.6%
Return On Equity - 3 Yr. Avg. -0.4%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 5.9%
Gross Margin - 3 Yr. Avg. 8.5%
EBITDA Margin -0.5%
EBITDA Margin - 3 Yr. Avg. 2.5%
Operating Margin -0.5%
Oper. Margin - 3 Yr. Avg. 1.6%
Pre-Tax Margin -2.3%
Pre-Tax Margin - 3 Yr. Avg. 0.8%
Net Profit Margin -2.1%
Net Profit Margin - 3 Yr. Avg. -0.2%
Effective Tax Rate -11.1%
Eff/ Tax Rate - 3 Yr. Avg. 21.4%
Payout Ratio 0%

APWC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the APWC stock intrinsic value calculation we used $390 million for the last fiscal year's total revenue generated by Asia Pacific Wire&Cable. The default revenue input number comes from 2015 income statement of Asia Pacific Wire&Cable. 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 APWC 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 4.3%, whose default value for APWC is calculated based on our internal credit rating of Asia Pacific Wire&Cable, 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 Asia Pacific Wire&Cable.
    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 APWC stock the variable cost ratio is equal to 86.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $54 million in the base year in the intrinsic value calculation for APWC 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 Asia Pacific Wire&Cable.

Corporate tax rate of 27% is the nominal tax rate for Asia Pacific Wire&Cable. 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 APWC 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 APWC are equal to 0%.

Life of production assets of 10 years is the average useful life of capital assets used in Asia Pacific Wire&Cable 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 APWC is equal to 34.4%. 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 - $135 million for Asia Pacific Wire&Cable - 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 13.821 million for Asia Pacific Wire&Cable 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 Asia Pacific Wire&Cable at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ Asia Pacific Wire & Cable Company Announces Dividend Policy   [Nov-11-16 04:05PM  GlobeNewswire]
▶ ASIA PACIFIC WIRE & CABLE CORP LTD Financials   [01:04PM  EDGAR Online Financials]
▶ Prysmian SpA Earnings Q2*, 2015   [Aug-12  10:01AM  Capital Cube]
▶ CFO Moves: Salem Five, Moneysupermarket.com, Asia Pacific Wire & Cable   [Jul-31  02:53PM  at The Wall Street Journal]
Stock chart of APWC Financial statements of APWC
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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