Intrinsic value of BioAmber - BIOA

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$2.25

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$2.25

 
Intrinsic value

$0.33

 
Up/down potential

-85%

 
Rating

str. sell

 
Value-price divergence* premium content

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

We calculate the intrinsic value of BIOA 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 0.1

 

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, %
  300.00
  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
  8
  8
  8
  9
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
Variable operating expenses, $m
 
  167
  171
  176
  180
  186
  192
  198
  206
  213
  221
  230
  239
  249
  260
  271
  283
  295
  309
  323
  338
  353
  370
  387
  406
  425
  445
  467
  489
  513
  538
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
  38
  167
  171
  176
  180
  186
  192
  198
  206
  213
  221
  230
  239
  249
  260
  271
  283
  295
  309
  323
  338
  353
  370
  387
  406
  425
  445
  467
  489
  513
  538
Operating income, $m
  -30
  -159
  -163
  -167
  -172
  -177
  -183
  -189
  -195
  -203
  -211
  -219
  -228
  -237
  -247
  -258
  -269
  -281
  -294
  -307
  -321
  -336
  -352
  -368
  -386
  -404
  -423
  -444
  -465
  -488
  -511
EBITDA, $m
  -25
  -154
  -157
  -162
  -166
  -171
  -177
  -183
  -189
  -196
  -204
  -212
  -220
  -230
  -239
  -250
  -261
  -272
  -284
  -297
  -311
  -325
  -341
  -357
  -373
  -391
  -410
  -430
  -450
  -472
  -495
Interest expense (income), $m
  0
  2
  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
  8
  8
  9
  9
Earnings before tax, $m
  -28
  -161
  -165
  -169
  -174
  -179
  -185
  -191
  -198
  -205
  -213
  -222
  -231
  -240
  -251
  -262
  -273
  -285
  -298
  -312
  -326
  -341
  -357
  -374
  -392
  -411
  -431
  -451
  -473
  -496
  -520
Tax expense, $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
Net income, $m
  -22
  -161
  -165
  -169
  -174
  -179
  -185
  -191
  -198
  -205
  -213
  -222
  -231
  -240
  -251
  -262
  -273
  -285
  -298
  -312
  -326
  -341
  -357
  -374
  -392
  -411
  -431
  -451
  -473
  -496
  -520

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  16
  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
  161
  148
  152
  156
  160
  165
  170
  176
  182
  189
  196
  204
  212
  221
  231
  241
  251
  262
  274
  286
  300
  314
  328
  344
  360
  377
  395
  414
  434
  455
  477
Adjusted assets (=assets-cash), $m
  145
  148
  152
  156
  160
  165
  170
  176
  182
  189
  196
  204
  212
  221
  231
  241
  251
  262
  274
  286
  300
  314
  328
  344
  360
  377
  395
  414
  434
  455
  477
Revenue / Adjusted assets
  0.055
  0.054
  0.053
  0.058
  0.056
  0.055
  0.053
  0.057
  0.055
  0.053
  0.056
  0.054
  0.057
  0.054
  0.056
  0.054
  0.056
  0.053
  0.055
  0.056
  0.053
  0.054
  0.055
  0.055
  0.056
  0.056
  0.056
  0.056
  0.055
  0.055
  0.055
Average production assets, $m
  128
  131
  134
  137
  141
  145
  150
  155
  160
  166
  173
  180
  187
  195
  203
  212
  221
  231
  241
  252
  264
  276
  289
  302
  317
  332
  348
  364
  382
  400
  420
Working capital, $m
  -14
  4
  4
  4
  4
  5
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  13
  13
Total debt, $m
  67
  53
  56
  58
  61
  64
  68
  72
  76
  80
  85
  91
  96
  102
  108
  115
  122
  129
  137
  146
  154
  164
  174
  184
  195
  206
  218
  231
  244
  258
  273
Total liabilities, $m
  113
  99
  102
  104
  107
  110
  114
  118
  122
  126
  131
  137
  142
  148
  154
  161
  168
  175
  183
  192
  200
  210
  220
  230
  241
  252
  264
  277
  290
  304
  319
Total equity, $m
  48
  49
  50
  52
  53
  55
  56
  58
  60
  63
  65
  68
  70
  73
  76
  80
  83
  87
  91
  95
  99
  104
  109
  114
  119
  125
  131
  137
  144
  151
  158
Total liabilities and equity, $m
  161
  148
  152
  156
  160
  165
  170
  176
  182
  189
  196
  205
  212
  221
  230
  241
  251
  262
  274
  287
  299
  314
  329
  344
  360
  377
  395
  414
  434
  455
  477
Debt-to-equity ratio
  1.396
  1.080
  1.110
  1.130
  1.150
  1.180
  1.200
  1.230
  1.260
  1.290
  1.310
  1.340
  1.370
  1.390
  1.420
  1.440
  1.470
  1.490
  1.510
  1.540
  1.560
  1.580
  1.600
  1.620
  1.630
  1.650
  1.670
  1.690
  1.700
  1.720
  1.730
Adjusted equity ratio
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -22
  -161
  -165
  -169
  -174
  -179
  -185
  -191
  -198
  -205
  -213
  -222
  -231
  -240
  -251
  -262
  -273
  -285
  -298
  -312
  -326
  -341
  -357
  -374
  -392
  -411
  -431
  -451
  -473
  -496
  -520
Depreciation, amort., depletion, $m
  5
  5
  5
  5
  6
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  16
  16
Funds from operations, $m
  -49
  -156
  -159
  -163
  -168
  -173
  -179
  -185
  -192
  -199
  -207
  -215
  -224
  -233
  -243
  -253
  -265
  -276
  -289
  -302
  -316
  -331
  -346
  -363
  -380
  -398
  -417
  -437
  -458
  -481
  -504
Change in working capital, $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
  1
  1
  1
  1
Cash from operations, $m
  -38
  -157
  -159
  -164
  -168
  -173
  -179
  -185
  -192
  -199
  -207
  -215
  -224
  -233
  -243
  -254
  -265
  -277
  -289
  -302
  -316
  -331
  -347
  -363
  -380
  -399
  -418
  -438
  -459
  -481
  -505
Maintenance CAPEX, $m
  0
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -16
New CAPEX, $m
  -1
  -3
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -18
  -19
Cash from investing activities, $m
  -1
  -8
  -8
  -8
  -9
  -9
  -11
  -11
  -12
  -12
  -12
  -14
  -14
  -15
  -16
  -17
  -17
  -19
  -19
  -20
  -22
  -22
  -24
  -25
  -26
  -27
  -29
  -30
  -32
  -33
  -35
Free cash flow, $m
  -39
  -164
  -168
  -172
  -177
  -183
  -189
  -196
  -203
  -211
  -220
  -229
  -238
  -248
  -259
  -270
  -282
  -295
  -309
  -323
  -338
  -354
  -370
  -388
  -406
  -426
  -446
  -468
  -491
  -515
  -540
Issuance/(repayment) of debt, $m
  12
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
Issuance/(repurchase) of shares, $m
  36
  163
  166
  171
  176
  181
  188
  194
  201
  209
  217
  226
  235
  245
  256
  267
  279
  291
  305
  319
  333
  349
  365
  383
  401
  420
  440
  462
  484
  508
  532
Cash from financing (excl. dividends), $m  
  47
  165
  168
  174
  179
  184
  192
  198
  205
  214
  222
  231
  241
  251
  262
  274
  286
  298
  313
  327
  342
  358
  375
  393
  412
  431
  452
  475
  497
  522
  547
Total cash flow (excl. dividends), $m
  9
  -162
  -165
  -170
  -174
  -180
  -186
  -192
  -199
  -207
  -215
  -223
  -232
  -242
  -253
  -264
  -275
  -288
  -301
  -314
  -329
  -344
  -360
  -378
  -395
  -414
  -434
  -455
  -477
  -501
  -525
Retained Cash Flow (-), $m
  -2
  -1
  -1
  -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
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
 
  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
Discount rate, %
 
  9.30
  9.77
  10.25
  10.77
  11.30
  11.87
  12.46
  13.09
  13.74
  14.43
  15.15
  15.91
  16.70
  17.54
  18.41
  19.33
  20.30
  21.32
  22.38
  23.50
  24.68
  25.91
  27.20
  28.57
  29.99
  31.49
  33.07
  34.72
  36.46
  38.28
PV of cash for 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
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Current shareholders' claim on cash, %
  100
  32.6
  10.7
  3.5
  1.1
  0.4
  0.1
  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
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

BioAmber Inc., an industrial biotechnology company, produces and sells bio-succinic acid to various chemical market customers in the United States. Its proprietary technology platform combines industrial biotechnology and chemical catalysis to convert renewable feedstocks into chemicals that are replacements for petroleum-derived chemicals. The company’s bio-succinic acid is used in various applications, including plasticizers, polyurethanes, personal care products, resins and coatings, de-icing and coolant solutions, fine chemicals, lubricants, and food additives, as well as anti-freeze solutions, coolants solvents, water treatment chemicals, laundry tablets and bath salts, artificial leather products, and foams made with recycled polyethylene terephthalate. Its product pipeline also includes bio-succinic acid derivatives, such as 1, 4 butanediol and tetrahydrofuran used in elastomers, engineering plastics, shoe soles, spandex, and solvents; succinic acid based polyesters for use in automotive interiors, fibers and non-wovens, food packaging, plastic bags and cups, and organic composite boards; and C6 building block chemicals comprising adipic acid, caprolactam, and hexamethylenediamine used in carpets, engineering plastics, textiles and fibers, films, and polyurethanes. The company sells its products directly to customers, as well as through distributors. It has strategic relationships with various companies, including PTTMCC Biochem Company Limited. The company was formerly known as DNP Green Technology, Inc. and changed its name to BioAmber Inc. in September 2010. BioAmber Inc. is headquartered in Montreal, Canada.

FINANCIAL RATIOS  of  BioAmber (BIOA)

Valuation Ratios
P/E Ratio -3.1
Price to Sales 8.6
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow -1.8
Price to Free Cash Flow -1.8
Growth Rates
Sales Growth Rate 300%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -98.4%
Cap. Spend. - 3 Yr. Gr. Rate -40.1%
Financial Strength
Quick Ratio 0
Current Ratio 0.2
LT Debt to Equity 60.4%
Total Debt to Equity 139.6%
Interest Coverage 0
Management Effectiveness
Return On Assets -14.5%
Ret/ On Assets - 3 Yr. Avg. -24.8%
Return On Total Capital -22%
Ret/ On T. Cap. - 3 Yr. Avg. -37.3%
Return On Equity -46.8%
Return On Equity - 3 Yr. Avg. -65.1%
Asset Turnover 0.1
Profitability Ratios
Gross Margin -62.5%
Gross Margin - 3 Yr. Avg. -104.2%
EBITDA Margin -287.5%
EBITDA Margin - 3 Yr. Avg. -1545.8%
Operating Margin -375%
Oper. Margin - 3 Yr. Avg. -1358.3%
Pre-Tax Margin -350%
Pre-Tax Margin - 3 Yr. Avg. -1583.3%
Net Profit Margin -275%
Net Profit Margin - 3 Yr. Avg. -1475%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

BIOA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BIOA stock intrinsic value calculation we used $8 million for the last fiscal year's total revenue generated by BioAmber. The default revenue input number comes from 2016 income statement of BioAmber. 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 BIOA 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 9.3%, whose default value for BIOA is calculated based on our internal credit rating of BioAmber, 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 BioAmber.
    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 BIOA stock the variable cost ratio is equal to 2050%.

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 BIOA 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 BioAmber.

Corporate tax rate of 27% is the nominal tax rate for BioAmber. 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 BIOA 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 BIOA are equal to 1600%.

Life of production assets of 25.8 years is the average useful life of capital assets used in BioAmber 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 BIOA is equal to 50%. 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 - $48 million for BioAmber - 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 35.151 million for BioAmber 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 BioAmber at the current share price and the inputted number of shares is $0.1 billion.


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COMPANY NEWS

▶ BioAmber Announces CFO Transition   [04:16PM  PR Newswire]
▶ 3 Top Stocks Under $5   [Mar-08-17 03:51PM  at Motley Fool]
▶ Bioamber Inc (BIOA): How It Stacks Up Against Its Peers   [Dec-14-16 06:23PM  at Insider Monkey]
▶ BioAmber closes on a $19.2 million corporate loan   [Sep-12-16 07:00AM  PR Newswire]
Stock chart of BIOA Financial statements of BIOA
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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