Intrinsic value of Brookfield Property Partners - BPY

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$22.53

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$22.53

 
Intrinsic value

$85.68

 
Up/down potential

+280%

 
Rating

str. buy

 
Value-price divergence* premium content

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Our model is not good at valuating stocks of financial companies, such as BPY.

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

We calculate the intrinsic value of BPY 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 5.8

 

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, %
  10.28
  7.60
  7.34
  7.11
  6.90
  6.71
  6.54
  6.38
  6.24
  6.12
  6.01
  5.91
  5.82
  5.73
  5.66
  5.59
  5.54
  5.48
  5.43
  5.39
  5.35
  5.32
  5.28
  5.26
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
  5.12
Revenue, $m
  5,352
  5,759
  6,181
  6,621
  7,077
  7,552
  8,045
  8,559
  9,093
  9,650
  10,229
  10,833
  11,464
  12,121
  12,807
  13,524
  14,272
  15,054
  15,872
  16,728
  17,623
  18,560
  19,541
  20,568
  21,644
  22,771
  23,952
  25,190
  26,487
  27,848
  29,274
Variable operating expenses, $m
 
  3,870
  4,148
  4,438
  4,738
  5,051
  5,376
  5,714
  6,066
  6,433
  6,815
  7,137
  7,552
  7,985
  8,437
  8,909
  9,402
  9,918
  10,456
  11,020
  11,610
  12,227
  12,873
  13,550
  14,258
  15,001
  15,779
  16,594
  17,449
  18,346
  19,285
Fixed operating expenses, $m
 
  1,384
  1,418
  1,454
  1,490
  1,527
  1,566
  1,605
  1,645
  1,686
  1,728
  1,771
  1,816
  1,861
  1,908
  1,955
  2,004
  2,054
  2,106
  2,158
  2,212
  2,267
  2,324
  2,382
  2,442
  2,503
  2,565
  2,630
  2,695
  2,763
  2,832
Total operating expenses, $m
  4,921
  5,254
  5,566
  5,892
  6,228
  6,578
  6,942
  7,319
  7,711
  8,119
  8,543
  8,908
  9,368
  9,846
  10,345
  10,864
  11,406
  11,972
  12,562
  13,178
  13,822
  14,494
  15,197
  15,932
  16,700
  17,504
  18,344
  19,224
  20,144
  21,109
  22,117
Operating income, $m
  431
  505
  615
  729
  849
  973
  1,104
  1,240
  1,382
  1,531
  1,686
  1,925
  2,096
  2,275
  2,462
  2,659
  2,866
  3,083
  3,310
  3,550
  3,801
  4,066
  4,344
  4,636
  4,943
  5,267
  5,607
  5,966
  6,343
  6,740
  7,157
EBITDA, $m
  671
  687
  805
  927
  1,055
  1,189
  1,328
  1,474
  1,626
  1,785
  1,951
  2,125
  2,307
  2,498
  2,699
  2,909
  3,129
  3,360
  3,603
  3,858
  4,126
  4,408
  4,704
  5,015
  5,343
  5,687
  6,049
  6,430
  6,831
  7,253
  7,697
Interest expense (income), $m
  1,383
  1,379
  1,590
  1,824
  2,066
  2,319
  2,581
  2,854
  3,138
  3,433
  3,741
  4,061
  4,396
  4,744
  5,107
  5,487
  5,883
  6,297
  6,729
  7,181
  7,654
  8,149
  8,667
  9,209
  9,777
  10,372
  10,995
  11,648
  12,332
  13,050
  13,802
Earnings before tax, $m
  2,142
  -874
  -975
  -1,094
  -1,218
  -1,346
  -1,478
  -1,614
  -1,756
  -1,903
  -2,055
  -2,136
  -2,300
  -2,469
  -2,645
  -2,827
  -3,017
  -3,214
  -3,419
  -3,632
  -3,853
  -4,084
  -4,324
  -4,574
  -4,834
  -5,105
  -5,388
  -5,682
  -5,990
  -6,310
  -6,645
Tax expense, $m
  -575
  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
  660
  -874
  -975
  -1,094
  -1,218
  -1,346
  -1,478
  -1,614
  -1,756
  -1,903
  -2,055
  -2,136
  -2,300
  -2,469
  -2,645
  -2,827
  -3,017
  -3,214
  -3,419
  -3,632
  -3,853
  -4,084
  -4,324
  -4,574
  -4,834
  -5,105
  -5,388
  -5,682
  -5,990
  -6,310
  -6,645

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,456
  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
  78,127
  82,268
  88,306
  94,581
  101,103
  107,883
  114,933
  122,268
  129,902
  137,851
  146,132
  154,764
  163,765
  173,155
  182,957
  193,194
  203,887
  215,064
  226,750
  238,972
  251,760
  265,144
  279,155
  293,828
  309,196
  325,297
  342,170
  359,853
  378,390
  397,824
  418,202
Adjusted assets (=assets-cash), $m
  76,671
  82,268
  88,306
  94,581
  101,103
  107,883
  114,933
  122,268
  129,902
  137,851
  146,132
  154,764
  163,765
  173,155
  182,957
  193,194
  203,887
  215,064
  226,750
  238,972
  251,760
  265,144
  279,155
  293,828
  309,196
  325,297
  342,170
  359,853
  378,390
  397,824
  418,202
Revenue / Adjusted assets
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
Average production assets, $m
  571
  616
  661
  708
  757
  808
  861
  916
  973
  1,033
  1,095
  1,159
  1,227
  1,297
  1,370
  1,447
  1,527
  1,611
  1,698
  1,790
  1,886
  1,986
  2,091
  2,201
  2,316
  2,436
  2,563
  2,695
  2,834
  2,980
  3,132
Working capital, $m
  -4,164
  -564
  -606
  -649
  -694
  -740
  -788
  -839
  -891
  -946
  -1,002
  -1,062
  -1,123
  -1,188
  -1,255
  -1,325
  -1,399
  -1,475
  -1,556
  -1,639
  -1,727
  -1,819
  -1,915
  -2,016
  -2,121
  -2,232
  -2,347
  -2,469
  -2,596
  -2,729
  -2,869
Total debt, $m
  33,519
  36,975
  42,410
  48,057
  53,927
  60,029
  66,374
  72,975
  79,846
  87,000
  94,453
  102,221
  110,322
  118,774
  127,596
  136,808
  146,433
  156,492
  167,009
  178,009
  189,518
  201,564
  214,174
  227,379
  241,211
  255,702
  270,887
  286,802
  303,485
  320,976
  339,316
Total liabilities, $m
  70,585
  74,041
  79,476
  85,123
  90,993
  97,095
  103,440
  110,041
  116,912
  124,066
  131,519
  139,287
  147,388
  155,840
  164,662
  173,874
  183,499
  193,558
  204,075
  215,075
  226,584
  238,630
  251,240
  264,445
  278,277
  292,768
  307,953
  323,868
  340,551
  358,042
  376,382
Total equity, $m
  7,542
  8,227
  8,831
  9,458
  10,110
  10,788
  11,493
  12,227
  12,990
  13,785
  14,613
  15,476
  16,376
  17,316
  18,296
  19,319
  20,389
  21,506
  22,675
  23,897
  25,176
  26,514
  27,916
  29,383
  30,920
  32,530
  34,217
  35,985
  37,839
  39,782
  41,820
Total liabilities and equity, $m
  78,127
  82,268
  88,307
  94,581
  101,103
  107,883
  114,933
  122,268
  129,902
  137,851
  146,132
  154,763
  163,764
  173,156
  182,958
  193,193
  203,888
  215,064
  226,750
  238,972
  251,760
  265,144
  279,156
  293,828
  309,197
  325,298
  342,170
  359,853
  378,390
  397,824
  418,202
Debt-to-equity ratio
  4.444
  4.490
  4.800
  5.080
  5.330
  5.560
  5.780
  5.970
  6.150
  6.310
  6.460
  6.600
  6.740
  6.860
  6.970
  7.080
  7.180
  7.280
  7.370
  7.450
  7.530
  7.600
  7.670
  7.740
  7.800
  7.860
  7.920
  7.970
  8.020
  8.070
  8.110
Adjusted equity ratio
  0.079
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  660
  -874
  -975
  -1,094
  -1,218
  -1,346
  -1,478
  -1,614
  -1,756
  -1,903
  -2,055
  -2,136
  -2,300
  -2,469
  -2,645
  -2,827
  -3,017
  -3,214
  -3,419
  -3,632
  -3,853
  -4,084
  -4,324
  -4,574
  -4,834
  -5,105
  -5,388
  -5,682
  -5,990
  -6,310
  -6,645
Depreciation, amort., depletion, $m
  240
  182
  190
  198
  207
  215
  225
  234
  244
  254
  265
  200
  211
  224
  236
  249
  263
  278
  293
  309
  325
  342
  360
  379
  399
  420
  442
  465
  489
  514
  540
Funds from operations, $m
  431
  -691
  -785
  -896
  -1,011
  -1,130
  -1,253
  -1,381
  -1,512
  -1,649
  -1,790
  -1,936
  -2,088
  -2,245
  -2,409
  -2,578
  -2,754
  -2,936
  -3,126
  -3,323
  -3,528
  -3,741
  -3,963
  -4,194
  -4,435
  -4,685
  -4,946
  -5,218
  -5,501
  -5,797
  -6,105
Change in working capital, $m
  -314
  -40
  -41
  -43
  -45
  -47
  -48
  -50
  -52
  -55
  -57
  -59
  -62
  -64
  -67
  -70
  -73
  -77
  -80
  -84
  -88
  -92
  -96
  -101
  -105
  -110
  -116
  -121
  -127
  -133
  -140
Cash from operations, $m
  745
  -81
  -744
  -853
  -966
  -1,084
  -1,205
  -1,330
  -1,460
  -1,594
  -1,733
  -1,877
  -2,026
  -2,181
  -2,341
  -2,508
  -2,680
  -2,860
  -3,046
  -3,239
  -3,440
  -3,649
  -3,867
  -4,093
  -4,329
  -4,575
  -4,830
  -5,096
  -5,374
  -5,663
  -5,965
Maintenance CAPEX, $m
  0
  -98
  -106
  -114
  -122
  -131
  -139
  -148
  -158
  -168
  -178
  -189
  -200
  -211
  -224
  -236
  -249
  -263
  -278
  -293
  -309
  -325
  -342
  -360
  -379
  -399
  -420
  -442
  -465
  -489
  -514
New CAPEX, $m
  -7,926
  -46
  -45
  -47
  -49
  -51
  -53
  -55
  -57
  -60
  -62
  -65
  -67
  -70
  -73
  -77
  -80
  -84
  -88
  -92
  -96
  -100
  -105
  -110
  -115
  -121
  -126
  -132
  -139
  -146
  -153
Cash from investing activities, $m
  -3,234
  -144
  -151
  -161
  -171
  -182
  -192
  -203
  -215
  -228
  -240
  -254
  -267
  -281
  -297
  -313
  -329
  -347
  -366
  -385
  -405
  -425
  -447
  -470
  -494
  -520
  -546
  -574
  -604
  -635
  -667
Free cash flow, $m
  -2,489
  -225
  -895
  -1,014
  -1,137
  -1,265
  -1,397
  -1,534
  -1,675
  -1,821
  -1,973
  -2,131
  -2,294
  -2,463
  -2,638
  -2,821
  -3,010
  -3,207
  -3,411
  -3,624
  -3,845
  -4,075
  -4,314
  -4,564
  -4,824
  -5,094
  -5,377
  -5,671
  -5,978
  -6,297
  -6,631
Issuance/(repayment) of debt, $m
  1,865
  4,912
  5,435
  5,648
  5,870
  6,102
  6,345
  6,601
  6,871
  7,154
  7,453
  7,768
  8,101
  8,452
  8,822
  9,212
  9,624
  10,059
  10,517
  11,000
  11,509
  12,045
  12,610
  13,205
  13,832
  14,491
  15,185
  15,915
  16,683
  17,491
  18,341
Issuance/(repurchase) of shares, $m
  2,791
  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  
  2,906
  4,912
  5,435
  5,648
  5,870
  6,102
  6,345
  6,601
  6,871
  7,154
  7,453
  7,768
  8,101
  8,452
  8,822
  9,212
  9,624
  10,059
  10,517
  11,000
  11,509
  12,045
  12,610
  13,205
  13,832
  14,491
  15,185
  15,915
  16,683
  17,491
  18,341
Total cash flow (excl. dividends), $m
  421
  4,687
  4,540
  4,633
  4,732
  4,837
  4,948
  5,068
  5,196
  5,333
  5,480
  5,638
  5,807
  5,989
  6,184
  6,392
  6,615
  6,852
  7,106
  7,377
  7,664
  7,971
  8,296
  8,641
  9,008
  9,397
  9,808
  10,244
  10,706
  11,193
  11,709
Retained Cash Flow (-), $m
  -111
  -685
  -604
  -628
  -652
  -678
  -705
  -733
  -763
  -795
  -828
  -863
  -900
  -939
  -980
  -1,024
  -1,069
  -1,118
  -1,169
  -1,222
  -1,279
  -1,338
  -1,401
  -1,467
  -1,537
  -1,610
  -1,687
  -1,768
  -1,854
  -1,943
  -2,038
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
 
  4,002
  3,936
  4,006
  4,080
  4,159
  4,243
  4,334
  4,432
  4,538
  4,652
  4,775
  4,907
  5,050
  5,203
  5,368
  5,545
  5,735
  5,938
  6,154
  6,386
  6,632
  6,895
  7,174
  7,471
  7,786
  8,121
  8,476
  8,852
  9,250
  9,671
Discount rate, %
 
  12.60
  13.23
  13.89
  14.59
  15.32
  16.08
  16.89
  17.73
  18.62
  19.55
  20.52
  21.55
  22.63
  23.76
  24.95
  26.19
  27.50
  28.88
  30.32
  31.84
  33.43
  35.10
  36.86
  38.70
  40.64
  42.67
  44.80
  47.04
  49.39
  51.86
PV of cash for distribution, $m
 
  3,555
  3,070
  2,712
  2,367
  2,040
  1,734
  1,454
  1,201
  976
  780
  613
  472
  356
  263
  190
  134
  92
  62
  40
  25
  16
  9
  5
  3
  2
  1
  0
  0
  0
  0
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

Brookfield Property Partners L.P. owns, operates, and invests in commercial properties in North America, Europe, Australia, and Brazil. As of April 1, 2013, the company had interests in approximately 300 office and retail properties covering approximately 250 million square feet; approximately 15,600 multi-family units; and 29 million square feet of industrial space, as well as an 18 million square foot office development pipeline. It also has investments in distressed and under-performing real estate assets and businesses; and commercial real estate mortgages and mezzanine loans. The company is headquartered in Hamilton, Bermuda. Brookfield Property Partners L.P. (NYSE:BPY.WI) operates independently of Brookfield Asset Management Inc. as of April 15, 2013.

FINANCIAL RATIOS  of  Brookfield Property Partners (BPY)

Valuation Ratios
P/E Ratio 8.9
Price to Sales 1.1
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 7.9
Price to Free Cash Flow -0.8
Growth Rates
Sales Growth Rate 10.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -0.4%
Cap. Spend. - 3 Yr. Gr. Rate 20%
Financial Strength
Quick Ratio 0
Current Ratio 0.2
LT Debt to Equity 376.9%
Total Debt to Equity 444.4%
Interest Coverage 3
Management Effectiveness
Return On Assets 3.2%
Ret/ On Assets - 3 Yr. Avg. 3.3%
Return On Total Capital 1.7%
Ret/ On T. Cap. - 3 Yr. Avg. 2.9%
Return On Equity 8.8%
Return On Equity - 3 Yr. Avg. 16.4%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 63.6%
Gross Margin - 3 Yr. Avg. 63.2%
EBITDA Margin 70.3%
EBITDA Margin - 3 Yr. Avg. 112.4%
Operating Margin 8.1%
Oper. Margin - 3 Yr. Avg. 8.1%
Pre-Tax Margin 40%
Pre-Tax Margin - 3 Yr. Avg. 82.6%
Net Profit Margin 12.3%
Net Profit Margin - 3 Yr. Avg. 20.2%
Effective Tax Rate -26.8%
Eff/ Tax Rate - 3 Yr. Avg. -1.1%
Payout Ratio 0%

BPY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BPY stock intrinsic value calculation we used $5352 million for the last fiscal year's total revenue generated by Brookfield Property Partners. The default revenue input number comes from 2016 income statement of Brookfield Property Partners. 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 BPY stock valuation model: a) initial revenue growth rate of 7.6% 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 12.6%, whose default value for BPY is calculated based on our internal credit rating of Brookfield Property Partners, 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 Brookfield Property Partners.
    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 BPY stock the variable cost ratio is equal to 67.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1350 million in the base year in the intrinsic value calculation for BPY 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 4.3% for Brookfield Property Partners.

Corporate tax rate of 27% is the nominal tax rate for Brookfield Property Partners. 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 BPY 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 BPY are equal to 10.7%.

Life of production assets of 5.8 years is the average useful life of capital assets used in Brookfield Property Partners 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 BPY is equal to -9.8%. 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 - $7542 million for Brookfield Property Partners - 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 258.76 million for Brookfield Property Partners 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 Brookfield Property Partners at the current share price and the inputted number of shares is $5.8 billion.


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Stock chart of BPY Financial statements of BPY
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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