Intrinsic value of China Auto Logistics - CALI

Previous Close

$2.10

  Intrinsic Value

$1.52

stock screener

  Rating & Target

sell

-28%

  Value-price divergence*

-212%

Previous close

$2.10

 
Intrinsic value

$1.52

 
Up/down potential

-28%

 
Rating

sell

 
Value-price divergence*

-212%

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

We calculate the intrinsic value of CALI 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 0.0

 

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, %
  4.71
  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
  467
  476
  487
  500
  514
  529
  547
  565
  585
  607
  630
  655
  682
  710
  740
  772
  806
  842
  880
  920
  962
  1,007
  1,054
  1,103
  1,155
  1,210
  1,268
  1,329
  1,393
  1,461
  1,532
Variable operating expenses, $m
 
  317
  325
  333
  342
  353
  364
  376
  390
  404
  420
  436
  454
  473
  493
  514
  537
  561
  586
  613
  641
  670
  702
  735
  769
  806
  845
  885
  928
  973
  1,020
Fixed operating expenses, $m
 
  164
  168
  172
  177
  181
  186
  190
  195
  200
  205
  210
  215
  221
  226
  232
  238
  243
  250
  256
  262
  269
  275
  282
  289
  297
  304
  312
  319
  327
  336
Total operating expenses, $m
  467
  481
  493
  505
  519
  534
  550
  566
  585
  604
  625
  646
  669
  694
  719
  746
  775
  804
  836
  869
  903
  939
  977
  1,017
  1,058
  1,103
  1,149
  1,197
  1,247
  1,300
  1,356
Operating income, $m
  0
  -5
  -5
  -5
  -5
  -4
  -3
  -1
  1
  3
  6
  9
  13
  17
  21
  26
  32
  38
  44
  51
  59
  67
  76
  86
  97
  108
  120
  132
  146
  161
  176
EBITDA, $m
  0
  -5
  -5
  -5
  -5
  -4
  -3
  -1
  1
  3
  6
  9
  13
  17
  21
  26
  32
  38
  44
  51
  59
  67
  76
  86
  97
  108
  120
  132
  146
  161
  176
Interest expense (income), $m
  6
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
Earnings before tax, $m
  -1
  -9
  -9
  -9
  -9
  -9
  -8
  -6
  -5
  -2
  0
  3
  6
  10
  14
  19
  24
  29
  35
  42
  49
  57
  65
  75
  84
  95
  106
  118
  131
  144
  159
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  2
  3
  4
  5
  6
  8
  10
  11
  13
  15
  18
  20
  23
  26
  29
  32
  35
  39
  43
Net income, $m
  4
  -9
  -9
  -9
  -9
  -9
  -8
  -6
  -5
  -2
  0
  2
  5
  7
  10
  14
  17
  21
  26
  31
  36
  42
  48
  54
  61
  69
  77
  86
  95
  105
  116

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  3
  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
  162
  165
  170
  174
  180
  186
  192
  199
  206
  214
  222
  231
  241
  251
  262
  274
  286
  299
  312
  327
  342
  358
  374
  392
  411
  431
  451
  473
  496
  520
Adjusted assets (=assets-cash), $m
  158
  162
  165
  170
  174
  180
  186
  192
  199
  206
  214
  222
  231
  241
  251
  262
  274
  286
  299
  312
  327
  342
  358
  374
  392
  411
  431
  451
  473
  496
  520
Revenue / Adjusted assets
  2.956
  2.938
  2.952
  2.941
  2.954
  2.939
  2.941
  2.943
  2.940
  2.947
  2.944
  2.950
  2.952
  2.946
  2.948
  2.947
  2.942
  2.944
  2.943
  2.949
  2.942
  2.944
  2.944
  2.949
  2.946
  2.944
  2.942
  2.947
  2.945
  2.946
  2.946
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
  23
  108
  111
  113
  117
  120
  124
  128
  133
  138
  143
  149
  155
  161
  168
  175
  183
  191
  200
  209
  218
  228
  239
  250
  262
  275
  288
  302
  316
  332
  348
Total debt, $m
  86
  86
  89
  93
  97
  102
  107
  112
  118
  124
  131
  138
  145
  154
  162
  172
  181
  192
  203
  214
  226
  239
  253
  267
  282
  298
  315
  332
  351
  370
  390
Total liabilities, $m
  137
  137
  140
  144
  148
  153
  158
  163
  169
  175
  182
  189
  196
  205
  213
  223
  232
  243
  254
  265
  277
  290
  304
  318
  333
  349
  366
  383
  402
  421
  441
Total equity, $m
  24
  24
  25
  26
  26
  27
  28
  29
  30
  31
  32
  34
  35
  36
  38
  40
  41
  43
  45
  47
  49
  52
  54
  57
  59
  62
  65
  68
  71
  75
  79
Total liabilities and equity, $m
  161
  161
  165
  170
  174
  180
  186
  192
  199
  206
  214
  223
  231
  241
  251
  263
  273
  286
  299
  312
  326
  342
  358
  375
  392
  411
  431
  451
  473
  496
  520
Debt-to-equity ratio
  3.583
  3.530
  3.580
  3.630
  3.690
  3.740
  3.800
  3.860
  3.920
  3.980
  4.040
  4.100
  4.160
  4.220
  4.280
  4.330
  4.390
  4.440
  4.490
  4.540
  4.590
  4.630
  4.680
  4.720
  4.760
  4.800
  4.840
  4.870
  4.910
  4.940
  4.970
Adjusted equity ratio
  0.152
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  4
  -9
  -9
  -9
  -9
  -9
  -8
  -6
  -5
  -2
  0
  2
  5
  7
  10
  14
  17
  21
  26
  31
  36
  42
  48
  54
  61
  69
  77
  86
  95
  105
  116
Depreciation, amort., depletion, $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
Funds from operations, $m
  -99
  -9
  -9
  -9
  -9
  -9
  -8
  -6
  -5
  -2
  0
  2
  5
  7
  10
  14
  17
  21
  26
  31
  36
  42
  48
  54
  61
  69
  77
  86
  95
  105
  116
Change in working capital, $m
  -49
  2
  2
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  15
  15
  16
Cash from operations, $m
  -50
  -11
  -12
  -12
  -12
  -12
  -12
  -11
  -9
  -7
  -5
  -4
  -2
  1
  3
  6
  10
  13
  17
  22
  26
  32
  37
  43
  50
  57
  64
  72
  81
  90
  100
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
  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 investing activities, $m
  21
  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
  -29
  -11
  -12
  -12
  -12
  -12
  -12
  -11
  -9
  -7
  -5
  -4
  -2
  1
  3
  6
  10
  13
  17
  22
  26
  32
  37
  43
  50
  57
  64
  72
  81
  90
  100
Issuance/(repayment) of debt, $m
  25
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  18
  19
  20
Issuance/(repurchase) of shares, $m
  0
  9
  10
  10
  10
  9
  9
  7
  6
  4
  1
  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  
  25
  12
  13
  14
  14
  13
  14
  12
  12
  10
  8
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  18
  19
  20
Total cash flow (excl. dividends), $m
  -4
  1
  1
  1
  2
  2
  2
  2
  2
  2
  3
  4
  6
  9
  12
  16
  19
  24
  28
  33
  39
  44
  51
  57
  65
  72
  81
  90
  99
  110
  120
Retained Cash Flow (-), $m
  -3
  -9
  -10
  -10
  -10
  -9
  -9
  -7
  -6
  -4
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
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
 
  -8
  -9
  -9
  -8
  -8
  -7
  -5
  -3
  -1
  1
  2
  5
  8
  11
  14
  18
  22
  26
  31
  36
  42
  48
  55
  62
  70
  78
  87
  96
  106
  117
Discount rate, %
 
  12.70
  13.34
  14.00
  14.70
  15.44
  16.21
  17.02
  17.87
  18.76
  19.70
  20.69
  21.72
  22.81
  23.95
  25.15
  26.40
  27.72
  29.11
  30.56
  32.09
  33.70
  35.38
  37.15
  39.01
  40.96
  43.01
  45.16
  47.41
  49.79
  52.27
PV of cash for distribution, $m
 
  -7
  -7
  -6
  -5
  -4
  -3
  -2
  -1
  0
  0
  0
  0
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  64.7
  41.0
  26.0
  16.7
  11.0
  7.6
  5.6
  4.3
  3.7
  3.5
  3.5
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  3.5

China Auto Logistics Inc. sells and trades in imported automobiles in the People’s Republic of China. It operates through Sales of Automobiles, Financing Services, and Other Services segments. The company also offers financing services, including letter of credit issuance, purchase deposit financing, and import duty advances services, as well as automobile value-added services comprising customs clearance, storage, and delivery services. In addition, it provides Web-based advertising services through its Websites, such as at188.com that provides sales and trading information related to imported automobiles, as well as parts and components information; and at160.com, which offers price comparison, and sales and trading information. It primarily serves authorized dealers and agents, free traders or wholesalers, and individual customers. The company is headquartered in Tianjin, the People’s Republic of China.

FINANCIAL RATIOS  of  China Auto Logistics (CALI)

Valuation Ratios
P/E Ratio 2.1
Price to Sales 0
Price to Book 0.4
Price to Tangible Book
Price to Cash Flow -0.2
Price to Free Cash Flow -0.2
Growth Rates
Sales Growth Rate 4.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 0
Current Ratio 0.2
LT Debt to Equity 0%
Total Debt to Equity 358.3%
Interest Coverage 1
Management Effectiveness
Return On Assets 4.5%
Ret/ On Assets - 3 Yr. Avg. -0.7%
Return On Total Capital 2.6%
Ret/ On T. Cap. - 3 Yr. Avg. -6.5%
Return On Equity 17.8%
Return On Equity - 3 Yr. Avg. -26.9%
Asset Turnover 2.1
Profitability Ratios
Gross Margin 0.6%
Gross Margin - 3 Yr. Avg. 0.8%
EBITDA Margin 1.1%
EBITDA Margin - 3 Yr. Avg. -0.7%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. -2.3%
Pre-Tax Margin -0.2%
Pre-Tax Margin - 3 Yr. Avg. -3.1%
Net Profit Margin 0.9%
Net Profit Margin - 3 Yr. Avg. -2.9%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. -2.5%
Payout Ratio 0%

CALI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CALI stock intrinsic value calculation we used $467 million for the last fiscal year's total revenue generated by China Auto Logistics. The default revenue input number comes from 2016 income statement of China Auto Logistics. 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 CALI 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 12.7%, whose default value for CALI is calculated based on our internal credit rating of China Auto Logistics, 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 China Auto Logistics.
    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 CALI stock the variable cost ratio is equal to 66.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $160 million in the base year in the intrinsic value calculation for CALI 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 4.6% for China Auto Logistics.

Corporate tax rate of 27% is the nominal tax rate for China Auto Logistics. 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 CALI 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 CALI are equal to 0%.

Life of production assets of 10 years is the average useful life of capital assets used in China Auto Logistics 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 CALI is equal to 22.7%. 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 - $24 million for China Auto Logistics - 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 3.958 million for China Auto Logistics 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 China Auto Logistics at the current share price and the inputted number of shares is $0.0 billion.

RELATED COMPANIES Price Int.Val. Rating

COMPANY NEWS

▶ China Auto Logistics Reports 2017 First Quarter Results   [May-15-17 07:30AM  Marketwired]
▶ It's Time to Look Under the Hood of China's CAR   [Mar-15  10:14PM  at The Wall Street Journal]
▶ 3 Stocks Pushing The Specialty Retail Industry Lower   [Oct-17  04:32PM  at TheStreet]
▶ 3 Wholesale Stocks Pushing The Industry Higher   [Oct-15  04:33PM  at TheStreet]
▶ 3 Stocks Driving The Specialty Retail Industry Higher   [Jul-22  04:01PM  at TheStreet]
▶ 3 Specialty Retail Stocks Moving The Industry Upward   [Jul-18  04:01PM  at TheStreet]
▶ China Auto Logistics Inc Stock Downgraded (CALI)   [Jun-10  11:11AM  at TheStreet]
▶ [$$] SEC Sues for Alleged Stock Manipulation   [May-05  07:15PM  at The Wall Street Journal]
Stock chart of CALI Financial statements of CALI
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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