Intrinsic value of CNOOC ADR - CEO

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$116.89

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$116.89

 
Intrinsic value

$31.25

 
Up/down potential

-73%

 
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 CEO 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 51.7

 

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, %
  -14.55
  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
  21,193
  21,617
  22,114
  22,682
  23,320
  24,027
  24,803
  25,648
  26,562
  27,547
  28,605
  29,736
  30,942
  32,227
  33,593
  35,042
  36,578
  38,203
  39,922
  41,739
  43,656
  45,680
  47,814
  50,064
  52,434
  54,930
  57,558
  60,324
  63,235
  66,298
  69,519
Variable operating expenses, $m
 
  4,410
  4,511
  4,627
  4,757
  4,902
  5,060
  5,232
  5,419
  5,620
  5,835
  6,066
  6,312
  6,574
  6,853
  7,149
  7,462
  7,793
  8,144
  8,515
  8,906
  9,319
  9,754
  10,213
  10,696
  11,206
  11,742
  12,306
  12,900
  13,525
  14,182
Fixed operating expenses, $m
 
  18,098
  18,551
  19,015
  19,490
  19,977
  20,477
  20,989
  21,513
  22,051
  22,602
  23,168
  23,747
  24,340
  24,949
  25,573
  26,212
  26,867
  27,539
  28,227
  28,933
  29,656
  30,398
  31,158
  31,937
  32,735
  33,553
  34,392
  35,252
  36,133
  37,037
Total operating expenses, $m
  21,542
  22,508
  23,062
  23,642
  24,247
  24,879
  25,537
  26,221
  26,932
  27,671
  28,437
  29,234
  30,059
  30,914
  31,802
  32,722
  33,674
  34,660
  35,683
  36,742
  37,839
  38,975
  40,152
  41,371
  42,633
  43,941
  45,295
  46,698
  48,152
  49,658
  51,219
Operating income, $m
  -349
  -891
  -948
  -959
  -927
  -851
  -733
  -573
  -370
  -123
  167
  502
  883
  1,313
  1,791
  2,321
  2,904
  3,543
  4,239
  4,997
  5,817
  6,705
  7,662
  8,693
  9,800
  10,989
  12,263
  13,626
  15,083
  16,640
  18,300
EBITDA, $m
  10,276
  6,095
  6,199
  6,371
  6,610
  6,914
  7,283
  7,716
  8,215
  8,780
  9,412
  10,113
  10,884
  11,728
  12,648
  13,646
  14,726
  15,890
  17,142
  18,487
  19,927
  21,469
  23,116
  24,873
  26,747
  28,742
  30,865
  33,123
  35,521
  38,067
  40,769
Interest expense (income), $m
  764
  662
  687
  715
  747
  783
  823
  867
  914
  966
  1,021
  1,081
  1,145
  1,213
  1,285
  1,362
  1,444
  1,530
  1,622
  1,719
  1,821
  1,929
  2,043
  2,163
  2,290
  2,424
  2,564
  2,712
  2,868
  3,032
  3,205
Earnings before tax, $m
  -763
  -1,554
  -1,635
  -1,675
  -1,674
  -1,635
  -1,556
  -1,440
  -1,284
  -1,089
  -855
  -579
  -261
  100
  506
  959
  1,460
  2,012
  2,617
  3,278
  3,996
  4,776
  5,619
  6,529
  7,510
  8,565
  9,698
  10,913
  12,215
  13,607
  15,095
Tax expense, $m
  -855
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  27
  137
  259
  394
  543
  707
  885
  1,079
  1,289
  1,517
  1,763
  2,028
  2,313
  2,619
  2,947
  3,298
  3,674
  4,076
Net income, $m
  92
  -1,554
  -1,635
  -1,675
  -1,674
  -1,635
  -1,556
  -1,440
  -1,284
  -1,089
  -855
  -579
  -261
  73
  369
  700
  1,066
  1,469
  1,911
  2,393
  2,917
  3,486
  4,102
  4,766
  5,483
  6,253
  7,080
  7,967
  8,917
  9,933
  11,020

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  4,424
  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
  92,255
  89,697
  91,760
  94,118
  96,765
  99,699
  102,918
  106,423
  110,217
  114,304
  118,691
  123,384
  128,392
  133,723
  139,390
  145,403
  151,775
  158,520
  165,653
  173,189
  181,147
  189,544
  198,399
  207,732
  217,567
  227,924
  238,830
  250,308
  262,387
  275,094
  288,460
Adjusted assets (=assets-cash), $m
  87,831
  89,697
  91,760
  94,118
  96,765
  99,699
  102,918
  106,423
  110,217
  114,304
  118,691
  123,384
  128,392
  133,723
  139,390
  145,403
  151,775
  158,520
  165,653
  173,189
  181,147
  189,544
  198,399
  207,732
  217,567
  227,924
  238,830
  250,308
  262,387
  275,094
  288,460
Revenue / Adjusted assets
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
Average production assets, $m
  34,245
  34,933
  35,736
  36,655
  37,686
  38,828
  40,082
  41,447
  42,925
  44,517
  46,225
  48,053
  50,003
  52,079
  54,286
  56,628
  59,110
  61,736
  64,514
  67,450
  70,549
  73,819
  77,268
  80,903
  84,733
  88,767
  93,014
  97,484
  102,188
  107,137
  112,343
Working capital, $m
  7,951
  6,507
  6,656
  6,827
  7,019
  7,232
  7,466
  7,720
  7,995
  8,292
  8,610
  8,950
  9,314
  9,700
  10,111
  10,548
  11,010
  11,499
  12,017
  12,563
  13,141
  13,750
  14,392
  15,069
  15,783
  16,534
  17,325
  18,158
  19,034
  19,956
  20,925
Total debt, $m
  21,770
  19,635
  20,436
  21,351
  22,378
  23,516
  24,765
  26,125
  27,597
  29,183
  30,885
  32,706
  34,649
  36,718
  38,916
  41,249
  43,722
  46,339
  49,106
  52,030
  55,118
  58,376
  61,812
  65,433
  69,249
  73,268
  77,499
  81,953
  86,639
  91,570
  96,756
Total liabilities, $m
  36,936
  34,802
  35,603
  36,518
  37,545
  38,683
  39,932
  41,292
  42,764
  44,350
  46,052
  47,873
  49,816
  51,885
  54,083
  56,416
  58,889
  61,506
  64,273
  67,197
  70,285
  73,543
  76,979
  80,600
  84,416
  88,435
  92,666
  97,120
  101,806
  106,737
  111,923
Total equity, $m
  55,318
  54,894
  56,157
  57,600
  59,220
  61,016
  62,986
  65,131
  67,453
  69,954
  72,639
  75,511
  78,576
  81,839
  85,307
  88,986
  92,886
  97,014
  101,379
  105,992
  110,862
  116,001
  121,420
  127,132
  133,151
  139,490
  146,164
  153,189
  160,581
  168,358
  176,538
Total liabilities and equity, $m
  92,254
  89,696
  91,760
  94,118
  96,765
  99,699
  102,918
  106,423
  110,217
  114,304
  118,691
  123,384
  128,392
  133,724
  139,390
  145,402
  151,775
  158,520
  165,652
  173,189
  181,147
  189,544
  198,399
  207,732
  217,567
  227,925
  238,830
  250,309
  262,387
  275,095
  288,461
Debt-to-equity ratio
  0.394
  0.360
  0.360
  0.370
  0.380
  0.390
  0.390
  0.400
  0.410
  0.420
  0.430
  0.430
  0.440
  0.450
  0.460
  0.460
  0.470
  0.480
  0.480
  0.490
  0.500
  0.500
  0.510
  0.510
  0.520
  0.530
  0.530
  0.530
  0.540
  0.540
  0.550
Adjusted equity ratio
  0.612
  0.612
  0.612
  0.612
  0.612
  0.612
  0.612
  0.612
  0.612
  0.612
  0.612
  0.612
  0.612
  0.612
  0.612
  0.612
  0.612
  0.612
  0.612
  0.612
  0.612
  0.612
  0.612
  0.612
  0.612
  0.612
  0.612
  0.612
  0.612
  0.612
  0.612

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  92
  -1,554
  -1,635
  -1,675
  -1,674
  -1,635
  -1,556
  -1,440
  -1,284
  -1,089
  -855
  -579
  -261
  73
  369
  700
  1,066
  1,469
  1,911
  2,393
  2,917
  3,486
  4,102
  4,766
  5,483
  6,253
  7,080
  7,967
  8,917
  9,933
  11,020
Depreciation, amort., depletion, $m
  10,625
  6,987
  7,147
  7,331
  7,537
  7,766
  8,016
  8,289
  8,585
  8,903
  9,245
  9,611
  10,001
  10,416
  10,857
  11,326
  11,822
  12,347
  12,903
  13,490
  14,110
  14,764
  15,454
  16,181
  16,947
  17,753
  18,603
  19,497
  20,438
  21,427
  22,469
Funds from operations, $m
  9,202
  5,433
  5,512
  5,656
  5,863
  6,131
  6,460
  6,850
  7,301
  7,814
  8,390
  9,032
  9,739
  10,489
  11,227
  12,026
  12,888
  13,816
  14,814
  15,883
  17,027
  18,250
  19,555
  20,947
  22,429
  24,006
  25,683
  27,464
  29,354
  31,361
  33,488
Change in working capital, $m
  -2,386
  128
  150
  171
  192
  213
  233
  254
  275
  297
  318
  340
  363
  387
  411
  436
  462
  489
  517
  547
  577
  609
  642
  677
  713
  751
  791
  833
  876
  922
  970
Cash from operations, $m
  11,588
  -26,531
  5,362
  5,485
  5,671
  5,918
  6,226
  6,595
  7,026
  7,517
  8,072
  8,691
  9,376
  10,102
  10,816
  11,589
  12,426
  13,327
  14,296
  15,336
  16,450
  17,641
  18,913
  20,270
  21,716
  23,255
  24,891
  26,631
  28,478
  30,439
  32,519
Maintenance CAPEX, $m
  0
  -6,849
  -6,987
  -7,147
  -7,331
  -7,537
  -7,766
  -8,016
  -8,289
  -8,585
  -8,903
  -9,245
  -9,611
  -10,001
  -10,416
  -10,857
  -11,326
  -11,822
  -12,347
  -12,903
  -13,490
  -14,110
  -14,764
  -15,454
  -16,181
  -16,947
  -17,753
  -18,603
  -19,497
  -20,438
  -21,427
New CAPEX, $m
  -9,791
  -688
  -803
  -918
  -1,031
  -1,143
  -1,254
  -1,365
  -1,478
  -1,592
  -1,708
  -1,828
  -1,950
  -2,076
  -2,207
  -2,342
  -2,482
  -2,627
  -2,778
  -2,935
  -3,099
  -3,270
  -3,449
  -3,635
  -3,830
  -4,034
  -4,247
  -4,470
  -4,704
  -4,949
  -5,205
Cash from investing activities, $m
  -11,067
  -7,537
  -7,790
  -8,065
  -8,362
  -8,680
  -9,020
  -9,381
  -9,767
  -10,177
  -10,611
  -11,073
  -11,561
  -12,077
  -12,623
  -13,199
  -13,808
  -14,449
  -15,125
  -15,838
  -16,589
  -17,380
  -18,213
  -19,089
  -20,011
  -20,981
  -22,000
  -23,073
  -24,201
  -25,387
  -26,632
Free cash flow, $m
  521
  -34,068
  -2,428
  -2,581
  -2,691
  -2,761
  -2,793
  -2,786
  -2,741
  -2,659
  -2,540
  -2,382
  -2,185
  -1,975
  -1,807
  -1,610
  -1,382
  -1,122
  -829
  -502
  -139
  261
  701
  1,181
  1,705
  2,274
  2,891
  3,558
  4,277
  5,052
  5,886
Issuance/(repayment) of debt, $m
  2,721
  712
  800
  915
  1,027
  1,138
  1,249
  1,360
  1,472
  1,586
  1,702
  1,821
  1,943
  2,069
  2,199
  2,333
  2,472
  2,617
  2,768
  2,924
  3,088
  3,258
  3,436
  3,622
  3,816
  4,019
  4,231
  4,454
  4,687
  4,930
  5,186
Issuance/(repurchase) of shares, $m
  0
  32,932
  2,890
  3,109
  3,284
  3,419
  3,514
  3,571
  3,591
  3,575
  3,522
  3,433
  3,306
  3,169
  3,076
  2,957
  2,809
  2,633
  2,427
  2,190
  1,922
  1,620
  1,283
  909
  498
  46
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  1,957
  33,644
  3,690
  4,024
  4,311
  4,557
  4,763
  4,931
  5,063
  5,161
  5,224
  5,254
  5,249
  5,238
  5,275
  5,290
  5,281
  5,250
  5,195
  5,114
  5,010
  4,878
  4,719
  4,531
  4,314
  4,065
  4,231
  4,454
  4,687
  4,930
  5,186
Total cash flow (excl. dividends), $m
  2,513
  -33,356
  -1,627
  -1,666
  -1,664
  -1,623
  -1,544
  -1,426
  -1,269
  -1,073
  -838
  -561
  -242
  94
  391
  723
  1,091
  1,495
  1,938
  2,422
  2,948
  3,519
  4,136
  4,803
  5,521
  6,293
  7,122
  8,011
  8,964
  9,983
  11,072
Retained Cash Flow (-), $m
  531
  -1,153
  -1,263
  -1,443
  -1,620
  -1,795
  -1,970
  -2,145
  -2,322
  -2,502
  -2,685
  -2,872
  -3,065
  -3,263
  -3,468
  -3,680
  -3,900
  -4,128
  -4,365
  -4,612
  -4,870
  -5,139
  -5,419
  -5,712
  -6,019
  -6,339
  -6,674
  -7,025
  -7,392
  -7,777
  -8,180
Prev. year cash balance distribution, $m
 
  1,577
  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
  448
  987
  1,572
  2,206
  2,892
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
 
  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
  13
  21
  24
  24
  22
Current shareholders' claim on cash, %
  100
  60.4
  57.2
  54.0
  50.9
  47.9
  45.2
  42.6
  40.2
  38.0
  36.1
  34.4
  32.8
  31.5
  30.3
  29.2
  28.2
  27.4
  26.7
  26.1
  25.6
  25.2
  24.9
  24.7
  24.6
  24.6
  24.6
  24.6
  24.6
  24.6
  24.6

CNOOC Limited, an investment holding company, explores for, develops, produces, and sells crude oil, natural gas, and other petroleum products. The company operates through Exploration and Production, and Trading Business. It produces offshore crude oil and natural gas primarily in Bohai, Western South China Sea, Eastern South China Sea, and East China Sea in offshore China; and Asia, Africa, North America, South America, Oceania, and Europe. As of December 31, 2015, CNOOC Limited had net proved reserves of approximately 4.32 billion barrels-of-oil equivalent. It is also involved in the issuance of bonds. The company was incorporated in 1999 and is based in Central, Hong Kong. CNOOC Limited is considered a Red Chip company due to its listing on the Hong Kong Stock Exchange. CNOOC Limited is a subsidiary of China National Offshore Oil Corporation.

FINANCIAL RATIOS  of  CNOOC ADR (CEO)

Valuation Ratios
P/E Ratio 56726.5
Price to Sales 246.3
Price to Book 94.3
Price to Tangible Book
Price to Cash Flow 450.4
Price to Free Cash Flow 2904.2
Growth Rates
Sales Growth Rate -14.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -29.3%
Cap. Spend. - 3 Yr. Gr. Rate 1.4%
Financial Strength
Quick Ratio 2
Current Ratio 0.9
LT Debt to Equity 34.2%
Total Debt to Equity 39.4%
Interest Coverage 0
Management Effectiveness
Return On Assets -0%
Ret/ On Assets - 3 Yr. Avg. 4.5%
Return On Total Capital 0.1%
Ret/ On T. Cap. - 3 Yr. Avg. 5.4%
Return On Equity 0.2%
Return On Equity - 3 Yr. Avg. 7.4%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 71.2%
Gross Margin - 3 Yr. Avg. 69.1%
EBITDA Margin 50.1%
EBITDA Margin - 3 Yr. Avg. 49.5%
Operating Margin -1.6%
Oper. Margin - 3 Yr. Avg. 12.7%
Pre-Tax Margin -3.6%
Pre-Tax Margin - 3 Yr. Avg. 12.1%
Net Profit Margin 0.4%
Net Profit Margin - 3 Yr. Avg. 11.4%
Effective Tax Rate 112.1%
Eff/ Tax Rate - 3 Yr. Avg. 40.3%
Payout Ratio 3210.9%

CEO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CEO stock intrinsic value calculation we used $21193 million for the last fiscal year's total revenue generated by CNOOC ADR. The default revenue input number comes from 2016 income statement of CNOOC ADR. 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 CEO 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 CEO is calculated based on our internal credit rating of CNOOC ADR, 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 CNOOC ADR.
    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 CEO stock the variable cost ratio is equal to 20.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $17657 million in the base year in the intrinsic value calculation for CEO 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 CNOOC ADR.

Corporate tax rate of 27% is the nominal tax rate for CNOOC ADR. 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 CEO 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 CEO are equal to 161.6%.

Life of production assets of 3.3 years is the average useful life of capital assets used in CNOOC ADR 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 CEO is equal to 30.1%. 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 - $55318 million for CNOOC ADR - 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 442.571 million for CNOOC ADR 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 CNOOC ADR at the current share price and the inputted number of shares is $51.7 billion.


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COMPANY NEWS

▶ 3 Experts On OPEC, Oil, Saudis & Aramco As Trump Travels   [May-19-17 07:04PM  Barrons.com]
▶ Asias LNG Buyers Club Is Shaking Up The Market   [May-15-17 03:00PM  Oilprice.com]
▶ ETFs with exposure to CNOOC Ltd. : May 11, 2017   [May-11-17 04:20PM  Capital Cube]
▶ OPEC Oil Cuts? Saudis, Russia, Iran & Even China Agree   [May-08-17 02:58PM  Barrons.com]
▶ ETFs with exposure to CNOOC Ltd. : April 27, 2017   [Apr-27-17 03:50PM  Capital Cube]
▶ Mexico Looks Overseas For New Oil Export Destinations   [Apr-25-17 05:00PM  Oilprice.com]
▶ China Offers Contested South China Sea Oil And Gas Blocks   [Apr-24-17 07:00PM  Oilprice.com]
▶ CNOOC Limited Filed 2016 Annual Report on Form 20-F   [Apr-21-17 07:25AM  PR Newswire]
▶ China's CNOOC Tenders 10 Coal Bed Methane Blocks   [Apr-20-17 08:00PM  Rigzone.com]
▶ [$$] Cnooc Shakes Up Management   [Apr-18-17 07:19AM  The Wall Street Journal]
▶ CNOOC Signs PSC With Husky   [Apr-13-17 08:05PM  PR Newswire]
▶ CNOOC Signs PSC With Husky   [08:00PM  PR Newswire]
▶ PetroChina Downgraded to Underperform   [Apr-10-17 02:25AM  Barrons.com]
▶ ConocoPhillips, Nexen Cut Canadian Synthetic Crude Output   [Apr-07-17 11:11AM  TheStreet.com]
▶ Fear Not: Oil Sell-off Is Done, Says Citi   [Mar-28-17 01:02AM  Barrons.com]
▶ 3 Reasons To Buy CNOOC   [Mar-23-17 11:07PM  Barrons.com]
▶ [$$] Cnooc Manages to Book Annual Profit Amid Cost Cutting   [12:01PM  The Wall Street Journal]
▶ CNOOC (CEO): Moving Average Crossover Alert   [Mar-13-17 06:39AM  Zacks]
▶ Dividends? 4 Cash Cow Oil Companies   [Feb-07-17 08:55PM  at Barrons.com]
▶ Oil Investors Await 2017 Investment Plans   [Jan-23-17 08:15AM  at Investopedia]
▶ CNOOC Sees Oil At $51, Raises Capex, Promises Dividends   [Jan-19-17 08:24PM  at Barrons.com]
▶ Enping 23-1 Oilfields Commences Production   [Jan-17-17 03:45AM  PR Newswire]
▶ PetroChina Has 37% Upside: Morgan Stanley   [Jan-10-17 09:50PM  at Barrons.com]
▶ 7 Energy Stocks With Up To 30% Upside   [Jan-03-17 08:28PM  at Barrons.com]
▶ Should You Avoid CNOOC Ltd (ADR) (CEO)?   [Dec-12-16 12:32PM  at Insider Monkey]
▶ Heres Why Hess Corp.'s Stock Jumped 17% Last Month   [Dec-09-16 01:12PM  at Motley Fool]
▶ A.M. Best Affirms Credit Ratings of ICM Assurance Ltd   [Dec-07-16 04:01PM  Business Wire]
▶ CNOOC Grabs a Stake in Mexican Offshore Oil   [Dec-06-16 12:09PM  at TheStreet]
▶ Nikkei Leads Asia Rally After OPEC Deal   [Nov-30-16 09:04PM  at Barrons.com]
▶ OPEC Talks Cuts Thursday In Doha, Oil Weakens   [Nov-16-16 06:09PM  at Barrons.com]
▶ Big Oils Shrinking Act Has More to Go in China   [Oct-30-16 12:00PM  at Bloomberg]
▶ Sanford C. Bernstein: Positive on Where Oil Is Heading   [Oct-27-16 02:03AM  at Bloomberg]
▶ [$$] China's Cnooc Trims Its Exposure in Canadian North   [02:45PM  at The Wall Street Journal]
▶ OPEC Oil Deal: Not As Good As It Sounds   [Sep-28-16 10:15PM  at Barrons.com]
▶ Can China's Teapots Continue To Support Oil Markets?   [Sep-25-16 11:04PM  at Barrons.com]
▶ Will China's Strategic Petroleum Reserve Save Oil Markets?   [Sep-22-16 10:22PM  at Barrons.com]
▶ Enping 18-1 Oilfield Commences Production   [Sep-21-16 04:45AM  PR Newswire]
▶ Billionaire Michael Platts BlueCrest Grows More Bullish on Energy   [Sep-16-16 08:54AM  at Insider Monkey]
▶ How Resilient Is China's Oil Demand Really?   [Sep-01-16 03:26AM  at Barrons.com]
▶ Is PotashCorp's Recovery Near At Hand?   [Aug-30-16 02:51PM  at Investopedia]
▶ [$$] PetroChina and Cnooc Results Plunge   [12:28AM  at The Wall Street Journal]
▶ Has CNOOC, King Of Cost Control, Bottomed?   [Aug-24-16 10:23PM  at Barrons.com]
▶ [$$] PetroChina and Cnooc Results Plunge   [08:40PM  at The Wall Street Journal]
▶ China Oil Stocks Socked By Energy Slump   [01:57PM  at Barrons.com]
Stock chart of CEO Financial statements of CEO Annual reports of CEO
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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