Intrinsic value of Ciner Resources - CINR

Previous Close

$27.55

  Intrinsic Value

$72.96

stock screener

  Rating & Target

str. buy

+165%

  Value-price divergence*

-46%

Previous close

$27.55

 
Intrinsic value

$72.96

 
Up/down potential

+165%

 
Rating

str. buy

 
Value-price divergence*

-46%

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

We calculate the intrinsic value of CINR 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 0.6

 

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, %
  -2.26
  11.40
  10.76
  10.18
  9.67
  9.20
  8.78
  8.40
  8.06
  7.75
  7.48
  7.23
  7.01
  6.81
  6.63
  6.46
  6.32
  6.19
  6.07
  5.96
  5.86
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
  5.33
  5.30
Revenue, $m
  475
  529
  586
  646
  708
  773
  841
  912
  985
  1,062
  1,141
  1,224
  1,310
  1,399
  1,491
  1,588
  1,688
  1,793
  1,901
  2,015
  2,133
  2,256
  2,385
  2,519
  2,659
  2,806
  2,959
  3,119
  3,287
  3,462
  3,645
Variable operating expenses, $m
 
  409
  453
  499
  547
  598
  650
  705
  762
  821
  882
  946
  1,012
  1,081
  1,153
  1,227
  1,305
  1,386
  1,470
  1,557
  1,649
  1,744
  1,843
  1,947
  2,055
  2,169
  2,287
  2,411
  2,540
  2,676
  2,818
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
  385
  409
  453
  499
  547
  598
  650
  705
  762
  821
  882
  946
  1,012
  1,081
  1,153
  1,227
  1,305
  1,386
  1,470
  1,557
  1,649
  1,744
  1,843
  1,947
  2,055
  2,169
  2,287
  2,411
  2,540
  2,676
  2,818
Operating income, $m
  90
  120
  133
  147
  161
  176
  191
  207
  224
  241
  259
  278
  297
  318
  339
  360
  383
  407
  432
  457
  484
  512
  541
  572
  604
  637
  672
  708
  746
  786
  828
EBITDA, $m
  117
  149
  165
  181
  199
  217
  236
  256
  277
  298
  320
  344
  368
  393
  419
  446
  474
  503
  534
  566
  599
  633
  670
  707
  747
  788
  831
  876
  923
  972
  1,024
Interest expense (income), $m
  3
  3
  4
  5
  6
  7
  9
  10
  11
  13
  14
  15
  17
  19
  20
  22
  24
  26
  27
  30
  32
  34
  36
  38
  41
  44
  46
  49
  52
  55
  58
Earnings before tax, $m
  86
  117
  129
  141
  154
  168
  182
  197
  212
  228
  245
  262
  280
  299
  318
  339
  359
  381
  404
  428
  453
  478
  505
  533
  563
  593
  625
  659
  694
  731
  769
Tax expense, $m
  0
  32
  35
  38
  42
  45
  49
  53
  57
  62
  66
  71
  76
  81
  86
  91
  97
  103
  109
  116
  122
  129
  136
  144
  152
  160
  169
  178
  187
  197
  208
Net income, $m
  41
  85
  94
  103
  113
  123
  133
  144
  155
  167
  179
  192
  205
  218
  232
  247
  262
  278
  295
  312
  330
  349
  369
  389
  411
  433
  457
  481
  507
  533
  561

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  20
  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
  413
  438
  485
  534
  586
  640
  696
  754
  815
  878
  944
  1,012
  1,083
  1,157
  1,234
  1,313
  1,396
  1,483
  1,573
  1,666
  1,764
  1,866
  1,972
  2,083
  2,199
  2,321
  2,447
  2,580
  2,718
  2,863
  3,015
Adjusted assets (=assets-cash), $m
  393
  438
  485
  534
  586
  640
  696
  754
  815
  878
  944
  1,012
  1,083
  1,157
  1,234
  1,313
  1,396
  1,483
  1,573
  1,666
  1,764
  1,866
  1,972
  2,083
  2,199
  2,321
  2,447
  2,580
  2,718
  2,863
  3,015
Revenue / Adjusted assets
  1.209
  1.208
  1.208
  1.210
  1.208
  1.208
  1.208
  1.210
  1.209
  1.210
  1.209
  1.209
  1.210
  1.209
  1.208
  1.209
  1.209
  1.209
  1.209
  1.209
  1.209
  1.209
  1.209
  1.209
  1.209
  1.209
  1.209
  1.209
  1.209
  1.209
  1.209
Average production assets, $m
  256
  285
  315
  347
  381
  416
  453
  491
  530
  571
  614
  658
  705
  752
  802
  854
  908
  964
  1,023
  1,084
  1,147
  1,214
  1,283
  1,355
  1,431
  1,509
  1,592
  1,678
  1,768
  1,862
  1,961
Working capital, $m
  80
  77
  85
  94
  103
  112
  122
  132
  143
  154
  165
  177
  190
  203
  216
  230
  245
  260
  276
  292
  309
  327
  346
  365
  386
  407
  429
  452
  477
  502
  529
Total debt, $m
  98
  118
  148
  179
  212
  247
  283
  320
  359
  399
  441
  485
  530
  577
  626
  677
  730
  785
  843
  903
  965
  1,030
  1,098
  1,169
  1,243
  1,321
  1,402
  1,486
  1,575
  1,668
  1,765
Total liabilities, $m
  260
  280
  310
  341
  374
  409
  445
  482
  521
  561
  603
  647
  692
  739
  788
  839
  892
  947
  1,005
  1,065
  1,127
  1,192
  1,260
  1,331
  1,405
  1,483
  1,564
  1,648
  1,737
  1,830
  1,927
Total equity, $m
  153
  158
  175
  193
  211
  231
  251
  272
  294
  317
  341
  365
  391
  418
  445
  474
  504
  535
  568
  602
  637
  674
  712
  752
  794
  838
  883
  931
  981
  1,034
  1,088
Total liabilities and equity, $m
  413
  438
  485
  534
  585
  640
  696
  754
  815
  878
  944
  1,012
  1,083
  1,157
  1,233
  1,313
  1,396
  1,482
  1,573
  1,667
  1,764
  1,866
  1,972
  2,083
  2,199
  2,321
  2,447
  2,579
  2,718
  2,864
  3,015
Debt-to-equity ratio
  0.641
  0.740
  0.840
  0.930
  1.000
  1.070
  1.130
  1.180
  1.220
  1.260
  1.290
  1.330
  1.360
  1.380
  1.410
  1.430
  1.450
  1.470
  1.480
  1.500
  1.520
  1.530
  1.540
  1.550
  1.570
  1.580
  1.590
  1.600
  1.610
  1.610
  1.620
Adjusted equity ratio
  0.338
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  41
  85
  94
  103
  113
  123
  133
  144
  155
  167
  179
  192
  205
  218
  232
  247
  262
  278
  295
  312
  330
  349
  369
  389
  411
  433
  457
  481
  507
  533
  561
Depreciation, amort., depletion, $m
  27
  28
  32
  35
  38
  42
  45
  49
  53
  57
  61
  66
  70
  75
  80
  85
  91
  96
  102
  108
  115
  121
  128
  136
  143
  151
  159
  168
  177
  186
  196
Funds from operations, $m
  142
  114
  126
  138
  151
  164
  178
  193
  208
  224
  240
  257
  275
  293
  313
  333
  353
  375
  397
  421
  445
  471
  497
  525
  554
  584
  616
  649
  683
  720
  758
Change in working capital, $m
  14
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  12
  13
  13
  14
  15
  15
  16
  16
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  27
Cash from operations, $m
  128
  106
  117
  129
  142
  155
  169
  183
  197
  213
  229
  245
  263
  281
  299
  319
  339
  360
  382
  404
  428
  453
  478
  505
  533
  563
  594
  626
  659
  694
  731
Maintenance CAPEX, $m
  0
  -26
  -28
  -32
  -35
  -38
  -42
  -45
  -49
  -53
  -57
  -61
  -66
  -70
  -75
  -80
  -85
  -91
  -96
  -102
  -108
  -115
  -121
  -128
  -136
  -143
  -151
  -159
  -168
  -177
  -186
New CAPEX, $m
  -25
  -29
  -31
  -32
  -34
  -35
  -37
  -38
  -40
  -41
  -43
  -44
  -46
  -48
  -50
  -52
  -54
  -56
  -59
  -61
  -64
  -66
  -69
  -72
  -75
  -79
  -82
  -86
  -90
  -94
  -99
Cash from investing activities, $m
  -25
  -55
  -59
  -64
  -69
  -73
  -79
  -83
  -89
  -94
  -100
  -105
  -112
  -118
  -125
  -132
  -139
  -147
  -155
  -163
  -172
  -181
  -190
  -200
  -211
  -222
  -233
  -245
  -258
  -271
  -285
Free cash flow, $m
  103
  51
  58
  66
  73
  82
  90
  99
  109
  119
  129
  140
  151
  162
  174
  186
  199
  213
  227
  241
  256
  272
  288
  305
  323
  341
  360
  380
  401
  423
  446
Issuance/(repayment) of debt, $m
  -12
  29
  30
  32
  33
  34
  36
  37
  39
  40
  42
  44
  45
  47
  49
  51
  53
  55
  57
  60
  62
  65
  68
  71
  74
  77
  81
  85
  89
  93
  97
Issuance/(repurchase) of shares, $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 financing (excl. dividends), $m  
  -60
  29
  30
  32
  33
  34
  36
  37
  39
  40
  42
  44
  45
  47
  49
  51
  53
  55
  57
  60
  62
  65
  68
  71
  74
  77
  81
  85
  89
  93
  97
Total cash flow (excl. dividends), $m
  43
  80
  88
  97
  106
  116
  126
  137
  148
  159
  171
  183
  196
  209
  223
  237
  252
  268
  284
  301
  318
  337
  356
  376
  397
  418
  441
  465
  490
  516
  543
Retained Cash Flow (-), $m
  3
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -32
  -34
  -35
  -37
  -38
  -40
  -42
  -44
  -46
  -48
  -50
  -52
  -55
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
 
  75
  71
  79
  88
  97
  106
  116
  126
  136
  147
  159
  170
  183
  195
  209
  222
  237
  252
  267
  283
  300
  317
  336
  355
  375
  395
  417
  440
  463
  488
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
 
  72
  65
  69
  72
  75
  77
  78
  79
  78
  77
  75
  73
  69
  66
  61
  57
  51
  46
  41
  36
  31
  26
  22
  18
  15
  12
  9
  7
  5
  4
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

Ciner Resources LP engages in the trona ore mining and soda ash production businesses in the United States and internationally. It processes trona ore into soda ash, which is a raw material in flat glass, container glass, detergents, chemicals, paper, and other consumer and industrial products. The company has approximately 23,500 acres of leased and licensed subsurface mining areas in the Green River Basin of Wyoming. As of December 31, 2015, it had proven and probable reserves of approximately 267.5 million short tons of trona. Ciner Resource Partners LLC serves as the general partner of the company. The company was formerly known as OCI Resources LP and changed its name to Ciner Resources LP in November 2015. Ciner Resources LP is based in Atlanta, Georgia. Ciner Resources LP operates as a subsidiary of OCI Wyoming Holding Co.

FINANCIAL RATIOS  of  Ciner Resources (CINR)

Valuation Ratios
P/E Ratio 13.5
Price to Sales 1.2
Price to Book 3.6
Price to Tangible Book
Price to Cash Flow 4.3
Price to Free Cash Flow 5.4
Growth Rates
Sales Growth Rate -2.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -30.6%
Cap. Spend. - 3 Yr. Gr. Rate 9.3%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 58.2%
Total Debt to Equity 64.1%
Interest Coverage 30
Management Effectiveness
Return On Assets 10.5%
Ret/ On Assets - 3 Yr. Avg. 11.5%
Return On Total Capital 15.9%
Ret/ On T. Cap. - 3 Yr. Avg. 16.5%
Return On Equity 26.5%
Return On Equity - 3 Yr. Avg. 30.5%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 24%
Gross Margin - 3 Yr. Avg. 25.3%
EBITDA Margin 24.4%
EBITDA Margin - 3 Yr. Avg. 25.9%
Operating Margin 18.9%
Oper. Margin - 3 Yr. Avg. 20.7%
Pre-Tax Margin 18.1%
Pre-Tax Margin - 3 Yr. Avg. 19.9%
Net Profit Margin 8.6%
Net Profit Margin - 3 Yr. Avg. 9.7%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 107.3%

CINR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CINR stock intrinsic value calculation we used $475 million for the last fiscal year's total revenue generated by Ciner Resources. The default revenue input number comes from 2016 income statement of Ciner Resources. 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 CINR stock valuation model: a) initial revenue growth rate of 11.4% 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 CINR is calculated based on our internal credit rating of Ciner Resources, 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 Ciner Resources.
    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 CINR stock the variable cost ratio is equal to 77.3%.

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 CINR 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 Ciner Resources.

Corporate tax rate of 27% is the nominal tax rate for Ciner Resources. 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 CINR 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 CINR are equal to 53.8%.

Life of production assets of 10 years is the average useful life of capital assets used in Ciner Resources 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 CINR is equal to 14.5%. 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 - $153 million for Ciner Resources - 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 20.205 million for Ciner Resources 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 Ciner Resources at the current share price and the inputted number of shares is $0.6 billion.

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COMPANY NEWS

▶ Ciner Resources misses 1Q profit forecasts   [May-08-17 06:42PM  Associated Press]
▶ Ciner Resources LP to Release 1st Quarter 2017 Results   [May-04-17 09:00AM  Business Wire]
▶ Ciner Resources LP Announces Quarterly Cash Distribution   [Apr-21-17 10:42AM  Business Wire]
▶ Ciner Resources misses 4Q profit forecasts   [Feb-16-17 06:11PM  Associated Press]
▶ Should You Avoid Tredegar Corporation (TG)?   [Dec-20-16 04:22PM  at Insider Monkey]
▶ Should You Avoid Materion Corp (MTRN)?   [Dec-14-16 11:20AM  at Insider Monkey]
Stock chart of CINR Financial statements of CINR Annual reports of CINR
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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