Intrinsic value of Ciner Resources - CINR

Previous Close

$25.04

  Intrinsic Value

$50.78

stock screener

  Rating & Target

str. buy

+103%

Previous close

$25.04

 
Intrinsic value

$50.78

 
Up/down potential

+103%

 
Rating

str. buy

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 0.5

 

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
  2.60
  2.84
  3.06
  3.25
  3.43
  3.58
  3.72
  3.85
  3.97
  4.07
  4.16
  4.25
  4.32
  4.39
  4.45
  4.51
  4.56
  4.60
  4.64
  4.68
  4.71
  4.74
  4.76
  4.79
  4.81
  4.83
  4.84
  4.86
  4.87
  4.89
Revenue, $m
  475
  487
  501
  517
  533
  552
  571
  593
  615
  640
  666
  694
  723
  754
  787
  822
  860
  899
  940
  984
  1,030
  1,078
  1,129
  1,183
  1,240
  1,299
  1,362
  1,428
  1,497
  1,570
  1,647
Variable operating expenses, $m
 
  377
  387
  399
  412
  426
  442
  458
  476
  495
  515
  536
  559
  583
  609
  636
  664
  695
  727
  760
  796
  833
  873
  914
  958
  1,004
  1,053
  1,104
  1,157
  1,214
  1,273
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
  377
  387
  399
  412
  426
  442
  458
  476
  495
  515
  536
  559
  583
  609
  636
  664
  695
  727
  760
  796
  833
  873
  914
  958
  1,004
  1,053
  1,104
  1,157
  1,214
  1,273
Operating income, $m
  90
  111
  114
  117
  121
  125
  130
  135
  140
  145
  151
  157
  164
  171
  179
  187
  195
  204
  213
  223
  234
  245
  256
  269
  281
  295
  309
  324
  340
  356
  374
EBITDA, $m
  117
  138
  142
  146
  151
  156
  162
  168
  175
  181
  189
  197
  205
  214
  223
  233
  244
  255
  267
  279
  292
  306
  320
  336
  352
  369
  386
  405
  425
  445
  467
Interest expense (income), $m
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  9
  10
  10
  11
  12
  13
  13
  14
  15
  16
  17
  18
  20
  21
  22
  23
Earnings before tax, $m
  86
  108
  110
  114
  117
  121
  125
  130
  134
  140
  145
  151
  157
  164
  170
  178
  186
  194
  202
  212
  221
  231
  242
  253
  265
  278
  291
  305
  319
  334
  351
Tax expense, $m
  0
  29
  30
  31
  32
  33
  34
  35
  36
  38
  39
  41
  42
  44
  46
  48
  50
  52
  55
  57
  60
  62
  65
  68
  72
  75
  79
  82
  86
  90
  95
Net income, $m
  41
  78
  81
  83
  86
  88
  91
  95
  98
  102
  106
  110
  115
  119
  124
  130
  135
  141
  148
  154
  161
  169
  177
  185
  194
  203
  212
  222
  233
  244
  256

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
  403
  415
  427
  441
  456
  473
  490
  509
  529
  551
  574
  598
  624
  651
  680
  711
  743
  778
  814
  852
  892
  934
  978
  1,025
  1,075
  1,127
  1,181
  1,238
  1,299
  1,362
Adjusted assets (=assets-cash), $m
  393
  403
  415
  427
  441
  456
  473
  490
  509
  529
  551
  574
  598
  624
  651
  680
  711
  743
  778
  814
  852
  892
  934
  978
  1,025
  1,075
  1,127
  1,181
  1,238
  1,299
  1,362
Revenue / Adjusted assets
  1.209
  1.208
  1.207
  1.211
  1.209
  1.211
  1.207
  1.210
  1.208
  1.210
  1.209
  1.209
  1.209
  1.208
  1.209
  1.209
  1.210
  1.210
  1.208
  1.209
  1.209
  1.209
  1.209
  1.210
  1.210
  1.208
  1.209
  1.209
  1.209
  1.209
  1.209
Average production assets, $m
  256
  262
  270
  278
  287
  297
  307
  319
  331
  344
  358
  373
  389
  406
  424
  442
  462
  483
  506
  529
  554
  580
  608
  636
  667
  699
  733
  768
  806
  845
  886
Working capital, $m
  80
  71
  73
  75
  77
  80
  83
  86
  89
  93
  97
  101
  105
  109
  114
  119
  125
  130
  136
  143
  149
  156
  164
  172
  180
  188
  197
  207
  217
  228
  239
Total debt, $m
  98
  96
  103
  111
  120
  130
  140
  151
  163
  176
  190
  205
  220
  237
  254
  273
  292
  313
  335
  358
  382
  408
  435
  463
  493
  525
  558
  593
  629
  668
  709
Total liabilities, $m
  260
  258
  265
  273
  282
  292
  302
  313
  325
  338
  352
  367
  382
  399
  416
  435
  454
  475
  497
  520
  544
  570
  597
  625
  655
  687
  720
  755
  791
  830
  871
Total equity, $m
  153
  146
  150
  154
  159
  165
  171
  177
  184
  191
  199
  207
  216
  225
  235
  246
  257
  268
  281
  294
  307
  322
  337
  353
  370
  388
  407
  426
  447
  469
  492
Total liabilities and equity, $m
  413
  404
  415
  427
  441
  457
  473
  490
  509
  529
  551
  574
  598
  624
  651
  681
  711
  743
  778
  814
  851
  892
  934
  978
  1,025
  1,075
  1,127
  1,181
  1,238
  1,299
  1,363
Debt-to-equity ratio
  0.641
  0.660
  0.690
  0.720
  0.750
  0.790
  0.820
  0.850
  0.890
  0.920
  0.960
  0.990
  1.020
  1.050
  1.080
  1.110
  1.140
  1.170
  1.190
  1.220
  1.240
  1.270
  1.290
  1.310
  1.330
  1.350
  1.370
  1.390
  1.410
  1.420
  1.440
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
  78
  81
  83
  86
  88
  91
  95
  98
  102
  106
  110
  115
  119
  124
  130
  135
  141
  148
  154
  161
  169
  177
  185
  194
  203
  212
  222
  233
  244
  256
Depreciation, amort., depletion, $m
  27
  28
  28
  29
  30
  31
  32
  34
  35
  36
  38
  39
  41
  43
  45
  47
  49
  51
  53
  56
  58
  61
  64
  67
  70
  74
  77
  81
  85
  89
  93
Funds from operations, $m
  142
  106
  109
  112
  116
  120
  124
  128
  133
  138
  144
  149
  156
  162
  169
  176
  184
  192
  201
  210
  220
  230
  241
  252
  264
  276
  289
  303
  318
  333
  349
Change in working capital, $m
  14
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
Cash from operations, $m
  128
  104
  107
  110
  113
  117
  121
  125
  130
  135
  140
  145
  151
  158
  164
  171
  179
  187
  195
  204
  213
  223
  233
  244
  256
  268
  280
  294
  308
  322
  338
Maintenance CAPEX, $m
  0
  -27
  -28
  -28
  -29
  -30
  -31
  -32
  -34
  -35
  -36
  -38
  -39
  -41
  -43
  -45
  -47
  -49
  -51
  -53
  -56
  -58
  -61
  -64
  -67
  -70
  -74
  -77
  -81
  -85
  -89
New CAPEX, $m
  -25
  -7
  -7
  -8
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -32
  -34
  -36
  -37
  -39
  -41
Cash from investing activities, $m
  -25
  -34
  -35
  -36
  -38
  -40
  -42
  -43
  -46
  -48
  -50
  -53
  -55
  -58
  -61
  -64
  -67
  -70
  -73
  -76
  -81
  -84
  -88
  -93
  -97
  -102
  -108
  -113
  -118
  -124
  -130
Free cash flow, $m
  103
  71
  72
  73
  75
  77
  79
  81
  84
  87
  90
  93
  96
  100
  104
  108
  112
  117
  122
  127
  133
  139
  145
  151
  158
  165
  173
  181
  190
  198
  208
Issuance/(repayment) of debt, $m
  -12
  7
  7
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
  32
  33
  35
  37
  39
  41
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
  7
  7
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
  32
  33
  35
  37
  39
  41
Total cash flow (excl. dividends), $m
  43
  77
  79
  81
  84
  87
  89
  93
  96
  99
  103
  107
  112
  116
  121
  126
  132
  138
  144
  150
  157
  164
  172
  180
  188
  197
  206
  216
  226
  237
  248
Retained Cash Flow (-), $m
  3
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
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
 
  85
  75
  77
  79
  81
  84
  86
  89
  92
  96
  99
  103
  107
  111
  116
  121
  126
  131
  137
  143
  150
  156
  164
  171
  179
  187
  196
  205
  215
  225
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
 
  81
  69
  67
  65
  63
  61
  58
  56
  53
  50
  47
  44
  41
  37
  34
  31
  27
  24
  21
  18
  15
  13
  11
  9
  7
  5
  4
  3
  2
  2
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
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Ciner Resources LP, through its subsidiary, Ciner Wyoming LLC (Ciner Wyoming), produces soda ash and serves a global market from its facility in the Green River Basin of Wyoming. The Company processes trona ore into soda ash, a raw material in flat glass, container glass, detergents, chemicals, paper and other consumer and industrial products. As of December 31, 2016, its Green River Basin surface operations were situated on approximately 880 acres in Wyoming, and the Company's mining operations included approximately 23,500 acres of leased and licensed subsurface mining area. The Company's mining leases and license are located in two mining beds, designated by the United States Geological Survey as beds 24 and 25, at depths of 800 to 1100 feet, respectively, below the surface. The Company uses a continuous mining technique to mine trona and roof bolt the ceiling simultaneously. The Company's soda ash is shipped by rail or truck from its Green River Basin operations.

FINANCIAL RATIOS  of  Ciner Resources (CINR)

Valuation Ratios
P/E Ratio 12.3
Price to Sales 1.1
Price to Book 3.3
Price to Tangible Book
Price to Cash Flow 3.9
Price to Free Cash Flow 4.9
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 2.6% 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 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 9.5 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 20.13 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 $0.5 billion.

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COMPANY NEWS

▶ Ciner Resources LP to Host Earnings Call   [Nov-07-17 06:30AM  ACCESSWIRE]
▶ Ciner Resources posts 3Q profit   [05:03AM  Associated Press]
▶ Ciner Resources LP to Release 3rd Quarter 2017 Results   [Nov-02-17 11:35AM  Business Wire]
▶ Ciner Resources LP Announces Quarterly Cash Distribution   [Oct-26-17 06:08PM  Business Wire]
▶ Ciner Resources posts 2Q profit   [12:14AM  Associated Press]
▶ Ciner Resources LP to Release 2nd Quarter 2017 Results   [Aug-01-17 10:42AM  Business Wire]
▶ Ciner Resources LP Announces Quarterly Cash Distribution   [Jul-28-17 02:37PM  Business Wire]
▶ 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]
Financial statements 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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