Intrinsic value of Euro Tech Holdings - CLWT

Previous Close

$5.00

  Intrinsic Value

$55.80

stock screener

  Rating & Target

str. buy

+999%

Previous close

$5.00

 
Intrinsic value

$55.80

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of CLWT 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  22.22
  22.80
  21.02
  19.42
  17.98
  16.68
  15.51
  14.46
  13.51
  12.66
  11.90
  11.21
  10.59
  10.03
  9.52
  9.07
  8.66
  8.30
  7.97
  7.67
  7.40
  7.16
  6.95
  6.75
  6.58
  6.42
  6.28
  6.15
  6.04
  5.93
  5.84
Revenue, $m
  22
  27
  33
  39
  46
  54
  62
  71
  81
  91
  102
  113
  125
  138
  151
  164
  179
  193
  209
  225
  242
  259
  277
  295
  315
  335
  356
  378
  401
  425
  449
Variable operating expenses, $m
 
  18
  22
  26
  31
  36
  41
  47
  54
  60
  67
  75
  83
  91
  100
  109
  118
  128
  138
  149
  160
  171
  183
  196
  209
  222
  236
  250
  266
  281
  298
Fixed operating expenses, $m
 
  7
  7
  7
  8
  8
  8
  8
  8
  9
  9
  9
  9
  9
  9
  10
  10
  10
  10
  11
  11
  11
  11
  12
  12
  12
  12
  13
  13
  13
  13
Total operating expenses, $m
  23
  25
  29
  33
  39
  44
  49
  55
  62
  69
  76
  84
  92
  100
  109
  119
  128
  138
  148
  160
  171
  182
  194
  208
  221
  234
  248
  263
  279
  294
  311
Operating income, $m
  -1
  2
  4
  6
  8
  10
  13
  16
  19
  22
  26
  29
  33
  37
  41
  46
  50
  55
  60
  65
  71
  76
  82
  88
  94
  101
  108
  115
  122
  130
  138
EBITDA, $m
  -1
  2
  4
  6
  8
  11
  13
  16
  20
  23
  26
  30
  34
  38
  43
  47
  52
  57
  62
  67
  73
  78
  84
  91
  97
  104
  111
  118
  126
  134
  142
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
Earnings before tax, $m
  -1
  2
  3
  5
  7
  10
  12
  15
  18
  21
  24
  28
  32
  35
  40
  44
  48
  53
  57
  62
  67
  73
  78
  84
  90
  96
  103
  110
  117
  124
  132
Tax expense, $m
  0
  0
  1
  1
  2
  3
  3
  4
  5
  6
  7
  8
  9
  10
  11
  12
  13
  14
  16
  17
  18
  20
  21
  23
  24
  26
  28
  30
  32
  34
  36
Net income, $m
  0
  1
  3
  4
  5
  7
  9
  11
  13
  15
  18
  20
  23
  26
  29
  32
  35
  38
  42
  46
  49
  53
  57
  61
  66
  70
  75
  80
  85
  91
  96

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  4
  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
  23
  28
  34
  40
  47
  55
  64
  73
  83
  93
  105
  116
  129
  141
  155
  169
  184
  199
  215
  231
  248
  266
  284
  304
  324
  344
  366
  389
  412
  436
  462
Adjusted assets (=assets-cash), $m
  19
  28
  34
  40
  47
  55
  64
  73
  83
  93
  105
  116
  129
  141
  155
  169
  184
  199
  215
  231
  248
  266
  284
  304
  324
  344
  366
  389
  412
  436
  462
Revenue / Adjusted assets
  1.158
  0.964
  0.971
  0.975
  0.979
  0.982
  0.969
  0.973
  0.976
  0.978
  0.971
  0.974
  0.969
  0.979
  0.974
  0.970
  0.973
  0.970
  0.972
  0.974
  0.976
  0.974
  0.975
  0.970
  0.972
  0.974
  0.973
  0.972
  0.973
  0.975
  0.972
Average production assets, $m
  0
  2
  3
  3
  4
  4
  5
  6
  7
  7
  8
  9
  10
  11
  12
  13
  15
  16
  17
  18
  20
  21
  23
  24
  26
  27
  29
  31
  33
  35
  37
Working capital, $m
  4
  -6
  -7
  -9
  -10
  -12
  -14
  -16
  -18
  -21
  -23
  -26
  -28
  -31
  -34
  -37
  -40
  -44
  -47
  -51
  -55
  -58
  -63
  -67
  -71
  -76
  -80
  -85
  -91
  -96
  -102
Total debt, $m
  1
  2
  4
  6
  8
  10
  13
  15
  18
  21
  24
  27
  31
  34
  38
  42
  46
  50
  55
  60
  64
  69
  75
  80
  86
  91
  97
  104
  110
  117
  124
Total liabilities, $m
  8
  8
  9
  11
  13
  16
  18
  21
  23
  26
  29
  33
  36
  40
  44
  47
  52
  56
  60
  65
  70
  75
  80
  85
  91
  97
  103
  109
  116
  123
  130
Total equity, $m
  15
  20
  24
  29
  34
  40
  46
  53
  60
  67
  75
  84
  92
  102
  111
  121
  132
  143
  154
  166
  178
  191
  205
  218
  233
  248
  263
  279
  296
  314
  332
Total liabilities and equity, $m
  23
  28
  33
  40
  47
  56
  64
  74
  83
  93
  104
  117
  128
  142
  155
  168
  184
  199
  214
  231
  248
  266
  285
  303
  324
  345
  366
  388
  412
  437
  462
Debt-to-equity ratio
  0.067
  0.120
  0.170
  0.200
  0.230
  0.260
  0.270
  0.290
  0.300
  0.310
  0.320
  0.330
  0.330
  0.340
  0.340
  0.350
  0.350
  0.350
  0.360
  0.360
  0.360
  0.360
  0.360
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
Adjusted equity ratio
  0.632
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  0
  1
  3
  4
  5
  7
  9
  11
  13
  15
  18
  20
  23
  26
  29
  32
  35
  38
  42
  46
  49
  53
  57
  61
  66
  70
  75
  80
  85
  91
  96
Depreciation, amort., depletion, $m
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
Funds from operations, $m
  1
  2
  3
  4
  6
  8
  10
  12
  14
  16
  19
  21
  24
  27
  30
  33
  37
  40
  44
  47
  51
  55
  59
  64
  68
  73
  78
  83
  89
  94
  100
Change in working capital, $m
  1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
Cash from operations, $m
  0
  3
  4
  6
  8
  9
  11
  14
  16
  19
  21
  24
  27
  30
  33
  36
  40
  43
  47
  51
  55
  59
  64
  68
  73
  78
  83
  88
  94
  100
  106
Maintenance CAPEX, $m
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
New CAPEX, $m
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
Cash from investing activities, $m
  0
  0
  0
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
Free cash flow, $m
  0
  2
  4
  5
  7
  8
  10
  12
  15
  17
  20
  22
  25
  28
  31
  34
  37
  41
  44
  48
  52
  56
  60
  64
  69
  73
  78
  83
  89
  94
  100
Issuance/(repayment) of debt, $m
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
Issuance/(repurchase) of shares, $m
  0
  2
  2
  1
  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  
  1
  4
  4
  3
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
Total cash flow (excl. dividends), $m
  1
  6
  7
  8
  9
  11
  13
  15
  17
  20
  23
  25
  28
  31
  35
  38
  41
  45
  49
  53
  57
  61
  65
  70
  74
  79
  84
  90
  95
  101
  107
Retained Cash Flow (-), $m
  0
  -3
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -18
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
 
  3
  3
  3
  3
  5
  7
  8
  10
  12
  15
  17
  20
  22
  25
  28
  31
  34
  37
  41
  44
  48
  52
  56
  60
  64
  69
  74
  78
  84
  89
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
 
  2
  2
  3
  3
  4
  5
  6
  6
  7
  8
  8
  8
  8
  8
  8
  8
  7
  7
  6
  6
  5
  4
  4
  3
  3
  2
  2
  1
  1
  1
Current shareholders' claim on cash, %
  100
  88.0
  78.7
  75.3
  75.3
  75.3
  75.3
  75.3
  75.3
  75.3
  75.3
  75.3
  75.3
  75.3
  75.3
  75.3
  75.3
  75.3
  75.3
  75.3
  75.3
  75.3
  75.3
  75.3
  75.3
  75.3
  75.3
  75.3
  75.3
  75.3
  75.3

Euro Tech Holdings Company Limited is a distributor of a range of advanced water treatment equipment, laboratory instruments, analyzers, test kits and related supplies and power generation equipment (including recorders and power quality analyzers). The Company acts as a distributor for manufacturers of such equipment, primarily to commercial customers and governmental agencies or instrumentalities in Hong Kong and the People's Republic of China (PRC). The Company operates two segments: Trading and manufacturing, and Engineering. It distributes analytical re-agents and chemicals to support testing systems of laboratory and portable instruments, process analyzers and portable test kits and assist in the analysis process. It distributes analytical instruments, environmental quality monitoring instruments, sample pre-treatment equipment and general purpose laboratory instruments. It provides systems engineering to waste-water treatment and power generation plants and beverage producers.

FINANCIAL RATIOS  of  Euro Tech Holdings (CLWT)

Valuation Ratios
P/E Ratio 0
Price to Sales 0.5
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate 22.2%
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 4
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 6.7%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. -1.5%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. -2.2%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. -2.2%
Asset Turnover 1
Profitability Ratios
Gross Margin 22.7%
Gross Margin - 3 Yr. Avg. 23.8%
EBITDA Margin -4.5%
EBITDA Margin - 3 Yr. Avg. -7%
Operating Margin -4.5%
Oper. Margin - 3 Yr. Avg. -7%
Pre-Tax Margin -4.5%
Pre-Tax Margin - 3 Yr. Avg. -7%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. -1.9%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

CLWT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CLWT stock intrinsic value calculation we used $22 million for the last fiscal year's total revenue generated by Euro Tech Holdings. The default revenue input number comes from 2016 income statement of Euro Tech Holdings. 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 CLWT stock valuation model: a) initial revenue growth rate of 22.8% 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 CLWT is calculated based on our internal credit rating of Euro Tech Holdings, 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 Euro Tech Holdings.
    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 CLWT stock the variable cost ratio is equal to 66.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $7 million in the base year in the intrinsic value calculation for CLWT 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 5.4% for Euro Tech Holdings.

Corporate tax rate of 27% is the nominal tax rate for Euro Tech Holdings. 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 CLWT 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 CLWT are equal to 8.2%.

Life of production assets of 10 years is the average useful life of capital assets used in Euro Tech Holdings 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 CLWT is equal to -22.6%. 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 - $17 million for Euro Tech Holdings - 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 2 million for Euro Tech Holdings 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 Euro Tech Holdings at the current share price and the inputted number of shares is $0.0 billion.

RELATED COMPANIES Price Int.Val. Rating
FTV Fortive 76.46 54.45  sell
DXPE DXP Enterprise 41.90 29.98  sell
KEYS Keysight Techn 59.62 32.24  sell
TMO Thermo Fisher 208.80 95.38  str.sell
RBA Ritchie Bros. 33.11 20.27  sell
LAWS Lawson Product 25.05 23.51  hold

COMPANY NEWS

▶ Benzinga Pro's 5 Stocks To Watch Today   [May-16-18 09:05AM  Benzinga]
▶ Cheap Stocks To Watch Out For In April   [Apr-11-18 10:02AM  Simply Wall St.]
▶ Investors Are Buying Up These 5 Stocks Today   [Jul-08-16 12:27PM  Insider Monkey]
▶ Investors Are Buying Up These 5 Stocks Today   [12:27PM  at Insider Monkey]
▶ EURO TECH HOLDINGS CO LTD Financials   [01:04PM  EDGAR Online Financials]
▶ Why Euro Tech Holdings (CLWT) Stock Is Soaring Today   [Jul-21  01:15PM  at TheStreet]
▶ Euro Tech Holdings subsidiary awarded 3 contracts valued at $2.3M   [Mar-25  06:06AM  theflyonthewall.com]
▶ Trading The Euro, Gold And Silver In View Of Europe's Woes   [Oct-24-11 11:40AM  at Seeking Alpha]
▶ Euro Tech Holdings announces stock buyback of up to 300,000 shares   [Aug-01-11 08:08AM  theflyonthewall.com]
▶ Emerging Market ADRs: Winners and Losers   [Oct-25-10 03:40PM  at TheStreet.com]
▶ Emerging Market ADRs: Winners and Losers   [Oct-11-10 10:39AM  at TheStreet.com]
▶ China BAK, Euro Tech: Early Volume Plays   [Feb-09-10 10:01AM  at TheStreet.com]
▶ Flotek, Sunrise: Midday Volume Plays   [Dec-28-09 02:02PM  at TheStreet.com]
▶ Euro Tech Volume Spikes on IPO Rumor   [Nov-30-09 11:36AM  at TheStreet.com]
▶ Euro Tech: Pump Up the Volume   [Oct-08-09 11:58AM  at TheStreet.com]
Financial statements of CLWT
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.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.