Intrinsic value of Dynagas LNG Partners - DLNG

Previous Close

$14.24

  Intrinsic Value

$4.54

stock screener

  Rating & Target

str. sell

-68%

  Value-price divergence*

-93%

Previous close

$14.24

 
Intrinsic value

$4.54

 
Up/down potential

-68%

 
Rating

str. sell

 
Value-price divergence*

-93%

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

We calculate the intrinsic value of DLNG 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, %
  17.24
  10.80
  10.22
  9.70
  9.23
  8.81
  8.42
  8.08
  7.77
  7.50
  7.25
  7.02
  6.82
  6.64
  6.47
  6.33
  6.19
  6.07
  5.97
  5.87
  5.78
  5.71
  5.63
  5.57
  5.51
  5.46
  5.42
  5.37
  5.34
  5.30
  5.27
Revenue, $m
  170
  188
  208
  228
  249
  271
  293
  317
  342
  367
  394
  422
  451
  480
  512
  544
  578
  613
  649
  687
  727
  769
  812
  857
  904
  954
  1,005
  1,060
  1,116
  1,175
  1,237
Variable operating expenses, $m
 
  74
  82
  90
  98
  107
  116
  125
  135
  145
  155
  166
  178
  189
  202
  214
  228
  241
  256
  271
  286
  303
  320
  338
  356
  376
  396
  417
  440
  463
  487
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
  68
  74
  82
  90
  98
  107
  116
  125
  135
  145
  155
  166
  178
  189
  202
  214
  228
  241
  256
  271
  286
  303
  320
  338
  356
  376
  396
  417
  440
  463
  487
Operating income, $m
  102
  114
  126
  138
  151
  164
  178
  192
  207
  223
  239
  256
  273
  291
  310
  330
  350
  371
  393
  417
  441
  466
  492
  519
  548
  578
  609
  642
  676
  712
  750
EBITDA, $m
  132
  152
  167
  184
  201
  218
  237
  256
  276
  296
  318
  340
  363
  387
  413
  439
  466
  494
  524
  554
  586
  620
  655
  691
  729
  769
  811
  855
  900
  948
  998
Interest expense (income), $m
  0
  24
  27
  29
  32
  35
  39
  42
  45
  49
  53
  57
  61
  65
  69
  74
  78
  83
  88
  94
  99
  105
  111
  117
  124
  131
  138
  146
  153
  162
  170
Earnings before tax, $m
  67
  90
  99
  109
  118
  129
  139
  150
  162
  174
  186
  199
  212
  226
  241
  256
  272
  288
  305
  323
  341
  361
  381
  402
  424
  447
  471
  496
  523
  551
  579
Tax expense, $m
  0
  24
  27
  29
  32
  35
  38
  41
  44
  47
  50
  54
  57
  61
  65
  69
  73
  78
  82
  87
  92
  97
  103
  109
  114
  121
  127
  134
  141
  149
  156
Net income, $m
  67
  66
  72
  79
  86
  94
  102
  110
  118
  127
  136
  145
  155
  165
  176
  187
  198
  210
  223
  236
  249
  263
  278
  293
  310
  326
  344
  362
  382
  402
  423

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  58
  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
  1,107
  1,163
  1,282
  1,406
  1,536
  1,671
  1,812
  1,958
  2,110
  2,268
  2,433
  2,604
  2,781
  2,966
  3,158
  3,358
  3,566
  3,782
  4,008
  4,243
  4,489
  4,745
  5,012
  5,291
  5,583
  5,888
  6,207
  6,540
  6,889
  7,255
  7,637
Adjusted assets (=assets-cash), $m
  1,049
  1,163
  1,282
  1,406
  1,536
  1,671
  1,812
  1,958
  2,110
  2,268
  2,433
  2,604
  2,781
  2,966
  3,158
  3,358
  3,566
  3,782
  4,008
  4,243
  4,489
  4,745
  5,012
  5,291
  5,583
  5,888
  6,207
  6,540
  6,889
  7,255
  7,637
Revenue / Adjusted assets
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
Average production assets, $m
  1,023
  1,133
  1,249
  1,370
  1,496
  1,628
  1,765
  1,908
  2,056
  2,210
  2,371
  2,537
  2,710
  2,890
  3,077
  3,272
  3,474
  3,685
  3,905
  4,135
  4,374
  4,623
  4,884
  5,156
  5,440
  5,737
  6,048
  6,373
  6,713
  7,069
  7,442
Working capital, $m
  7
  -19
  -21
  -23
  -25
  -27
  -29
  -32
  -34
  -37
  -39
  -42
  -45
  -48
  -51
  -54
  -58
  -61
  -65
  -69
  -73
  -77
  -81
  -86
  -90
  -95
  -101
  -106
  -112
  -118
  -124
Total debt, $m
  716
  761
  841
  925
  1,012
  1,103
  1,198
  1,297
  1,399
  1,506
  1,617
  1,732
  1,851
  1,976
  2,105
  2,240
  2,380
  2,526
  2,678
  2,837
  3,002
  3,175
  3,355
  3,543
  3,740
  3,945
  4,160
  4,385
  4,620
  4,867
  5,125
Total liabilities, $m
  739
  784
  864
  948
  1,035
  1,126
  1,221
  1,320
  1,422
  1,529
  1,640
  1,755
  1,874
  1,999
  2,128
  2,263
  2,403
  2,549
  2,701
  2,860
  3,025
  3,198
  3,378
  3,566
  3,763
  3,968
  4,183
  4,408
  4,643
  4,890
  5,148
Total equity, $m
  368
  379
  418
  458
  501
  545
  591
  638
  688
  739
  793
  849
  907
  967
  1,029
  1,095
  1,162
  1,233
  1,307
  1,383
  1,463
  1,547
  1,634
  1,725
  1,820
  1,919
  2,023
  2,132
  2,246
  2,365
  2,490
Total liabilities and equity, $m
  1,107
  1,163
  1,282
  1,406
  1,536
  1,671
  1,812
  1,958
  2,110
  2,268
  2,433
  2,604
  2,781
  2,966
  3,157
  3,358
  3,565
  3,782
  4,008
  4,243
  4,488
  4,745
  5,012
  5,291
  5,583
  5,887
  6,206
  6,540
  6,889
  7,255
  7,638
Debt-to-equity ratio
  1.946
  2.010
  2.010
  2.020
  2.020
  2.030
  2.030
  2.030
  2.030
  2.040
  2.040
  2.040
  2.040
  2.040
  2.050
  2.050
  2.050
  2.050
  2.050
  2.050
  2.050
  2.050
  2.050
  2.050
  2.050
  2.060
  2.060
  2.060
  2.060
  2.060
  2.060
Adjusted equity ratio
  0.296
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  67
  66
  72
  79
  86
  94
  102
  110
  118
  127
  136
  145
  155
  165
  176
  187
  198
  210
  223
  236
  249
  263
  278
  293
  310
  326
  344
  362
  382
  402
  423
Depreciation, amort., depletion, $m
  30
  38
  42
  46
  50
  54
  59
  64
  69
  74
  79
  85
  90
  96
  103
  109
  116
  123
  130
  138
  146
  154
  163
  172
  181
  191
  202
  212
  224
  236
  248
Funds from operations, $m
  101
  104
  114
  125
  136
  148
  160
  173
  187
  200
  215
  230
  245
  262
  278
  296
  314
  333
  353
  373
  395
  417
  441
  465
  491
  518
  546
  575
  605
  638
  671
Change in working capital, $m
  -3
  -2
  -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
  -6
  -6
Cash from operations, $m
  104
  105
  116
  127
  138
  150
  163
  176
  189
  203
  218
  233
  248
  265
  281
  299
  317
  337
  357
  377
  399
  422
  445
  470
  496
  523
  551
  580
  611
  643
  677
Maintenance CAPEX, $m
  0
  -34
  -38
  -42
  -46
  -50
  -54
  -59
  -64
  -69
  -74
  -79
  -85
  -90
  -96
  -103
  -109
  -116
  -123
  -130
  -138
  -146
  -154
  -163
  -172
  -181
  -191
  -202
  -212
  -224
  -236
New CAPEX, $m
  -37
  -110
  -116
  -121
  -126
  -132
  -137
  -143
  -148
  -154
  -160
  -166
  -173
  -180
  -187
  -195
  -203
  -211
  -220
  -229
  -239
  -250
  -261
  -272
  -284
  -297
  -311
  -325
  -340
  -356
  -373
Cash from investing activities, $m
  -37
  -144
  -154
  -163
  -172
  -182
  -191
  -202
  -212
  -223
  -234
  -245
  -258
  -270
  -283
  -298
  -312
  -327
  -343
  -359
  -377
  -396
  -415
  -435
  -456
  -478
  -502
  -527
  -552
  -580
  -609
Free cash flow, $m
  67
  -39
  -38
  -36
  -34
  -31
  -29
  -26
  -23
  -20
  -16
  -13
  -9
  -6
  -2
  2
  6
  10
  14
  18
  22
  26
  31
  35
  39
  44
  49
  54
  59
  64
  69
Issuance/(repayment) of debt, $m
  34
  77
  80
  84
  87
  91
  95
  99
  103
  107
  111
  115
  120
  124
  129
  135
  140
  146
  152
  159
  165
  173
  180
  188
  197
  206
  215
  225
  235
  246
  258
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  
  34
  77
  80
  84
  87
  91
  95
  99
  103
  107
  111
  115
  120
  124
  129
  135
  140
  146
  152
  159
  165
  173
  180
  188
  197
  206
  215
  225
  235
  246
  258
Total cash flow (excl. dividends), $m
  100
  38
  42
  48
  54
  60
  66
  73
  80
  87
  94
  102
  110
  119
  127
  137
  146
  156
  166
  176
  187
  199
  211
  223
  236
  250
  264
  278
  294
  310
  327
Retained Cash Flow (-), $m
  0
  -37
  -39
  -41
  -42
  -44
  -46
  -48
  -50
  -52
  -54
  -56
  -58
  -60
  -63
  -65
  -68
  -71
  -74
  -77
  -80
  -83
  -87
  -91
  -95
  -99
  -104
  -109
  -114
  -119
  -125
Prev. year cash balance distribution, $m
 
  26
  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
 
  27
  4
  7
  11
  16
  20
  25
  30
  35
  41
  47
  52
  59
  65
  71
  78
  85
  92
  100
  107
  115
  124
  132
  141
  150
  160
  170
  180
  191
  202
Discount rate, %
 
  9.30
  9.77
  10.25
  10.77
  11.30
  11.87
  12.46
  13.09
  13.74
  14.43
  15.15
  15.91
  16.70
  17.54
  18.41
  19.33
  20.30
  21.32
  22.38
  23.50
  24.68
  25.91
  27.20
  28.57
  29.99
  31.49
  33.07
  34.72
  36.46
  38.28
PV of cash for distribution, $m
 
  24
  3
  6
  8
  9
  10
  11
  11
  11
  11
  10
  9
  8
  7
  6
  5
  4
  3
  2
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
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

Dynagas LNG Partners LP, through its subsidiaries, operates in the seaborne transportation industry worldwide. The company owns and operates liquefied natural gas (LNG) vessels. As of March 31, 2016, its fleet consisted of six LNG carriers, each of which has a carrying capacity of approximately 150,000 to 155,000 cubic meters. Dynagas GP LLC serves as the general partner of Dynagas LNG Partners LP. The company was founded in 2013 and is headquartered in Monaco.

FINANCIAL RATIOS  of  Dynagas LNG Partners (DLNG)

Valuation Ratios
P/E Ratio 7.6
Price to Sales 3
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 4.9
Price to Free Cash Flow 7.6
Growth Rates
Sales Growth Rate 17.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -82%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 185.9%
Total Debt to Equity 194.6%
Interest Coverage 0
Management Effectiveness
Return On Assets 6%
Ret/ On Assets - 3 Yr. Avg. 6.5%
Return On Total Capital 6.3%
Ret/ On T. Cap. - 3 Yr. Avg. 6.7%
Return On Equity 18.2%
Return On Equity - 3 Yr. Avg. 18.2%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 82.4%
Gross Margin - 3 Yr. Avg. 82.2%
EBITDA Margin 57.1%
EBITDA Margin - 3 Yr. Avg. 59.8%
Operating Margin 60%
Oper. Margin - 3 Yr. Avg. 60.5%
Pre-Tax Margin 39.4%
Pre-Tax Margin - 3 Yr. Avg. 42.8%
Net Profit Margin 39.4%
Net Profit Margin - 3 Yr. Avg. 42.8%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 100%

DLNG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DLNG stock intrinsic value calculation we used $170 million for the last fiscal year's total revenue generated by Dynagas LNG Partners. The default revenue input number comes from 2016 income statement of Dynagas LNG Partners. 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 DLNG stock valuation model: a) initial revenue growth rate of 10.8% 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 9.3%, whose default value for DLNG is calculated based on our internal credit rating of Dynagas LNG Partners, 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 Dynagas LNG Partners.
    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 DLNG stock the variable cost ratio is equal to 39.4%.

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 DLNG 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 Dynagas LNG Partners.

Corporate tax rate of 27% is the nominal tax rate for Dynagas LNG Partners. 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 DLNG 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 DLNG are equal to 601.5%.

Life of production assets of 34.1 years is the average useful life of capital assets used in Dynagas LNG Partners 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 DLNG is equal to -10%. 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 - $368 million for Dynagas LNG Partners - 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 35.569 million for Dynagas LNG Partners 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 Dynagas LNG Partners at the current share price and the inputted number of shares is $0.5 billion.

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Stock chart of DLNG Financial statements of DLNG
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