Intrinsic value of eHi Car Services ADR - EHIC

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$9.96

  Intrinsic Value

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  Value-price divergence*

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$9.96

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

We calculate the intrinsic value of EHIC 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 0.7

 

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, %
  45.24
  47.70
  43.43
  39.59
  36.13
  33.02
  30.21
  27.69
  25.42
  23.38
  21.54
  19.89
  18.40
  17.06
  15.85
  14.77
  13.79
  12.91
  12.12
  11.41
  10.77
  10.19
  9.67
  9.20
  8.78
  8.41
  8.07
  7.76
  7.48
  7.23
  7.01
Revenue, $m
  305
  2,143
  3,074
  4,291
  5,841
  7,769
  10,117
  12,918
  16,203
  19,991
  24,298
  29,130
  34,490
  40,374
  46,774
  53,682
  61,086
  68,973
  77,334
  86,157
  95,434
  105,160
  115,332
  125,948
  137,012
  148,529
  160,509
  172,962
  185,905
  199,355
  213,332
Variable operating expenses, $m
 
  1,811
  2,597
  3,626
  4,936
  6,565
  8,549
  10,916
  13,691
  16,892
  20,531
  24,615
  29,144
  34,116
  39,524
  45,361
  51,618
  58,283
  65,347
  72,803
  80,642
  88,861
  97,455
  106,426
  115,775
  125,507
  135,630
  146,153
  157,090
  168,455
  180,266
Fixed operating expenses, $m
 
  158
  162
  166
  170
  174
  179
  183
  188
  192
  197
  202
  207
  212
  218
  223
  229
  234
  240
  246
  252
  259
  265
  272
  279
  286
  293
  300
  307
  315
  323
Total operating expenses, $m
  268
  1,969
  2,759
  3,792
  5,106
  6,739
  8,728
  11,099
  13,879
  17,084
  20,728
  24,817
  29,351
  34,328
  39,742
  45,584
  51,847
  58,517
  65,587
  73,049
  80,894
  89,120
  97,720
  106,698
  116,054
  125,793
  135,923
  146,453
  157,397
  168,770
  180,589
Operating income, $m
  37
  174
  315
  499
  735
  1,030
  1,390
  1,819
  2,324
  2,906
  3,569
  4,313
  5,139
  6,046
  7,032
  8,098
  9,240
  10,457
  11,747
  13,108
  14,540
  16,041
  17,611
  19,250
  20,958
  22,737
  24,586
  26,509
  28,508
  30,585
  32,743
EBITDA, $m
  134
  881
  1,328
  1,913
  2,660
  3,590
  4,723
  6,076
  7,663
  9,494
  11,576
  13,912
  16,504
  19,350
  22,446
  25,788
  29,369
  33,185
  37,230
  41,500
  45,989
  50,695
  55,617
  60,754
  66,108
  71,682
  77,479
  83,506
  89,769
  96,278
  103,043
Interest expense (income), $m
  30
  112
  195
  306
  452
  638
  868
  1,149
  1,485
  1,878
  2,331
  2,847
  3,425
  4,067
  4,771
  5,537
  6,364
  7,250
  8,195
  9,195
  10,251
  11,362
  12,526
  13,744
  15,014
  16,339
  17,717
  19,151
  20,642
  22,191
  23,801
Earnings before tax, $m
  6
  62
  120
  193
  283
  392
  521
  670
  839
  1,028
  1,238
  1,466
  1,714
  1,979
  2,261
  2,560
  2,875
  3,206
  3,552
  3,913
  4,289
  4,679
  5,085
  5,507
  5,944
  6,398
  6,869
  7,358
  7,866
  8,394
  8,942
Tax expense, $m
  1
  17
  32
  52
  76
  106
  141
  181
  227
  278
  334
  396
  463
  534
  611
  691
  776
  866
  959
  1,056
  1,158
  1,263
  1,373
  1,487
  1,605
  1,727
  1,855
  1,987
  2,124
  2,266
  2,414
Net income, $m
  5
  45
  87
  141
  207
  286
  380
  489
  612
  751
  903
  1,070
  1,251
  1,444
  1,651
  1,869
  2,099
  2,340
  2,593
  2,856
  3,131
  3,416
  3,712
  4,020
  4,339
  4,670
  5,014
  5,371
  5,742
  6,127
  6,528

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  77
  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
  1,181
  7,654
  10,978
  15,324
  20,860
  27,748
  36,131
  46,137
  57,866
  71,396
  86,777
  104,036
  123,178
  144,192
  167,051
  191,722
  218,164
  246,334
  276,192
  307,703
  340,837
  375,573
  411,899
  449,814
  489,328
  530,461
  573,245
  617,723
  663,947
  711,981
  761,900
Adjusted assets (=assets-cash), $m
  1,104
  7,654
  10,978
  15,324
  20,860
  27,748
  36,131
  46,137
  57,866
  71,396
  86,777
  104,036
  123,178
  144,192
  167,051
  191,722
  218,164
  246,334
  276,192
  307,703
  340,837
  375,573
  411,899
  449,814
  489,328
  530,461
  573,245
  617,723
  663,947
  711,981
  761,900
Revenue / Adjusted assets
  0.276
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
Average production assets, $m
  719
  4,520
  6,483
  9,049
  12,319
  16,386
  21,336
  27,245
  34,171
  42,161
  51,243
  61,435
  72,739
  85,148
  98,647
  113,216
  128,830
  145,465
  163,097
  181,705
  201,271
  221,783
  243,235
  265,624
  288,958
  313,248
  338,513
  364,778
  392,074
  420,439
  449,917
Working capital, $m
  79
  -388
  -556
  -777
  -1,057
  -1,406
  -1,831
  -2,338
  -2,933
  -3,618
  -4,398
  -5,273
  -6,243
  -7,308
  -8,466
  -9,716
  -11,057
  -12,484
  -13,997
  -15,594
  -17,274
  -19,034
  -20,875
  -22,797
  -24,799
  -26,884
  -29,052
  -31,306
  -33,649
  -36,083
  -38,613
Total debt, $m
  534
  3,421
  5,375
  7,931
  11,186
  15,236
  20,165
  26,048
  32,945
  40,901
  49,945
  60,093
  71,349
  83,705
  97,146
  111,653
  127,200
  143,764
  161,321
  179,850
  199,332
  219,757
  241,117
  263,411
  286,645
  310,831
  335,988
  362,141
  389,321
  417,565
  446,917
Total liabilities, $m
  603
  4,501
  6,455
  9,011
  12,266
  16,316
  21,245
  27,128
  34,025
  41,981
  51,025
  61,173
  72,429
  84,785
  98,226
  112,733
  128,280
  144,844
  162,401
  180,930
  200,412
  220,837
  242,197
  264,491
  287,725
  311,911
  337,068
  363,221
  390,401
  418,645
  447,997
Total equity, $m
  577
  3,153
  4,523
  6,314
  8,594
  11,432
  14,886
  19,008
  23,841
  29,415
  35,752
  42,863
  50,749
  59,407
  68,825
  78,990
  89,883
  101,490
  113,791
  126,774
  140,425
  154,736
  169,702
  185,324
  201,603
  218,550
  236,177
  254,502
  273,546
  293,336
  313,903
Total liabilities and equity, $m
  1,180
  7,654
  10,978
  15,325
  20,860
  27,748
  36,131
  46,136
  57,866
  71,396
  86,777
  104,036
  123,178
  144,192
  167,051
  191,723
  218,163
  246,334
  276,192
  307,704
  340,837
  375,573
  411,899
  449,815
  489,328
  530,461
  573,245
  617,723
  663,947
  711,981
  761,900
Debt-to-equity ratio
  0.925
  1.080
  1.190
  1.260
  1.300
  1.330
  1.350
  1.370
  1.380
  1.390
  1.400
  1.400
  1.410
  1.410
  1.410
  1.410
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
Adjusted equity ratio
  0.523
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  5
  45
  87
  141
  207
  286
  380
  489
  612
  751
  903
  1,070
  1,251
  1,444
  1,651
  1,869
  2,099
  2,340
  2,593
  2,856
  3,131
  3,416
  3,712
  4,020
  4,339
  4,670
  5,014
  5,371
  5,742
  6,127
  6,528
Depreciation, amort., depletion, $m
  97
  706
  1,013
  1,414
  1,925
  2,560
  3,334
  4,257
  5,339
  6,588
  8,007
  9,599
  11,365
  13,304
  15,414
  17,690
  20,130
  22,729
  25,484
  28,391
  31,449
  34,654
  38,005
  41,504
  45,150
  48,945
  52,893
  56,996
  61,262
  65,694
  70,300
Funds from operations, $m
  14
  752
  1,100
  1,555
  2,132
  2,847
  3,714
  4,746
  5,952
  7,338
  8,910
  10,670
  12,616
  14,749
  17,064
  19,559
  22,229
  25,069
  28,077
  31,248
  34,579
  38,070
  41,718
  45,524
  49,489
  53,615
  57,907
  62,368
  67,004
  71,821
  76,827
Change in working capital, $m
  -47
  -125
  -168
  -220
  -281
  -349
  -425
  -507
  -594
  -686
  -779
  -875
  -970
  -1,065
  -1,159
  -1,250
  -1,340
  -1,428
  -1,513
  -1,597
  -1,679
  -1,760
  -1,841
  -1,922
  -2,003
  -2,085
  -2,168
  -2,254
  -2,343
  -2,434
  -2,530
Cash from operations, $m
  61
  1,959
  1,269
  1,775
  2,412
  3,196
  4,139
  5,253
  6,546
  8,024
  9,690
  11,544
  13,586
  15,814
  18,223
  20,809
  23,569
  26,497
  29,590
  32,845
  36,258
  39,830
  43,559
  47,445
  51,491
  55,700
  60,075
  64,622
  69,346
  74,255
  79,357
Maintenance CAPEX, $m
  0
  -478
  -706
  -1,013
  -1,414
  -1,925
  -2,560
  -3,334
  -4,257
  -5,339
  -6,588
  -8,007
  -9,599
  -11,365
  -13,304
  -15,414
  -17,690
  -20,130
  -22,729
  -25,484
  -28,391
  -31,449
  -34,654
  -38,005
  -41,504
  -45,150
  -48,945
  -52,893
  -56,996
  -61,262
  -65,694
New CAPEX, $m
  -535
  -1,460
  -1,963
  -2,566
  -3,269
  -4,067
  -4,951
  -5,909
  -6,927
  -7,990
  -9,083
  -10,192
  -11,304
  -12,409
  -13,499
  -14,569
  -15,614
  -16,635
  -17,632
  -18,608
  -19,566
  -20,512
  -21,451
  -22,390
  -23,334
  -24,290
  -25,265
  -26,265
  -27,296
  -28,365
  -29,478
Cash from investing activities, $m
  -489
  -1,938
  -2,669
  -3,579
  -4,683
  -5,992
  -7,511
  -9,243
  -11,184
  -13,329
  -15,671
  -18,199
  -20,903
  -23,774
  -26,803
  -29,983
  -33,304
  -36,765
  -40,361
  -44,092
  -47,957
  -51,961
  -56,105
  -60,395
  -64,838
  -69,440
  -74,210
  -79,158
  -84,292
  -89,627
  -95,172
Free cash flow, $m
  -428
  21
  -1,400
  -1,804
  -2,271
  -2,796
  -3,372
  -3,989
  -4,637
  -5,305
  -5,981
  -6,654
  -7,317
  -7,961
  -8,581
  -9,173
  -9,735
  -10,268
  -10,771
  -11,247
  -11,699
  -12,131
  -12,546
  -12,950
  -13,346
  -13,740
  -14,135
  -14,536
  -14,947
  -15,372
  -15,814
Issuance/(repayment) of debt, $m
  141
  1,451
  1,955
  2,555
  3,255
  4,050
  4,930
  5,883
  6,897
  7,955
  9,044
  10,148
  11,256
  12,356
  13,442
  14,506
  15,548
  16,564
  17,557
  18,528
  19,483
  20,425
  21,360
  22,294
  23,234
  24,186
  25,157
  26,153
  27,180
  28,244
  29,352
Issuance/(repurchase) of shares, $m
  4
  0
  815
  1,039
  1,297
  1,584
  1,896
  2,228
  2,573
  2,924
  3,274
  3,617
  3,948
  4,262
  4,557
  4,831
  5,082
  5,310
  5,516
  5,701
  5,868
  6,017
  6,153
  6,277
  6,392
  6,500
  6,605
  6,708
  6,811
  6,917
  7,029
Cash from financing (excl. dividends), $m  
  115
  1,451
  2,770
  3,594
  4,552
  5,634
  6,826
  8,111
  9,470
  10,879
  12,318
  13,765
  15,204
  16,618
  17,999
  19,337
  20,630
  21,874
  23,073
  24,229
  25,351
  26,442
  27,513
  28,571
  29,626
  30,686
  31,762
  32,861
  33,991
  35,161
  36,381
Total cash flow (excl. dividends), $m
  -301
  1,471
  554
  751
  984
  1,254
  1,558
  1,894
  2,260
  2,651
  3,063
  3,494
  3,939
  4,395
  4,861
  5,334
  5,812
  6,296
  6,786
  7,281
  7,784
  8,294
  8,813
  9,344
  9,888
  10,447
  11,022
  11,617
  12,233
  12,873
  13,538
Retained Cash Flow (-), $m
  -6
  -1,012
  -1,370
  -1,791
  -2,281
  -2,838
  -3,454
  -4,122
  -4,833
  -5,574
  -6,337
  -7,111
  -7,887
  -8,658
  -9,418
  -10,164
  -10,894
  -11,606
  -12,302
  -12,982
  -13,651
  -14,311
  -14,966
  -15,621
  -16,280
  -16,947
  -17,627
  -18,325
  -19,044
  -19,790
  -20,566
Prev. year cash balance distribution, $m
 
  1,807
  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
 
  2,266
  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
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
 
  2,173
  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
Current shareholders' claim on cash, %
  100
  100.0
  73.0
  55.0
  42.5
  33.6
  27.2
  22.4
  18.8
  16.0
  13.8
  12.0
  10.6
  9.5
  8.6
  7.8
  7.1
  6.6
  6.1
  5.7
  5.3
  5.0
  4.8
  4.5
  4.3
  4.1
  4.0
  3.8
  3.7
  3.5
  3.4

eHi Car Services Limited, through its subsidiaries, provides car rentals and car services to individuals, and corporate and institutional clients in the People's Republic of China. It offers self-drive car rental services; car services, including airport pickup and drop-off, inter-office transfers, and other business transportation services, as well as services for event-driven activities, such as conventions, promotional tours, and special events. As of December 31, 2015, the company had a car rental fleet of 35,647 vehicles; and car services fleet of 2,423 vehicles. eHi Car Services Limited was founded in 2006 and is headquartered in Shanghai, the People's Republic of China.

FINANCIAL RATIOS  of  eHi Car Services ADR (EHIC)

Valuation Ratios
P/E Ratio 276.6
Price to Sales 4.5
Price to Book 2.4
Price to Tangible Book
Price to Cash Flow 22.7
Price to Free Cash Flow -2.9
Growth Rates
Sales Growth Rate 45.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 68.8%
Cap. Spend. - 3 Yr. Gr. Rate 43.5%
Financial Strength
Quick Ratio 1
Current Ratio 0.4
LT Debt to Equity 69.3%
Total Debt to Equity 92.5%
Interest Coverage 1
Management Effectiveness
Return On Assets 2.6%
Ret/ On Assets - 3 Yr. Avg. 5.3%
Return On Total Capital 0.5%
Ret/ On T. Cap. - 3 Yr. Avg. 3.6%
Return On Equity 0.9%
Return On Equity - 3 Yr. Avg. 6%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 28.2%
Gross Margin - 3 Yr. Avg. 21.7%
EBITDA Margin 43.6%
EBITDA Margin - 3 Yr. Avg. 57%
Operating Margin 12.1%
Oper. Margin - 3 Yr. Avg. 5%
Pre-Tax Margin 2%
Pre-Tax Margin - 3 Yr. Avg. 15.1%
Net Profit Margin 1.6%
Net Profit Margin - 3 Yr. Avg. 13.1%
Effective Tax Rate 16.7%
Eff/ Tax Rate - 3 Yr. Avg. 9.1%
Payout Ratio 0%

EHIC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EHIC stock intrinsic value calculation we used $1451 million for the last fiscal year's total revenue generated by eHi Car Services ADR. The default revenue input number comes from 2016 income statement of eHi Car Services 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 EHIC stock valuation model: a) initial revenue growth rate of 47.7% 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 EHIC is calculated based on our internal credit rating of eHi Car Services 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 eHi Car Services 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 EHIC stock the variable cost ratio is equal to 84.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $154 million in the base year in the intrinsic value calculation for EHIC 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 5.7% for eHi Car Services ADR.

Corporate tax rate of 27% is the nominal tax rate for eHi Car Services 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 EHIC 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 EHIC are equal to 210.9%.

Life of production assets of 6.4 years is the average useful life of capital assets used in eHi Car Services 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 EHIC is equal to -18.1%. 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 - $3948 million for eHi Car Services 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 69.339 million for eHi Car Services 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 eHi Car Services ADR at the current share price and the inputted number of shares is $0.7 billion.


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COMPANY NEWS

▶ Time to Buy Hertz at an 8-Year Low?   [May-26-17 12:29PM  Investopedia]
▶ eHi Car Services Filed 2016 Annual Report on Form 20-F   [Apr-28-17 08:00AM  PR Newswire]
▶ Is Solaredge Technologies Inc (SEDG) a Good Buy?   [Dec-12-16 05:06PM  Insider Monkey]
▶ Is Solaredge Technologies Inc (SEDG) a Good Buy?   [05:06PM  at Insider Monkey]
▶ eHi Car Services Announces Second Quarter 2016 Results   [Aug-23-16 06:00PM  PR Newswire]
▶ Five Rental and Leasing Companies Hedge Funds Are Bullish On   [Jun-16-16 08:00AM  at Insider Monkey]
▶ eHi Car Services Announces First Quarter 2016 Results   [May-23-16 06:00PM  PR Newswire]
▶ EHI CAR SERVICES LTD Financials   [01:04PM  EDGAR Online Financials]
▶ eHi Car Services Filed 2015 Annual Report on Form 20-F   [Apr-27-16 08:00AM  PR Newswire]
▶ eHi Car Services Forms Strategic Cooperation with SAIC   [Apr-11-16 08:00AM  PR Newswire]
▶ Hedge Funds Are Crazy About Ply Gem Holdings Inc (PGEM)   [Nov-21  12:06PM  at Insider Monkey]
▶ China's Top Car Rental Firm Can Double in Value   [Oct-07  12:01AM  at Barrons.com]
▶ 5 Hated Earnings Stocks You Should Love   [Aug-18  09:08AM  at TheStreet]
▶ Time to Get eHi on China Ride-Sharing   [Jun-16  03:15AM  at The Wall Street Journal]
▶ eHi Car Services Announces First Quarter 2015 Results   [May-26  05:00PM  PR Newswire]
▶ Tiger Global, SRS to Invest in eHi   [May-22  07:56AM  at The Wall Street Journal]
▶ Park This CAR in Your Portfolio   [Mar-11  09:22PM  at Barrons.com]
▶ eHi Car Services Announces Third Quarter 2014 Results   [Dec-11  07:04AM  PR Newswire]
▶ IPO Calendar: 10 IPOs Planning To Raise $4.2 Billion   [Nov-18  02:24PM  at Investor's Business Daily]
▶ Will Chinas eHi IPO Make a Splash?   [09:25AM  at 24/7 Wall St.]
Stock chart of EHIC Financial statements of EHIC Annual reports of EHIC
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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