Intrinsic value of Pingtan Marine Enterprise - PME

Previous Close

$3.52

  Intrinsic Value

$0.39

stock screener

  Rating & Target

str. sell

-89%

  Value-price divergence*

-228%

Previous close

$3.52

 
Intrinsic value

$0.39

 
Up/down potential

-89%

 
Rating

str. sell

 
Value-price divergence*

-228%

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

We calculate the intrinsic value of PME 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 0.3

 

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, %
  -65.57
  50.00
  45.50
  41.45
  37.81
  34.52
  31.57
  28.91
  26.52
  24.37
  22.43
  20.69
  19.12
  17.71
  16.44
  15.29
  14.27
  13.34
  12.50
  11.75
  11.08
  10.47
  9.92
  9.43
  8.99
  8.59
  8.23
  7.91
  7.62
  7.36
  7.12
Revenue, $m
  21
  32
  46
  65
  89
  120
  158
  204
  258
  321
  393
  474
  565
  665
  774
  892
  1,020
  1,156
  1,300
  1,453
  1,614
  1,783
  1,960
  2,144
  2,337
  2,538
  2,747
  2,964
  3,190
  3,424
  3,668
Variable operating expenses, $m
 
  26
  37
  53
  72
  97
  128
  165
  209
  260
  318
  384
  457
  538
  627
  723
  826
  936
  1,053
  1,177
  1,307
  1,444
  1,587
  1,737
  1,893
  2,056
  2,225
  2,401
  2,584
  2,774
  2,971
Fixed operating expenses, $m
 
  18
  19
  19
  20
  20
  21
  21
  22
  22
  23
  24
  24
  25
  25
  26
  27
  27
  28
  29
  29
  30
  31
  32
  33
  33
  34
  35
  36
  37
  38
Total operating expenses, $m
  35
  44
  56
  72
  92
  117
  149
  186
  231
  282
  341
  408
  481
  563
  652
  749
  853
  963
  1,081
  1,206
  1,336
  1,474
  1,618
  1,769
  1,926
  2,089
  2,259
  2,436
  2,620
  2,811
  3,009
Operating income, $m
  -14
  -12
  -10
  -7
  -3
  2
  9
  17
  27
  38
  52
  66
  83
  101
  122
  143
  167
  192
  219
  247
  277
  308
  341
  376
  412
  449
  488
  528
  570
  614
  659
EBITDA, $m
  -7
  -2
  5
  15
  27
  43
  62
  85
  113
  145
  182
  224
  271
  323
  380
  441
  507
  577
  652
  732
  815
  903
  995
  1,091
  1,191
  1,295
  1,403
  1,516
  1,633
  1,755
  1,882
Interest expense (income), $m
  3
  3
  6
  9
  14
  20
  27
  36
  48
  61
  76
  94
  113
  135
  160
  186
  215
  246
  279
  314
  352
  391
  432
  475
  520
  567
  616
  667
  720
  775
  832
Earnings before tax, $m
  -15
  -16
  -16
  -16
  -17
  -17
  -18
  -19
  -21
  -22
  -24
  -27
  -30
  -34
  -38
  -43
  -48
  -54
  -60
  -67
  -75
  -82
  -91
  -99
  -109
  -118
  -128
  -139
  -150
  -161
  -173
Tax expense, $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
Net income, $m
  -14
  -16
  -16
  -16
  -17
  -17
  -18
  -19
  -21
  -22
  -24
  -27
  -30
  -34
  -38
  -43
  -48
  -54
  -60
  -67
  -75
  -82
  -91
  -99
  -109
  -118
  -128
  -139
  -150
  -161
  -173

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  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
  0
  0
  0
Total assets, $m
  226
  339
  493
  697
  961
  1,292
  1,700
  2,192
  2,773
  3,449
  4,223
  5,097
  6,071
  7,146
  8,321
  9,594
  10,963
  12,425
  13,978
  15,622
  17,352
  19,169
  21,071
  23,059
  25,131
  27,290
  29,536
  31,872
  34,299
  36,822
  39,444
Adjusted assets (=assets-cash), $m
  225
  339
  493
  697
  961
  1,292
  1,700
  2,192
  2,773
  3,449
  4,223
  5,097
  6,071
  7,146
  8,321
  9,594
  10,963
  12,425
  13,978
  15,622
  17,352
  19,169
  21,071
  23,059
  25,131
  27,290
  29,536
  31,872
  34,299
  36,822
  39,444
Revenue / Adjusted assets
  0.093
  0.094
  0.093
  0.093
  0.093
  0.093
  0.093
  0.093
  0.093
  0.093
  0.093
  0.093
  0.093
  0.093
  0.093
  0.093
  0.093
  0.093
  0.093
  0.093
  0.093
  0.093
  0.093
  0.093
  0.093
  0.093
  0.093
  0.093
  0.093
  0.093
  0.093
Average production assets, $m
  109
  163
  237
  335
  462
  621
  817
  1,053
  1,333
  1,657
  2,029
  2,449
  2,917
  3,434
  3,999
  4,610
  5,268
  5,970
  6,717
  7,507
  8,338
  9,211
  10,125
  11,080
  12,076
  13,114
  14,193
  15,315
  16,482
  17,694
  18,954
Working capital, $m
  -4
  16
  23
  32
  45
  60
  79
  102
  129
  160
  196
  237
  282
  332
  387
  446
  510
  578
  650
  726
  807
  891
  980
  1,072
  1,169
  1,269
  1,373
  1,482
  1,595
  1,712
  1,834
Total debt, $m
  61
  110
  179
  270
  387
  534
  715
  933
  1,191
  1,491
  1,835
  2,223
  2,656
  3,133
  3,655
  4,220
  4,827
  5,477
  6,166
  6,896
  7,664
  8,471
  9,316
  10,198
  11,118
  12,077
  13,074
  14,111
  15,189
  16,309
  17,473
Total liabilities, $m
  101
  150
  219
  310
  427
  574
  755
  973
  1,231
  1,531
  1,875
  2,263
  2,696
  3,173
  3,695
  4,260
  4,867
  5,517
  6,206
  6,936
  7,704
  8,511
  9,356
  10,238
  11,158
  12,117
  13,114
  14,151
  15,229
  16,349
  17,513
Total equity, $m
  125
  188
  274
  388
  534
  719
  945
  1,219
  1,542
  1,918
  2,348
  2,834
  3,376
  3,973
  4,627
  5,334
  6,095
  6,908
  7,772
  8,686
  9,648
  10,658
  11,716
  12,821
  13,973
  15,173
  16,422
  17,721
  19,070
  20,473
  21,931
Total liabilities and equity, $m
  226
  338
  493
  698
  961
  1,293
  1,700
  2,192
  2,773
  3,449
  4,223
  5,097
  6,072
  7,146
  8,322
  9,594
  10,962
  12,425
  13,978
  15,622
  17,352
  19,169
  21,072
  23,059
  25,131
  27,290
  29,536
  31,872
  34,299
  36,822
  39,444
Debt-to-equity ratio
  0.488
  0.590
  0.650
  0.700
  0.720
  0.740
  0.760
  0.770
  0.770
  0.780
  0.780
  0.780
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
Adjusted equity ratio
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -14
  -16
  -16
  -16
  -17
  -17
  -18
  -19
  -21
  -22
  -24
  -27
  -30
  -34
  -38
  -43
  -48
  -54
  -60
  -67
  -75
  -82
  -91
  -99
  -109
  -118
  -128
  -139
  -150
  -161
  -173
Depreciation, amort., depletion, $m
  7
  11
  15
  22
  30
  40
  53
  68
  86
  107
  131
  158
  188
  222
  258
  297
  340
  385
  433
  484
  538
  594
  653
  715
  779
  846
  916
  988
  1,063
  1,142
  1,223
Funds from operations, $m
  -2
  -5
  -1
  5
  13
  23
  35
  49
  65
  85
  106
  131
  158
  188
  220
  255
  292
  331
  373
  417
  463
  512
  563
  615
  671
  728
  787
  849
  914
  981
  1,050
Change in working capital, $m
  3
  5
  7
  9
  12
  15
  19
  23
  27
  31
  36
  41
  45
  50
  55
  59
  64
  68
  72
  76
  80
  84
  88
  92
  96
  100
  104
  109
  113
  117
  122
Cash from operations, $m
  -5
  -10
  -8
  -4
  1
  7
  16
  26
  38
  53
  70
  90
  113
  138
  165
  195
  228
  263
  301
  341
  383
  427
  474
  523
  574
  627
  683
  741
  801
  863
  928
Maintenance CAPEX, $m
  0
  -7
  -11
  -15
  -22
  -30
  -40
  -53
  -68
  -86
  -107
  -131
  -158
  -188
  -222
  -258
  -297
  -340
  -385
  -433
  -484
  -538
  -594
  -653
  -715
  -779
  -846
  -916
  -988
  -1,063
  -1,142
New CAPEX, $m
  -1
  -54
  -74
  -98
  -127
  -159
  -196
  -236
  -279
  -325
  -372
  -420
  -468
  -517
  -565
  -612
  -658
  -703
  -747
  -790
  -832
  -873
  -914
  -955
  -996
  -1,037
  -1,079
  -1,122
  -1,167
  -1,212
  -1,260
Cash from investing activities, $m
  -13
  -61
  -85
  -113
  -149
  -189
  -236
  -289
  -347
  -411
  -479
  -551
  -626
  -705
  -787
  -870
  -955
  -1,043
  -1,132
  -1,223
  -1,316
  -1,411
  -1,508
  -1,608
  -1,711
  -1,816
  -1,925
  -2,038
  -2,155
  -2,275
  -2,402
Free cash flow, $m
  -18
  -72
  -92
  -118
  -147
  -182
  -220
  -263
  -309
  -358
  -408
  -461
  -514
  -567
  -621
  -674
  -727
  -779
  -831
  -882
  -933
  -984
  -1,034
  -1,085
  -1,137
  -1,189
  -1,242
  -1,297
  -1,354
  -1,412
  -1,473
Issuance/(repayment) of debt, $m
  7
  50
  68
  91
  117
  147
  181
  218
  258
  300
  344
  388
  433
  477
  522
  565
  608
  649
  690
  730
  768
  807
  845
  882
  920
  958
  997
  1,037
  1,078
  1,120
  1,164
Issuance/(repurchase) of shares, $m
  0
  79
  102
  130
  163
  202
  245
  292
  344
  398
  455
  513
  572
  632
  691
  751
  809
  867
  924
  981
  1,037
  1,093
  1,148
  1,204
  1,261
  1,318
  1,377
  1,437
  1,499
  1,563
  1,630
Cash from financing (excl. dividends), $m  
  11
  129
  170
  221
  280
  349
  426
  510
  602
  698
  799
  901
  1,005
  1,109
  1,213
  1,316
  1,417
  1,516
  1,614
  1,711
  1,805
  1,900
  1,993
  2,086
  2,181
  2,276
  2,374
  2,474
  2,577
  2,683
  2,794
Total cash flow (excl. dividends), $m
  -8
  58
  78
  103
  133
  167
  206
  248
  293
  341
  390
  440
  491
  542
  592
  641
  690
  737
  783
  828
  872
  916
  959
  1,002
  1,045
  1,088
  1,132
  1,177
  1,223
  1,271
  1,321
Retained Cash Flow (-), $m
  25
  -79
  -102
  -130
  -163
  -202
  -245
  -292
  -344
  -398
  -455
  -513
  -572
  -632
  -691
  -751
  -809
  -867
  -924
  -981
  -1,037
  -1,093
  -1,148
  -1,204
  -1,261
  -1,318
  -1,377
  -1,437
  -1,499
  -1,563
  -1,630
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
 
  -21
  -24
  -27
  -30
  -34
  -39
  -45
  -51
  -57
  -65
  -73
  -81
  -90
  -99
  -109
  -119
  -130
  -141
  -153
  -165
  -177
  -190
  -203
  -216
  -231
  -245
  -260
  -276
  -292
  -309
Discount rate, %
 
  8.20
  8.61
  9.04
  9.49
  9.97
  10.47
  10.99
  11.54
  12.12
  12.72
  13.36
  14.02
  14.73
  15.46
  16.24
  17.05
  17.90
  18.79
  19.73
  20.72
  21.76
  22.84
  23.99
  25.19
  26.45
  27.77
  29.16
  30.61
  32.15
  33.75
PV of cash for distribution, $m
 
  -20
  -20
  -21
  -21
  -21
  -22
  -22
  -21
  -21
  -20
  -18
  -17
  -15
  -13
  -11
  -10
  -8
  -6
  -5
  -4
  -3
  -2
  -1
  -1
  -1
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  78.1
  63.0
  52.0
  43.8
  37.5
  32.6
  28.7
  25.5
  22.8
  20.7
  18.8
  17.3
  16.0
  14.8
  13.8
  12.9
  12.2
  11.5
  10.9
  10.3
  9.8
  9.4
  9.0
  8.6
  8.3
  7.9
  7.6
  7.4
  7.1
  6.9

Pingtan Marine Enterprise Limited engages in the ocean fishing business. The company harvests a range of fish species, such as ribbon fish, Indian white shrimp, croaker fish, pomfret, Spanish mackerel, conger eel, squid, and red snapper with its owned or licensed vessels operating within the Indian Exclusive Economic Zone and the Arafura Sea of Indonesia. It operates approximately 135 fishing vessels. The company serves various customers, including distributors, restaurant owners, and exporters in the People’s Republic of China. Pingtan Marine Enterprise Limited is based in Fuzhou, the People’s Republic of China.

FINANCIAL RATIOS  of  Pingtan Marine Enterprise (PME)

Valuation Ratios
P/E Ratio -19.9
Price to Sales 13.3
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow -55.7
Price to Free Cash Flow -46.4
Growth Rates
Sales Growth Rate -65.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -98.2%
Cap. Spend. - 3 Yr. Gr. Rate -67.1%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 17.6%
Total Debt to Equity 48.8%
Interest Coverage -4
Management Effectiveness
Return On Assets -4.8%
Ret/ On Assets - 3 Yr. Avg. 16.1%
Return On Total Capital -7.1%
Ret/ On T. Cap. - 3 Yr. Avg. 15.2%
Return On Equity -10.2%
Return On Equity - 3 Yr. Avg. 27.4%
Asset Turnover 0.1
Profitability Ratios
Gross Margin -42.9%
Gross Margin - 3 Yr. Avg. -4.8%
EBITDA Margin -23.8%
EBITDA Margin - 3 Yr. Avg. 22.5%
Operating Margin -66.7%
Oper. Margin - 3 Yr. Avg. -16%
Pre-Tax Margin -71.4%
Pre-Tax Margin - 3 Yr. Avg. -0.6%
Net Profit Margin -66.7%
Net Profit Margin - 3 Yr. Avg. -0.1%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio -21.4%

PME stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PME stock intrinsic value calculation we used $21 million for the last fiscal year's total revenue generated by Pingtan Marine Enterprise. The default revenue input number comes from 2016 income statement of Pingtan Marine Enterprise. 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 PME stock valuation model: a) initial revenue growth rate of 50% 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 8.2%, whose default value for PME is calculated based on our internal credit rating of Pingtan Marine Enterprise, 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 Pingtan Marine Enterprise.
    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 PME stock the variable cost ratio is equal to 81%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $18 million in the base year in the intrinsic value calculation for PME 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 5.1% for Pingtan Marine Enterprise.

Corporate tax rate of 27% is the nominal tax rate for Pingtan Marine Enterprise. 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 PME 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 PME are equal to 516.7%.

Life of production assets of 15.5 years is the average useful life of capital assets used in Pingtan Marine Enterprise 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 PME is equal to 50%. 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 - $125 million for Pingtan Marine Enterprise - 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 79.869 million for Pingtan Marine Enterprise 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 Pingtan Marine Enterprise at the current share price and the inputted number of shares is $0.3 billion.

RELATED COMPANIES Price Int.Val. Rating

COMPANY NEWS

▶ Pingtan Marine posts 2Q profit   [12:33AM  Associated Press]
▶ Pingtan Marine posts 1Q profit   [10:04AM  Associated Press]
▶ Why Pingtan Marine Enterprise Exploded 20% Higher Today   [May-12-17 02:20PM  Motley Fool]
▶ Why Pingtan Marine Enterprise Tumbled Another 3.4% Today   [May-11-17 05:54PM  Motley Fool]
▶ Pingtan Marine Enterprise Provides Update   [03:25PM  PR Newswire]
Stock chart of PME Financial statements of PME
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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