Intrinsic value of PetroChina ADR - PTR

Previous Close

$65.13

  Intrinsic Value

$12.65

stock screener

  Rating & Target

str. sell

-81%

  Value-price divergence*

-82%

Previous close

$65.13

 
Intrinsic value

$12.65

 
Up/down potential

-81%

 
Rating

str. sell

 
Value-price divergence*

-82%

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

We calculate the intrinsic value of PTR 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 212.8

 

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, %
  -6.29
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  233,921
  238,599
  244,087
  250,360
  257,403
  265,207
  273,769
  283,093
  293,185
  304,058
  315,727
  328,211
  341,531
  355,714
  370,787
  386,782
  403,732
  421,674
  440,648
  460,697
  481,865
  504,200
  527,755
  552,584
  578,744
  606,296
  635,305
  665,839
  697,969
  731,772
  767,326
Variable operating expenses, $m
 
  197,547
  202,075
  207,251
  213,063
  219,502
  226,567
  234,260
  242,588
  251,560
  261,189
  270,823
  281,814
  293,517
  305,955
  319,153
  333,139
  347,944
  363,601
  380,143
  397,610
  416,040
  435,477
  455,964
  477,550
  500,285
  524,221
  549,416
  575,929
  603,821
  633,159
Fixed operating expenses, $m
 
  32,939
  33,763
  34,607
  35,472
  36,359
  37,268
  38,200
  39,155
  40,133
  41,137
  42,165
  43,219
  44,300
  45,407
  46,543
  47,706
  48,899
  50,121
  51,374
  52,659
  53,975
  55,324
  56,708
  58,125
  59,578
  61,068
  62,595
  64,159
  65,763
  67,407
Total operating expenses, $m
  225,149
  230,486
  235,838
  241,858
  248,535
  255,861
  263,835
  272,460
  281,743
  291,693
  302,326
  312,988
  325,033
  337,817
  351,362
  365,696
  380,845
  396,843
  413,722
  431,517
  450,269
  470,015
  490,801
  512,672
  535,675
  559,863
  585,289
  612,011
  640,088
  669,584
  700,566
Operating income, $m
  8,772
  8,113
  8,249
  8,502
  8,868
  9,346
  9,934
  10,632
  11,442
  12,364
  13,401
  15,223
  16,498
  17,897
  19,425
  21,087
  22,887
  24,831
  26,927
  29,179
  31,596
  34,185
  36,954
  39,912
  43,069
  46,433
  50,016
  53,828
  57,881
  62,188
  66,760
EBITDA, $m
  40,332
  40,054
  40,909
  41,984
  43,273
  44,774
  46,484
  48,405
  50,537
  52,885
  55,451
  58,242
  61,263
  64,521
  68,025
  71,783
  75,805
  80,101
  84,683
  89,563
  94,755
  100,271
  106,128
  112,340
  118,925
  125,901
  133,286
  141,101
  149,365
  158,102
  167,335
Interest expense (income), $m
  2,789
  2,175
  2,292
  2,428
  2,583
  2,757
  2,950
  3,161
  3,391
  3,641
  3,909
  4,197
  4,506
  4,835
  5,185
  5,557
  5,952
  6,371
  6,814
  7,283
  7,778
  8,301
  8,852
  9,434
  10,047
  10,694
  11,374
  12,091
  12,845
  13,638
  14,473
Earnings before tax, $m
  6,531
  5,938
  5,957
  6,074
  6,285
  6,589
  6,984
  7,471
  8,051
  8,724
  9,492
  11,025
  11,992
  13,062
  14,240
  15,529
  16,935
  18,460
  20,112
  21,896
  23,818
  25,884
  28,102
  30,478
  33,021
  35,739
  38,642
  41,737
  45,036
  48,549
  52,287
Tax expense, $m
  2,282
  1,603
  1,608
  1,640
  1,697
  1,779
  1,886
  2,017
  2,174
  2,355
  2,563
  2,977
  3,238
  3,527
  3,845
  4,193
  4,572
  4,984
  5,430
  5,912
  6,431
  6,989
  7,587
  8,229
  8,916
  9,650
  10,433
  11,269
  12,160
  13,108
  14,118
Net income, $m
  1,137
  4,335
  4,348
  4,434
  4,588
  4,810
  5,099
  5,454
  5,877
  6,368
  6,929
  8,049
  8,754
  9,536
  10,395
  11,336
  12,362
  13,476
  14,682
  15,984
  17,387
  18,895
  20,514
  22,249
  24,105
  26,090
  28,209
  30,468
  32,877
  35,441
  38,170

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  14,267
  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
  346,729
  338,920
  346,715
  355,625
  365,629
  376,714
  388,876
  402,120
  416,456
  431,901
  448,476
  466,209
  485,130
  505,276
  526,687
  549,406
  573,483
  598,969
  625,921
  654,399
  684,467
  716,194
  749,652
  784,920
  822,079
  861,216
  902,422
  945,794
  991,434
  1,039,449
  1,089,952
Adjusted assets (=assets-cash), $m
  332,462
  338,920
  346,715
  355,625
  365,629
  376,714
  388,876
  402,120
  416,456
  431,901
  448,476
  466,209
  485,130
  505,276
  526,687
  549,406
  573,483
  598,969
  625,921
  654,399
  684,467
  716,194
  749,652
  784,920
  822,079
  861,216
  902,422
  945,794
  991,434
  1,039,449
  1,089,952
Revenue / Adjusted assets
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
  0.704
Average production assets, $m
  257,539
  262,698
  268,740
  275,647
  283,401
  291,992
  301,419
  311,685
  322,797
  334,768
  347,616
  361,360
  376,026
  391,641
  408,237
  425,847
  444,509
  464,264
  485,154
  507,227
  530,533
  555,124
  581,058
  608,395
  637,197
  667,532
  699,471
  733,089
  768,464
  805,681
  844,826
Working capital, $m
  -17,013
  -10,737
  -10,984
  -11,266
  -11,583
  -11,934
  -12,320
  -12,739
  -13,193
  -13,683
  -14,208
  -14,769
  -15,369
  -16,007
  -16,685
  -17,405
  -18,168
  -18,975
  -19,829
  -20,731
  -21,684
  -22,689
  -23,749
  -24,866
  -26,043
  -27,283
  -28,589
  -29,963
  -31,409
  -32,930
  -34,530
Total debt, $m
  74,690
  63,678
  67,443
  71,747
  76,579
  81,933
  87,807
  94,204
  101,128
  108,588
  116,594
  125,159
  134,298
  144,028
  154,370
  165,343
  176,972
  189,282
  202,300
  216,055
  230,577
  245,901
  262,062
  279,096
  297,044
  315,947
  335,850
  356,798
  378,842
  402,034
  426,427
Total liabilities, $m
  174,710
  163,698
  167,463
  171,767
  176,599
  181,953
  187,827
  194,224
  201,148
  208,608
  216,614
  225,179
  234,318
  244,048
  254,390
  265,363
  276,992
  289,302
  302,320
  316,075
  330,597
  345,921
  362,082
  379,116
  397,064
  415,967
  435,870
  456,818
  478,862
  502,054
  526,447
Total equity, $m
  172,019
  175,221
  179,252
  183,858
  189,030
  194,761
  201,049
  207,896
  215,308
  223,293
  231,862
  241,030
  250,812
  261,228
  272,297
  284,043
  296,491
  309,667
  323,601
  338,324
  353,869
  370,272
  387,570
  405,804
  425,015
  445,249
  466,552
  488,975
  512,571
  537,395
  563,505
Total liabilities and equity, $m
  346,729
  338,919
  346,715
  355,625
  365,629
  376,714
  388,876
  402,120
  416,456
  431,901
  448,476
  466,209
  485,130
  505,276
  526,687
  549,406
  573,483
  598,969
  625,921
  654,399
  684,466
  716,193
  749,652
  784,920
  822,079
  861,216
  902,422
  945,793
  991,433
  1,039,449
  1,089,952
Debt-to-equity ratio
  0.434
  0.360
  0.380
  0.390
  0.410
  0.420
  0.440
  0.450
  0.470
  0.490
  0.500
  0.520
  0.540
  0.550
  0.570
  0.580
  0.600
  0.610
  0.630
  0.640
  0.650
  0.660
  0.680
  0.690
  0.700
  0.710
  0.720
  0.730
  0.740
  0.750
  0.760
Adjusted equity ratio
  0.506
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,137
  4,335
  4,348
  4,434
  4,588
  4,810
  5,099
  5,454
  5,877
  6,368
  6,929
  8,049
  8,754
  9,536
  10,395
  11,336
  12,362
  13,476
  14,682
  15,984
  17,387
  18,895
  20,514
  22,249
  24,105
  26,090
  28,209
  30,468
  32,877
  35,441
  38,170
Depreciation, amort., depletion, $m
  31,560
  31,940
  32,660
  33,482
  34,405
  35,428
  36,550
  37,772
  39,095
  40,520
  42,050
  43,019
  44,765
  46,624
  48,600
  50,696
  52,918
  55,269
  57,756
  60,384
  63,159
  66,086
  69,174
  72,428
  75,857
  79,468
  83,270
  87,272
  91,484
  95,914
  100,575
Funds from operations, $m
  36,379
  36,275
  37,008
  37,916
  38,993
  40,238
  41,649
  43,226
  44,972
  46,889
  48,979
  51,068
  53,519
  56,160
  58,995
  62,033
  65,280
  68,746
  72,439
  76,368
  80,546
  84,982
  89,688
  94,677
  99,962
  105,558
  111,479
  117,741
  124,360
  131,355
  138,744
Change in working capital, $m
  -1,985
  -211
  -247
  -282
  -317
  -351
  -385
  -420
  -454
  -489
  -525
  -562
  -599
  -638
  -678
  -720
  -763
  -807
  -854
  -902
  -953
  -1,005
  -1,060
  -1,117
  -1,177
  -1,240
  -1,305
  -1,374
  -1,446
  -1,521
  -1,600
Cash from operations, $m
  38,364
  36,486
  37,255
  38,198
  39,310
  40,589
  42,034
  43,646
  45,426
  47,378
  49,504
  51,629
  54,119
  56,798
  59,673
  62,752
  66,043
  69,553
  73,292
  77,271
  81,498
  85,987
  90,748
  95,794
  101,139
  106,798
  112,784
  119,115
  125,806
  132,877
  140,344
Maintenance CAPEX, $m
  0
  -30,659
  -31,274
  -31,993
  -32,815
  -33,738
  -34,761
  -35,883
  -37,105
  -38,428
  -39,853
  -41,383
  -43,019
  -44,765
  -46,624
  -48,600
  -50,696
  -52,918
  -55,269
  -57,756
  -60,384
  -63,159
  -66,086
  -69,174
  -72,428
  -75,857
  -79,468
  -83,270
  -87,272
  -91,484
  -95,914
New CAPEX, $m
  -27,404
  -5,159
  -6,042
  -6,907
  -7,754
  -8,592
  -9,427
  -10,265
  -11,112
  -11,971
  -12,848
  -13,745
  -14,666
  -15,615
  -16,596
  -17,610
  -18,662
  -19,754
  -20,890
  -22,073
  -23,306
  -24,592
  -25,934
  -27,336
  -28,802
  -30,335
  -31,939
  -33,618
  -35,376
  -37,217
  -39,146
Cash from investing activities, $m
  -25,446
  -35,818
  -37,316
  -38,900
  -40,569
  -42,330
  -44,188
  -46,148
  -48,217
  -50,399
  -52,701
  -55,128
  -57,685
  -60,380
  -63,220
  -66,210
  -69,358
  -72,672
  -76,159
  -79,829
  -83,690
  -87,751
  -92,020
  -96,510
  -101,230
  -106,192
  -111,407
  -116,888
  -122,648
  -128,701
  -135,060
Free cash flow, $m
  12,918
  667
  -61
  -701
  -1,259
  -1,741
  -2,154
  -2,503
  -2,791
  -3,021
  -3,197
  -3,498
  -3,566
  -3,583
  -3,546
  -3,457
  -3,315
  -3,119
  -2,868
  -2,559
  -2,192
  -1,764
  -1,272
  -716
  -91
  606
  1,377
  2,227
  3,158
  4,176
  5,284
Issuance/(repayment) of debt, $m
  -5,265
  3,255
  3,765
  4,304
  4,832
  5,354
  5,874
  6,397
  6,924
  7,460
  8,006
  8,565
  9,139
  9,731
  10,341
  10,974
  11,629
  12,310
  13,018
  13,755
  14,523
  15,324
  16,161
  17,034
  17,948
  18,903
  19,902
  20,949
  22,044
  23,191
  24,393
Issuance/(repurchase) of shares, $m
  0
  0
  0
  173
  584
  921
  1,189
  1,393
  1,535
  1,616
  1,640
  1,119
  1,028
  880
  674
  410
  85
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -8,472
  3,255
  3,765
  4,477
  5,416
  6,275
  7,063
  7,790
  8,459
  9,076
  9,646
  9,684
  10,167
  10,611
  11,015
  11,384
  11,714
  12,310
  13,018
  13,755
  14,523
  15,324
  16,161
  17,034
  17,948
  18,903
  19,902
  20,949
  22,044
  23,191
  24,393
Total cash flow (excl. dividends), $m
  4,862
  3,922
  3,705
  3,775
  4,157
  4,534
  4,910
  5,287
  5,668
  6,055
  6,449
  6,186
  6,601
  7,028
  7,469
  7,926
  8,399
  9,191
  10,150
  11,196
  12,331
  13,561
  14,888
  16,319
  17,857
  19,509
  21,280
  23,175
  25,202
  27,367
  29,677
Retained Cash Flow (-), $m
  -1,347
  -3,202
  -4,030
  -4,607
  -5,172
  -5,731
  -6,288
  -6,847
  -7,412
  -7,985
  -8,569
  -9,168
  -9,782
  -10,416
  -11,069
  -11,746
  -12,448
  -13,176
  -13,934
  -14,723
  -15,545
  -16,403
  -17,298
  -18,234
  -19,211
  -20,234
  -21,304
  -22,423
  -23,596
  -24,824
  -26,110
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
 
  720
  -326
  -831
  -1,015
  -1,197
  -1,378
  -1,560
  -1,744
  -1,930
  -2,120
  -2,982
  -3,182
  -3,388
  -3,600
  -3,820
  -4,049
  -3,986
  -3,784
  -3,527
  -3,214
  -2,842
  -2,410
  -1,915
  -1,354
  -725
  -24
  752
  1,607
  2,543
  3,567
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
 
  690
  -298
  -724
  -836
  -928
  -1,000
  -1,054
  -1,090
  -1,109
  -1,112
  -1,416
  -1,358
  -1,288
  -1,209
  -1,122
  -1,029
  -867
  -697
  -543
  -408
  -294
  -200
  -125
  -69
  -28
  -1
  16
  25
  28
  27
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  99.9
  99.7
  99.3
  98.8
  98.2
  97.7
  97.1
  96.5
  96.1
  95.8
  95.5
  95.3
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2

PetroChina Company Limited is a China-based company principally engaged in the production and distribution of oil and gas. The Company mainly operates through four business segments. The Exploration and Production segment is principally engaged in the exploration, development, production and sales of crude oil and natural gas. The Refining and Chemical Products segment is principally engaged in the refining of crude oil and petroleum products, as well as the production and sales of basic petrochemical products, derivative petrochemical products and other chemical products. The Sales segment is principally engaged in the sales of refined petroleum products. The Natural Gas and Pipeline segment is engaged in the transportation and sales of natural gas, crude oil and refined petroleum products.

FINANCIAL RATIOS  of  PetroChina ADR (PTR)

Valuation Ratios
P/E Ratio 10483.9
Price to Sales 51
Price to Book 69.3
Price to Tangible Book
Price to Cash Flow 310.7
Price to Free Cash Flow 1087.6
Growth Rates
Sales Growth Rate -6.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -15.4%
Cap. Spend. - 3 Yr. Gr. Rate -9.5%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 31.4%
Total Debt to Equity 43.4%
Interest Coverage 3
Management Effectiveness
Return On Assets 0.9%
Ret/ On Assets - 3 Yr. Avg. 2.7%
Return On Total Capital 0.5%
Ret/ On T. Cap. - 3 Yr. Avg. 3%
Return On Equity 0.7%
Return On Equity - 3 Yr. Avg. 4.3%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 39.8%
Gross Margin - 3 Yr. Avg. 37.4%
EBITDA Margin 17.5%
EBITDA Margin - 3 Yr. Avg. 16.5%
Operating Margin 3.7%
Oper. Margin - 3 Yr. Avg. 5.3%
Pre-Tax Margin 2.8%
Pre-Tax Margin - 3 Yr. Avg. 4.3%
Net Profit Margin 0.5%
Net Profit Margin - 3 Yr. Avg. 2.4%
Effective Tax Rate 34.9%
Eff/ Tax Rate - 3 Yr. Avg. 28.7%
Payout Ratio 107.5%

PTR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PTR stock intrinsic value calculation we used $233921 million for the last fiscal year's total revenue generated by PetroChina ADR. The default revenue input number comes from 2016 income statement of PetroChina 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 PTR stock valuation model: a) initial revenue growth rate of 2% 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 PTR is calculated based on our internal credit rating of PetroChina 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 PetroChina 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 PTR stock the variable cost ratio is equal to 82.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $32136 million in the base year in the intrinsic value calculation for PTR 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 3.6% for PetroChina ADR.

Corporate tax rate of 27% is the nominal tax rate for PetroChina 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 PTR 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 PTR are equal to 110.1%.

Life of production assets of 8.4 years is the average useful life of capital assets used in PetroChina 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 PTR is equal to -4.5%. 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 - $172019 million for PetroChina 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 3267.8 million for PetroChina 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 PetroChina ADR at the current share price and the inputted number of shares is $212.8 billion.

RELATED COMPANIES Price Int.Val. Rating
EC Ecopetrol ADR 9.83 1.72  str.sell
CEO CNOOC ADR 129.47 29.97  str.sell
CVX Chevron 120.13 18.46  str.sell
XOM Exxon Mobil 82.81 9.82  str.sell
TOT Total ADR 54.48 9.80  str.sell
E ENI ADR 33.07 7.47  str.sell

COMPANY NEWS

▶ Energy Leads Wall Street's Gains as Crude Hovers Around $52   [Oct-16-17 10:55AM  TheStreet.com]
▶ Oil Giants At Odds As Saudi, Russian Ties Improve   [Oct-09-17 06:00PM  Oilprice.com]
▶ Why Short Interest in BP Stock Has Dropped   [Oct-03-17 09:06AM  Market Realist]
▶ PetroChina Stock: Is It in a Bearish Zone in 3Q17?   [Sep-29-17 07:37AM  Market Realist]
▶ Russia's Gazprom knocks US ExxonMobil to #9   [Sep-25-17 01:53PM  Yahoo Finance Video]
▶ This Weeks Integrated Energy Losers: E, YPF, and PTR   [Sep-22-17 09:08AM  Market Realist]
▶ [$$] China Inc's profits soar but will the rally last?   [Sep-10-17 09:06PM  Financial Times]
▶ Sinopec's 1H Profit Jumps 40% Fueled by Chemicals Unit   [Aug-27-17 09:56PM  Bloomberg Video]
▶ China SOEs' One True Master   [Aug-25-17 12:57AM  Bloomberg]
▶ PetroChina Dividend Decision Seen as One-Time Event   [Aug-24-17 11:56PM  Bloomberg Video]
▶ In China, It's a Gas   [10:52PM  Bloomberg]
▶ Sanford's Beveridge Asks If We're Stuck at $50 Oil   [Aug-23-17 08:38PM  Bloomberg Video]
▶ China Prepares For A Natural Gas Import Boom   [Aug-10-17 06:00PM  Oilprice.com]
▶ [$$] Saudi Aramco Is in Talks to Buy PetroChina Refinery Stake   [Aug-04-17 11:45PM  The Wall Street Journal]
▶ [$$] Saudi Aramco in Talks to Buy PetroChina Refinery Stake   [06:19AM  The Wall Street Journal]
▶ PetroChina Forecasts Profit Boost   [Jul-27-17 12:04AM  Bloomberg Video]
▶ Whats the Forecast for ExxonMobils Stock Price?   [Jul-26-17 07:40AM  Market Realist]
▶ How Chevron Stock Has Performed ahead of 2Q17 Earnings   [Jul-20-17 06:06PM  Market Realist]
▶ Why CNOOC Is Better Than PetroChina, Sinopec   [Jul-18-17 03:51AM  Barrons.com]
▶ ETFs with exposure to PetroChina Co., Ltd. : July 6, 2017   [Jul-06-17 02:07PM  Capital Cube]
▶ Short Interest in BP Has Risen: What Does That Imply?   [Jun-08-17 07:35AM  Market Realist]
▶ ETFs with exposure to PetroChina Co., Ltd. : May 30, 2017   [May-30-17 12:39PM  Capital Cube]
▶ Has Big Oil Regained Its Pre-Crash Position?   [May-29-17 06:00PM  Oilprice.com]
▶ [$$] China Wants More Private Money for Its State-Owned Energy Giants   [May-22-17 07:51AM  The Wall Street Journal]
▶ Mixed bag for Asian stocks as Nikkei gets back on track   [May-15-17 11:13PM  MarketWatch]
▶ Inside Shells Implied Volatility after 1Q17   [May-09-17 07:36AM  Market Realist]
▶ ETFs with exposure to PetroChina Co., Ltd. : May 8, 2017   [May-08-17 05:07PM  Capital Cube]
▶ Wheres BPs Implied Volatility Now?   [09:06AM  Market Realist]
▶ PetroChina posts 1Q profit   [02:28PM  Associated Press]
▶ PetroChina Files Annual Report on Form 20-F   [Apr-27-17 11:59AM  PR Newswire]
▶ Has Short Interest in Chevron Tumbled?   [Apr-20-17 07:37AM  Market Realist]
▶ What's the most expensive stock of all time?   [Apr-19-17 01:21PM  Investopedia]
▶ PetroChina Downgraded to Underperform   [Apr-10-17 02:25AM  Barrons.com]
▶ Is An Iraqi Production Slowdown Inevitable?   [Apr-03-17 07:00PM  Oilprice.com]
▶ Oil Prices Rise Above $50 On Outages, OPEC Expectations   [Mar-31-17 04:30PM  Oilprice.com]
▶ Hang Seng Slides, Follows Oil And Metals Lower   [Mar-08-17 09:40PM  at Barrons.com]
▶ [$$] Go Long China, Short US: 5 Smart Stock Trades   [Mar-06-17 10:03PM  at Barrons.com]
Financial statements of PTR
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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