Intrinsic value of PetroChina ADR - PTR

Previous Close

$68.39

  Intrinsic Value

$12.46

stock screener

  Rating & Target

str. sell

-82%

Previous close

$68.39

 
Intrinsic value

$12.46

 
Up/down potential

-82%

 
Rating

str. sell

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 226.9

 

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
  24.90
  22.91
  21.12
  19.51
  18.06
  16.75
  15.58
  14.52
  13.57
  12.71
  11.94
  11.24
  10.62
  10.06
  9.55
  9.10
  8.69
  8.32
  7.99
  7.69
  7.42
  7.18
  6.96
  6.76
  6.59
  6.43
  6.29
  6.16
  6.04
  5.94
Revenue, $m
  233,921
  292,167
  359,103
  434,942
  519,786
  613,641
  716,430
  828,019
  948,232
  1,076,872
  1,213,739
  1,358,644
  1,511,421
  1,671,939
  1,840,108
  2,015,884
  2,199,273
  2,390,335
  2,589,182
  2,795,977
  3,010,937
  3,234,329
  3,466,471
  3,707,727
  3,958,508
  4,219,269
  4,490,509
  4,772,772
  5,066,640
  5,372,739
  5,691,735
Variable operating expenses, $m
 
  241,748
  296,980
  359,559
  429,568
  507,012
  591,829
  683,906
  783,100
  889,247
  1,002,182
  1,121,083
  1,247,147
  1,379,599
  1,518,363
  1,663,404
  1,814,728
  1,972,383
  2,136,461
  2,307,097
  2,484,472
  2,668,804
  2,860,356
  3,059,428
  3,266,359
  3,481,525
  3,705,339
  3,938,248
  4,180,733
  4,433,310
  4,696,530
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
  274,687
  330,743
  394,166
  465,040
  543,371
  629,097
  722,106
  822,255
  929,380
  1,043,319
  1,163,248
  1,290,366
  1,423,899
  1,563,770
  1,709,947
  1,862,434
  2,021,282
  2,186,582
  2,358,471
  2,537,131
  2,722,779
  2,915,680
  3,116,136
  3,324,484
  3,541,103
  3,766,407
  4,000,843
  4,244,892
  4,499,073
  4,763,937
Operating income, $m
  8,772
  17,479
  28,360
  40,776
  54,746
  70,270
  87,334
  105,913
  125,978
  147,492
  170,420
  195,395
  221,054
  248,040
  276,337
  305,937
  336,839
  369,054
  402,600
  437,505
  473,807
  511,551
  550,791
  591,592
  634,024
  678,165
  724,102
  771,929
  821,747
  873,665
  927,798
EBITDA, $m
  40,332
  56,441
  76,095
  98,451
  123,542
  151,368
  181,904
  215,110
  250,931
  289,306
  330,173
  373,474
  419,158
  467,184
  517,523
  570,161
  625,101
  682,358
  741,967
  803,978
  868,454
  935,479
  1,005,147
  1,077,569
  1,152,871
  1,231,190
  1,312,679
  1,397,503
  1,485,839
  1,577,878
  1,673,822
Interest expense (income), $m
  2,789
  2,175
  3,615
  5,269
  7,142
  9,237
  11,556
  14,094
  16,850
  19,820
  22,997
  26,377
  29,956
  33,730
  37,694
  41,848
  46,189
  50,719
  55,438
  60,349
  65,457
  70,766
  76,284
  82,017
  87,976
  94,170
  100,610
  107,310
  114,281
  121,540
  129,100
Earnings before tax, $m
  6,531
  15,304
  24,744
  35,507
  47,604
  61,032
  75,778
  91,819
  109,127
  127,672
  147,423
  169,018
  191,098
  214,311
  238,643
  264,089
  290,650
  318,335
  347,162
  377,156
  408,350
  440,785
  474,508
  509,575
  546,048
  583,995
  623,492
  664,619
  707,466
  752,126
  798,698
Tax expense, $m
  2,282
  4,132
  6,681
  9,587
  12,853
  16,479
  20,460
  24,791
  29,464
  34,471
  39,804
  45,635
  51,596
  57,864
  64,434
  71,304
  78,475
  85,950
  93,734
  101,832
  110,254
  119,012
  128,117
  137,585
  147,433
  157,679
  168,343
  179,447
  191,016
  203,074
  215,648
Net income, $m
  1,137
  11,172
  18,063
  25,920
  34,751
  44,554
  55,318
  67,028
  79,663
  93,201
  107,619
  123,383
  139,501
  156,447
  174,209
  192,785
  212,174
  232,384
  253,428
  275,324
  298,095
  321,773
  346,391
  371,990
  398,615
  426,316
  455,149
  485,172
  516,450
  549,052
  583,050

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
  415,010
  510,089
  617,815
  738,333
  871,649
  1,017,657
  1,176,164
  1,346,921
  1,529,648
  1,724,061
  1,929,891
  2,146,904
  2,374,913
  2,613,789
  2,863,471
  3,123,968
  3,395,363
  3,677,815
  3,971,558
  4,276,899
  4,594,218
  4,923,965
  5,266,658
  5,622,880
  5,993,279
  6,378,564
  6,779,505
  7,196,931
  7,631,731
  8,084,851
Adjusted assets (=assets-cash), $m
  332,462
  415,010
  510,089
  617,815
  738,333
  871,649
  1,017,657
  1,176,164
  1,346,921
  1,529,648
  1,724,061
  1,929,891
  2,146,904
  2,374,913
  2,613,789
  2,863,471
  3,123,968
  3,395,363
  3,677,815
  3,971,558
  4,276,899
  4,594,218
  4,923,965
  5,266,658
  5,622,880
  5,993,279
  6,378,564
  6,779,505
  7,196,931
  7,631,731
  8,084,851
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
  321,676
  395,372
  478,871
  572,285
  675,619
  788,790
  911,649
  1,044,004
  1,185,636
  1,336,327
  1,495,867
  1,664,074
  1,840,805
  2,025,959
  2,219,488
  2,421,400
  2,631,759
  2,850,689
  3,078,370
  3,315,041
  3,560,997
  3,816,585
  4,082,208
  4,358,317
  4,645,415
  4,944,051
  5,254,821
  5,578,370
  5,915,385
  6,266,601
Working capital, $m
  -17,013
  -13,148
  -16,160
  -19,572
  -23,390
  -27,614
  -32,239
  -37,261
  -42,670
  -48,459
  -54,618
  -61,139
  -68,014
  -75,237
  -82,805
  -90,715
  -98,967
  -107,565
  -116,513
  -125,819
  -135,492
  -145,545
  -155,991
  -166,848
  -178,133
  -189,867
  -202,073
  -214,775
  -227,999
  -241,773
  -256,128
Total debt, $m
  74,690
  100,430
  146,353
  198,385
  256,595
  320,987
  391,508
  468,067
  550,543
  638,800
  732,701
  832,118
  936,935
  1,047,063
  1,162,440
  1,283,037
  1,408,856
  1,539,940
  1,676,365
  1,818,242
  1,965,722
  2,118,987
  2,278,255
  2,443,776
  2,615,831
  2,794,734
  2,980,826
  3,174,481
  3,376,098
  3,586,106
  3,804,963
Total liabilities, $m
  174,710
  200,450
  246,373
  298,405
  356,615
  421,007
  491,528
  568,087
  650,563
  738,820
  832,721
  932,138
  1,036,955
  1,147,083
  1,262,460
  1,383,057
  1,508,876
  1,639,960
  1,776,385
  1,918,262
  2,065,742
  2,219,007
  2,378,275
  2,543,796
  2,715,851
  2,894,754
  3,080,846
  3,274,501
  3,476,118
  3,686,126
  3,904,983
Total equity, $m
  172,019
  214,560
  263,716
  319,410
  381,718
  450,643
  526,129
  608,077
  696,358
  790,828
  891,340
  997,754
  1,109,950
  1,227,830
  1,351,329
  1,480,415
  1,615,091
  1,755,403
  1,901,430
  2,053,295
  2,211,157
  2,375,211
  2,545,690
  2,722,862
  2,907,029
  3,098,525
  3,297,718
  3,505,004
  3,720,814
  3,945,605
  4,179,868
Total liabilities and equity, $m
  346,729
  415,010
  510,089
  617,815
  738,333
  871,650
  1,017,657
  1,176,164
  1,346,921
  1,529,648
  1,724,061
  1,929,892
  2,146,905
  2,374,913
  2,613,789
  2,863,472
  3,123,967
  3,395,363
  3,677,815
  3,971,557
  4,276,899
  4,594,218
  4,923,965
  5,266,658
  5,622,880
  5,993,279
  6,378,564
  6,779,505
  7,196,932
  7,631,731
  8,084,851
Debt-to-equity ratio
  0.434
  0.470
  0.550
  0.620
  0.670
  0.710
  0.740
  0.770
  0.790
  0.810
  0.820
  0.830
  0.840
  0.850
  0.860
  0.870
  0.870
  0.880
  0.880
  0.890
  0.890
  0.890
  0.890
  0.900
  0.900
  0.900
  0.900
  0.910
  0.910
  0.910
  0.910
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
  11,172
  18,063
  25,920
  34,751
  44,554
  55,318
  67,028
  79,663
  93,201
  107,619
  123,383
  139,501
  156,447
  174,209
  192,785
  212,174
  232,384
  253,428
  275,324
  298,095
  321,773
  346,391
  371,990
  398,615
  426,316
  455,149
  485,172
  516,450
  549,052
  583,050
Depreciation, amort., depletion, $m
  31,560
  38,962
  47,735
  57,675
  68,796
  81,098
  94,570
  109,197
  124,953
  141,814
  159,753
  178,079
  198,104
  219,143
  241,186
  264,225
  288,262
  313,305
  339,368
  366,473
  394,648
  423,928
  454,355
  485,977
  518,847
  553,026
  588,577
  625,574
  664,092
  704,213
  746,024
Funds from operations, $m
  36,379
  50,134
  65,798
  83,596
  103,547
  125,651
  149,889
  176,225
  204,616
  235,015
  267,372
  301,462
  337,605
  375,590
  415,395
  457,010
  500,436
  545,689
  592,796
  641,796
  692,743
  745,701
  800,746
  857,967
  917,462
  979,342
  1,043,726
  1,110,746
  1,180,542
  1,253,264
  1,329,074
Change in working capital, $m
  -1,985
  -2,621
  -3,012
  -3,413
  -3,818
  -4,223
  -4,626
  -5,021
  -5,410
  -5,789
  -6,159
  -6,521
  -6,875
  -7,223
  -7,568
  -7,910
  -8,253
  -8,598
  -8,948
  -9,306
  -9,673
  -10,053
  -10,446
  -10,857
  -11,285
  -11,734
  -12,206
  -12,702
  -13,224
  -13,774
  -14,355
Cash from operations, $m
  38,364
  52,755
  68,810
  87,009
  107,365
  129,875
  154,514
  181,246
  210,026
  240,804
  273,531
  307,983
  344,480
  382,814
  422,963
  464,920
  508,689
  554,287
  601,744
  651,102
  702,416
  755,754
  811,193
  868,823
  928,747
  991,076
  1,055,932
  1,123,448
  1,193,766
  1,267,039
  1,343,428
Maintenance CAPEX, $m
  0
  -30,659
  -38,295
  -47,068
  -57,008
  -68,129
  -80,431
  -93,904
  -108,530
  -124,286
  -141,147
  -159,086
  -178,079
  -198,104
  -219,143
  -241,186
  -264,225
  -288,262
  -313,305
  -339,368
  -366,473
  -394,648
  -423,928
  -454,355
  -485,977
  -518,847
  -553,026
  -588,577
  -625,574
  -664,092
  -704,213
New CAPEX, $m
  -27,404
  -64,137
  -73,696
  -83,499
  -93,414
  -103,334
  -113,171
  -122,859
  -132,354
  -141,633
  -150,690
  -159,540
  -168,208
  -176,730
  -185,154
  -193,529
  -201,912
  -210,359
  -218,930
  -227,681
  -236,671
  -245,955
  -255,588
  -265,623
  -276,109
  -287,098
  -298,636
  -310,771
  -323,549
  -337,015
  -351,215
Cash from investing activities, $m
  -25,446
  -94,796
  -111,991
  -130,567
  -150,422
  -171,463
  -193,602
  -216,763
  -240,884
  -265,919
  -291,837
  -318,626
  -346,287
  -374,834
  -404,297
  -434,715
  -466,137
  -498,621
  -532,235
  -567,049
  -603,144
  -640,603
  -679,516
  -719,978
  -762,086
  -805,945
  -851,662
  -899,348
  -949,123
  -1,001,107
  -1,055,428
Free cash flow, $m
  12,918
  -42,042
  -43,180
  -43,558
  -43,057
  -41,588
  -39,088
  -35,517
  -30,858
  -25,115
  -18,306
  -10,644
  -1,807
  7,979
  18,665
  30,205
  42,552
  55,666
  69,510
  84,053
  99,273
  115,150
  131,676
  148,845
  166,661
  185,131
  204,271
  224,100
  244,643
  265,932
  288,001
Issuance/(repayment) of debt, $m
  -5,265
  40,007
  45,923
  52,032
  58,210
  64,392
  70,522
  76,559
  82,476
  88,257
  93,902
  99,416
  104,817
  110,128
  115,377
  120,596
  125,820
  131,084
  136,424
  141,878
  147,480
  153,265
  159,268
  165,521
  172,055
  178,903
  186,093
  193,654
  201,617
  210,008
  218,857
Issuance/(repurchase) of shares, $m
  0
  31,369
  31,093
  29,774
  27,557
  24,371
  20,168
  14,920
  8,618
  1,269
  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  
  -8,472
  71,376
  77,016
  81,806
  85,767
  88,763
  90,690
  91,479
  91,094
  89,526
  93,902
  99,416
  104,817
  110,128
  115,377
  120,596
  125,820
  131,084
  136,424
  141,878
  147,480
  153,265
  159,268
  165,521
  172,055
  178,903
  186,093
  193,654
  201,617
  210,008
  218,857
Total cash flow (excl. dividends), $m
  4,862
  29,335
  33,835
  38,247
  42,710
  47,174
  51,602
  55,962
  60,235
  64,411
  75,595
  88,773
  103,011
  118,107
  134,042
  150,801
  168,372
  186,749
  205,934
  225,931
  246,752
  268,416
  290,944
  314,366
  338,716
  364,034
  390,363
  417,754
  446,260
  475,940
  506,858
Retained Cash Flow (-), $m
  -1,347
  -42,541
  -49,156
  -55,694
  -62,308
  -68,925
  -75,486
  -81,948
  -88,281
  -94,470
  -100,512
  -106,414
  -112,196
  -117,881
  -123,499
  -129,085
  -134,677
  -140,311
  -146,028
  -151,865
  -157,861
  -164,054
  -170,479
  -177,172
  -184,167
  -191,496
  -199,192
  -207,286
  -215,809
  -224,792
  -234,263
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
 
  -13,207
  -15,321
  -17,447
  -19,598
  -21,750
  -23,884
  -25,986
  -28,046
  -30,059
  -24,916
  -17,642
  -9,185
  227
  10,543
  21,715
  33,695
  46,438
  59,906
  74,066
  88,891
  104,362
  120,465
  137,194
  154,549
  172,538
  191,171
  210,468
  230,451
  251,149
  272,595
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
 
  -12,662
  -14,025
  -15,184
  -16,137
  -16,859
  -17,334
  -17,556
  -17,529
  -17,267
  -13,063
  -8,378
  -3,920
  86
  3,540
  6,375
  8,563
  10,104
  11,032
  11,404
  11,295
  10,794
  9,995
  8,992
  7,871
  6,712
  5,577
  4,517
  3,565
  2,742
  2,053
Current shareholders' claim on cash, %
  100
  87.9
  79.2
  72.9
  68.4
  65.3
  63.1
  61.8
  61.2
  61.1
  61.1
  61.1
  61.1
  61.1
  61.1
  61.1
  61.1
  61.1
  61.1
  61.1
  61.1
  61.1
  61.1
  61.1
  61.1
  61.1
  61.1
  61.1
  61.1
  61.1
  61.1

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 11008.6
Price to Sales 53.5
Price to Book 72.8
Price to Tangible Book
Price to Cash Flow 326.3
Price to Free Cash Flow 1142
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 24.9% 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 3318.08 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 $226.9 billion.

RELATED COMPANIES Price Int.Val. Rating
EC Ecopetrol ADR 12.91 1.74  str.sell
CEO CNOOC ADR 138.81 29.66  str.sell
CVX Chevron 119.73 18.60  str.sell
XOM Exxon Mobil 83.03 9.87  str.sell
TOT Total ADR 54.37 9.60  str.sell
E ENI ADR 32.67 7.49  str.sell

COMPANY NEWS

▶ PetroChinas Stock Returns: Could It Enter Bullish Territory?   [Dec-15-17 09:04AM  Market Realist]
▶ Integrated Energy Gainers: PTR, CEO, BP, RDS.A, and STO   [Dec-14-17 02:30PM  Market Realist]
▶ What's the most expensive stock of all time?   [Nov-20-17 12:44PM  Investopedia]
▶ Which Integrated Energy Stocks Are Rising This Week?   [Nov-10-17 09:03AM  Market Realist]
▶ Russias Crude Oil Exports Could Pressure Oil Futures   [Nov-08-17 09:34AM  Market Realist]
▶ BPs Stock Price Forecast Range after Q3 Earnings   [Nov-02-17 10:31AM  Market Realist]
▶ ExxonMobil Stock: Price Forecast Range after 3Q17 Earnings   [Oct-31-17 09:03AM  Market Realist]
▶ [$$] Why Asia's Largest Oil Company Won't Reward Investors   [05:59AM  The Wall Street Journal]
▶ The World's Hidden Gas Giant   [01:07AM  Bloomberg]
▶ PetroChina posts 3Q profit   [Oct-30-17 03:47PM  Associated Press]
▶ PetroChina, Sinopec Earnings Preview   [Oct-29-17 10:01PM  Bloomberg Video]
▶ Petrochina's Q3 Net Profit Leaps   [08:00PM  Rigzone.com]
▶ How Has Short Interest in CVX Trended?   [Oct-23-17 09:07AM  Market Realist]
▶ Energy Leads Wall Street's Gains as Crude Hovers Around $52   [Oct-16-17 10:55AM  TheStreet.com]
▶ Oil Giants At Odds As Saudi, Russian Ties Improve   [Oct-09-17 06:00PM  Oilprice.com]
▶ Why Short Interest in BP Stock Has Dropped   [Oct-03-17 09:06AM  Market Realist]
▶ PetroChina Stock: Is It in a Bearish Zone in 3Q17?   [Sep-29-17 07:37AM  Market Realist]
▶ Russia's Gazprom knocks US ExxonMobil to #9   [Sep-25-17 01:53PM  Yahoo Finance Video]
▶ This Weeks Integrated Energy Losers: E, YPF, and PTR   [Sep-22-17 09:08AM  Market Realist]
▶ [$$] 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]
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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