Intrinsic value of Semiconductor Manufacturing Internationa - SMI

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$5.96

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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$5.96

 
Intrinsic value

$28.44

 
Up/down potential

+377%

 
Rating

str. buy

 
Value-price divergence* premium content

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

We calculate the intrinsic value of SMI 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 5.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  30.32
  33.60
  30.74
  28.17
  25.85
  23.76
  21.89
  20.20
  18.68
  17.31
  16.08
  14.97
  13.97
  13.08
  12.27
  11.54
  10.89
  10.30
  9.77
  9.29
  8.86
  8.48
  8.13
  7.82
  7.53
  7.28
  7.05
  6.85
  6.66
  6.50
  6.35
Revenue, $m
  2,914
  3,893
  5,090
  6,523
  8,210
  10,161
  12,385
  14,886
  17,667
  20,725
  24,058
  27,660
  31,526
  35,648
  40,022
  44,642
  49,503
  54,601
  59,936
  65,505
  71,311
  77,357
  83,645
  90,183
  96,978
  104,040
  111,378
  119,005
  126,934
  135,181
  143,761
Variable operating expenses, $m
 
  3,220
  4,209
  5,395
  6,789
  8,403
  10,242
  12,311
  14,611
  17,140
  19,896
  22,875
  26,072
  29,481
  33,098
  36,919
  40,939
  45,155
  49,567
  54,173
  58,975
  63,974
  69,175
  74,582
  80,201
  86,041
  92,109
  98,417
  104,975
  111,795
  118,890
Fixed operating expenses, $m
 
  172
  177
  181
  185
  190
  195
  200
  205
  210
  215
  220
  226
  232
  237
  243
  249
  256
  262
  269
  275
  282
  289
  296
  304
  311
  319
  327
  335
  344
  352
Total operating expenses, $m
  2,575
  3,392
  4,386
  5,576
  6,974
  8,593
  10,437
  12,511
  14,816
  17,350
  20,111
  23,095
  26,298
  29,713
  33,335
  37,162
  41,188
  45,411
  49,829
  54,442
  59,250
  64,256
  69,464
  74,878
  80,505
  86,352
  92,428
  98,744
  105,310
  112,139
  119,242
Operating income, $m
  339
  501
  704
  948
  1,235
  1,568
  1,948
  2,376
  2,852
  3,376
  3,947
  4,565
  5,228
  5,936
  6,686
  7,480
  8,315
  9,190
  10,107
  11,064
  12,062
  13,101
  14,181
  15,305
  16,473
  17,687
  18,949
  20,261
  21,624
  23,042
  24,518
EBITDA, $m
  1,069
  1,086
  1,469
  1,927
  2,468
  3,094
  3,808
  4,612
  5,505
  6,489
  7,561
  8,719
  9,963
  11,290
  12,698
  14,185
  15,750
  17,392
  19,109
  20,903
  22,773
  24,719
  26,745
  28,851
  31,040
  33,314
  35,678
  38,135
  40,690
  43,347
  46,111
Interest expense (income), $m
  28
  84
  146
  222
  313
  420
  543
  684
  842
  1,018
  1,212
  1,423
  1,651
  1,896
  2,157
  2,434
  2,726
  3,034
  3,357
  3,694
  4,047
  4,414
  4,797
  5,195
  5,609
  6,039
  6,486
  6,951
  7,434
  7,936
  8,458
Earnings before tax, $m
  310
  417
  558
  725
  922
  1,148
  1,405
  1,692
  2,009
  2,357
  2,735
  3,142
  3,577
  4,040
  4,530
  5,046
  5,589
  6,157
  6,750
  7,370
  8,015
  8,686
  9,384
  10,110
  10,864
  11,648
  12,463
  13,310
  14,191
  15,107
  16,061
Tax expense, $m
  -6
  113
  151
  196
  249
  310
  379
  457
  543
  636
  738
  848
  966
  1,091
  1,223
  1,362
  1,509
  1,662
  1,823
  1,990
  2,164
  2,345
  2,534
  2,730
  2,933
  3,145
  3,365
  3,594
  3,831
  4,079
  4,336
Net income, $m
  377
  304
  407
  530
  673
  838
  1,025
  1,235
  1,467
  1,721
  1,997
  2,293
  2,611
  2,949
  3,307
  3,684
  4,080
  4,494
  4,928
  5,380
  5,851
  6,341
  6,851
  7,380
  7,931
  8,503
  9,098
  9,716
  10,359
  11,028
  11,724

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  2,158
  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
  10,115
  10,637
  13,907
  17,824
  22,431
  27,762
  33,838
  40,673
  48,270
  56,627
  65,732
  75,574
  86,135
  97,400
  109,350
  121,972
  135,253
  149,184
  163,759
  178,976
  194,840
  211,357
  228,539
  246,402
  264,968
  284,261
  304,311
  325,150
  346,815
  369,346
  392,789
Adjusted assets (=assets-cash), $m
  7,957
  10,637
  13,907
  17,824
  22,431
  27,762
  33,838
  40,673
  48,270
  56,627
  65,732
  75,574
  86,135
  97,400
  109,350
  121,972
  135,253
  149,184
  163,759
  178,976
  194,840
  211,357
  228,539
  246,402
  264,968
  284,261
  304,311
  325,150
  346,815
  369,346
  392,789
Revenue / Adjusted assets
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
Average production assets, $m
  2,189
  2,924
  3,822
  4,899
  6,166
  7,631
  9,301
  11,180
  13,268
  15,565
  18,068
  20,773
  23,676
  26,772
  30,057
  33,526
  37,177
  41,006
  45,012
  49,195
  53,555
  58,095
  62,818
  67,728
  72,831
  78,134
  83,645
  89,373
  95,328
  101,521
  107,964
Working capital, $m
  1,703
  319
  417
  535
  673
  833
  1,016
  1,221
  1,449
  1,699
  1,973
  2,268
  2,585
  2,923
  3,282
  3,661
  4,059
  4,477
  4,915
  5,371
  5,848
  6,343
  6,859
  7,395
  7,952
  8,531
  9,133
  9,758
  10,409
  11,085
  11,788
Total debt, $m
  3,106
  4,184
  6,348
  8,941
  11,991
  15,520
  19,543
  24,068
  29,097
  34,629
  40,657
  47,172
  54,164
  61,621
  69,532
  77,888
  86,680
  95,902
  105,550
  115,624
  126,126
  137,060
  148,435
  160,260
  172,551
  185,323
  198,596
  212,391
  226,733
  241,649
  257,168
Total liabilities, $m
  5,965
  7,042
  9,206
  11,799
  14,849
  18,378
  22,401
  26,926
  31,955
  37,487
  43,515
  50,030
  57,022
  64,479
  72,390
  80,746
  89,538
  98,760
  108,408
  118,482
  128,984
  139,918
  151,293
  163,118
  175,409
  188,181
  201,454
  215,249
  229,591
  244,507
  260,026
Total equity, $m
  4,151
  3,595
  4,700
  6,024
  7,582
  9,383
  11,437
  13,747
  16,315
  19,140
  22,218
  25,544
  29,114
  32,921
  36,960
  41,227
  45,716
  50,424
  55,350
  60,494
  65,856
  71,439
  77,246
  83,284
  89,559
  96,080
  102,857
  109,901
  117,223
  124,839
  132,763
Total liabilities and equity, $m
  10,116
  10,637
  13,906
  17,823
  22,431
  27,761
  33,838
  40,673
  48,270
  56,627
  65,733
  75,574
  86,136
  97,400
  109,350
  121,973
  135,254
  149,184
  163,758
  178,976
  194,840
  211,357
  228,539
  246,402
  264,968
  284,261
  304,311
  325,150
  346,814
  369,346
  392,789
Debt-to-equity ratio
  0.748
  1.160
  1.350
  1.480
  1.580
  1.650
  1.710
  1.750
  1.780
  1.810
  1.830
  1.850
  1.860
  1.870
  1.880
  1.890
  1.900
  1.900
  1.910
  1.910
  1.920
  1.920
  1.920
  1.920
  1.930
  1.930
  1.930
  1.930
  1.930
  1.940
  1.940
Adjusted equity ratio
  0.311
  0.338
  0.338
  0.338
  0.338
  0.338
  0.338
  0.338
  0.338
  0.338
  0.338
  0.338
  0.338
  0.338
  0.338
  0.338
  0.338
  0.338
  0.338
  0.338
  0.338
  0.338
  0.338
  0.338
  0.338
  0.338
  0.338
  0.338
  0.338
  0.338
  0.338

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  377
  304
  407
  530
  673
  838
  1,025
  1,235
  1,467
  1,721
  1,997
  2,293
  2,611
  2,949
  3,307
  3,684
  4,080
  4,494
  4,928
  5,380
  5,851
  6,341
  6,851
  7,380
  7,931
  8,503
  9,098
  9,716
  10,359
  11,028
  11,724
Depreciation, amort., depletion, $m
  730
  585
  764
  980
  1,233
  1,526
  1,860
  2,236
  2,654
  3,113
  3,614
  4,155
  4,735
  5,354
  6,011
  6,705
  7,435
  8,201
  9,002
  9,839
  10,711
  11,619
  12,564
  13,546
  14,566
  15,627
  16,729
  17,875
  19,066
  20,304
  21,593
Funds from operations, $m
  890
  889
  1,172
  1,509
  1,906
  2,364
  2,885
  3,471
  4,120
  4,834
  5,610
  6,448
  7,346
  8,303
  9,318
  10,389
  11,515
  12,695
  13,930
  15,219
  16,562
  17,960
  19,414
  20,926
  22,497
  24,130
  25,827
  27,591
  29,425
  31,332
  33,317
Change in working capital, $m
  -87
  80
  98
  118
  138
  160
  182
  205
  228
  251
  273
  295
  317
  338
  359
  379
  399
  418
  437
  457
  476
  496
  516
  536
  557
  579
  602
  625
  650
  676
  704
Cash from operations, $m
  977
  -1,131
  1,073
  1,392
  1,768
  2,204
  2,703
  3,266
  3,892
  4,583
  5,337
  6,153
  7,029
  7,965
  8,959
  10,010
  11,116
  12,277
  13,493
  14,762
  16,086
  17,464
  18,898
  20,390
  21,940
  23,551
  25,225
  26,965
  28,774
  30,656
  32,613
Maintenance CAPEX, $m
  0
  -438
  -585
  -764
  -980
  -1,233
  -1,526
  -1,860
  -2,236
  -2,654
  -3,113
  -3,614
  -4,155
  -4,735
  -5,354
  -6,011
  -6,705
  -7,435
  -8,201
  -9,002
  -9,839
  -10,711
  -11,619
  -12,564
  -13,546
  -14,566
  -15,627
  -16,729
  -17,875
  -19,066
  -20,304
New CAPEX, $m
  -2,843
  -735
  -899
  -1,077
  -1,266
  -1,465
  -1,670
  -1,879
  -2,088
  -2,297
  -2,503
  -2,705
  -2,903
  -3,096
  -3,285
  -3,469
  -3,650
  -3,829
  -4,006
  -4,183
  -4,360
  -4,540
  -4,723
  -4,910
  -5,103
  -5,303
  -5,511
  -5,728
  -5,955
  -6,193
  -6,444
Cash from investing activities, $m
  -2,443
  -1,173
  -1,484
  -1,841
  -2,246
  -2,698
  -3,196
  -3,739
  -4,324
  -4,951
  -5,616
  -6,319
  -7,058
  -7,831
  -8,639
  -9,480
  -10,355
  -11,264
  -12,207
  -13,185
  -14,199
  -15,251
  -16,342
  -17,474
  -18,649
  -19,869
  -21,138
  -22,457
  -23,830
  -25,259
  -26,748
Free cash flow, $m
  -1,466
  -2,304
  -410
  -449
  -478
  -494
  -493
  -473
  -432
  -367
  -279
  -166
  -28
  134
  320
  529
  761
  1,013
  1,285
  1,577
  1,886
  2,213
  2,557
  2,916
  3,291
  3,682
  4,087
  4,508
  4,945
  5,397
  5,866
Issuance/(repayment) of debt, $m
  1,766
  1,772
  2,165
  2,593
  3,050
  3,529
  4,023
  4,525
  5,029
  5,532
  6,028
  6,515
  6,992
  7,457
  7,911
  8,356
  8,792
  9,222
  9,649
  10,074
  10,502
  10,934
  11,374
  11,826
  12,291
  12,772
  13,273
  13,795
  14,342
  14,916
  15,519
Issuance/(repurchase) of shares, $m
  18
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  2,615
  1,772
  2,165
  2,593
  3,050
  3,529
  4,023
  4,525
  5,029
  5,532
  6,028
  6,515
  6,992
  7,457
  7,911
  8,356
  8,792
  9,222
  9,649
  10,074
  10,502
  10,934
  11,374
  11,826
  12,291
  12,772
  13,273
  13,795
  14,342
  14,916
  15,519
Total cash flow (excl. dividends), $m
  1,121
  -532
  1,755
  2,144
  2,572
  3,035
  3,529
  4,052
  4,598
  5,164
  5,749
  6,349
  6,964
  7,591
  8,232
  8,885
  9,553
  10,235
  10,934
  11,651
  12,388
  13,147
  13,931
  14,742
  15,582
  16,454
  17,360
  18,304
  19,287
  20,313
  21,385
Retained Cash Flow (-), $m
  -421
  -908
  -1,105
  -1,324
  -1,557
  -1,802
  -2,054
  -2,310
  -2,568
  -2,824
  -3,078
  -3,326
  -3,570
  -3,807
  -4,039
  -4,266
  -4,489
  -4,709
  -4,926
  -5,144
  -5,362
  -5,583
  -5,808
  -6,038
  -6,275
  -6,521
  -6,777
  -7,044
  -7,323
  -7,616
  -7,924
Prev. year cash balance distribution, $m
 
  1,464
  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
 
  24
  649
  820
  1,014
  1,233
  1,476
  1,741
  2,030
  2,340
  2,671
  3,023
  3,394
  3,784
  4,192
  4,619
  5,064
  5,527
  6,008
  6,507
  7,026
  7,565
  8,124
  8,704
  9,307
  9,933
  10,583
  11,260
  11,964
  12,697
  13,461
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
 
  23
  594
  713
  835
  956
  1,071
  1,176
  1,269
  1,344
  1,400
  1,435
  1,448
  1,439
  1,407
  1,356
  1,287
  1,202
  1,106
  1,002
  893
  782
  674
  570
  474
  386
  309
  242
  185
  139
  101
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Semiconductor Manufacturing International Corporation, an investment holding company, engages in the computer-aided design, manufacture, testing, packaging, and trading of integrated circuits and other semiconductor services. It also designs and manufactures semiconductor masks; and manufactures and trades in solar cell related semiconductor products. In addition, the company is involved in the construction, operation, and management of SMICD’s living quarters, schools, and supermarkets; and bumping and circuit probe testing activities. It operates in the United States, Europe, and the Asia Pacific. Semiconductor Manufacturing International Corporation was founded in 2000 and is headquartered in Shanghai, the People’s Republic of China.

FINANCIAL RATIOS  of  Semiconductor Manufacturing Internationa (SMI)

Valuation Ratios
P/E Ratio 67.2
Price to Sales 8.7
Price to Book 6.1
Price to Tangible Book
Price to Cash Flow 25.9
Price to Free Cash Flow -13.6
Growth Rates
Sales Growth Rate 30.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 124%
Cap. Spend. - 3 Yr. Gr. Rate 29.8%
Financial Strength
Quick Ratio 3
Current Ratio 0.2
LT Debt to Equity 58.1%
Total Debt to Equity 74.8%
Interest Coverage 12
Management Effectiveness
Return On Assets 4.7%
Ret/ On Assets - 3 Yr. Avg. 4.1%
Return On Total Capital 6.1%
Ret/ On T. Cap. - 3 Yr. Avg. 5.1%
Return On Equity 9.6%
Return On Equity - 3 Yr. Avg. 7.6%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 29.2%
Gross Margin - 3 Yr. Avg. 28.1%
EBITDA Margin 36.7%
EBITDA Margin - 3 Yr. Avg. 35.8%
Operating Margin 11.6%
Oper. Margin - 3 Yr. Avg. 9.4%
Pre-Tax Margin 10.6%
Pre-Tax Margin - 3 Yr. Avg. 9.3%
Net Profit Margin 12.9%
Net Profit Margin - 3 Yr. Avg. 10.7%
Effective Tax Rate -1.9%
Eff/ Tax Rate - 3 Yr. Avg. 3.6%
Payout Ratio 0%

SMI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SMI stock intrinsic value calculation we used $2914 million for the last fiscal year's total revenue generated by Semiconductor Manufacturing Internationa. The default revenue input number comes from 2016 income statement of Semiconductor Manufacturing Internationa. 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 SMI stock valuation model: a) initial revenue growth rate of 33.6% 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 SMI is calculated based on our internal credit rating of Semiconductor Manufacturing Internationa, 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 Semiconductor Manufacturing Internationa.
    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 SMI stock the variable cost ratio is equal to 82.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $168 million in the base year in the intrinsic value calculation for SMI stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Semiconductor Manufacturing Internationa.

Corporate tax rate of 27% is the nominal tax rate for Semiconductor Manufacturing Internationa. 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 SMI 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 SMI are equal to 75.1%.

Life of production assets of 3 years is the average useful life of capital assets used in Semiconductor Manufacturing Internationa 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 SMI is equal to 8.2%. 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 - $4151 million for Semiconductor Manufacturing Internationa - 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 915.605 million for Semiconductor Manufacturing Internationa 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 Semiconductor Manufacturing Internationa at the current share price and the inputted number of shares is $5.5 billion.


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COMPANY NEWS

▶ SMIC 2016 Annual Results Announcement   [Mar-27-17 08:18AM  PR Newswire]
▶ SMIC 2016 Annual Results Announcement   [08:09AM  PR Newswire]
▶ SMIC Signs License Agreement For Invensas DBI® Technology   [Mar-14-17 04:05PM  Business Wire]
▶ SMIC posts 4Q profit   [10:21AM  Associated Press]
▶ SMIC Reports 2016 Fourth Quarter Results   [06:53AM  PR Newswire]
▶ SMIC Reports 2016 Fourth Quarter Results   [05:30AM  PR Newswire]
▶ SMIC Reaffirms Fourth Quarter 2016 Guidance   [Jan-19-17 05:22AM  PR Newswire]
▶ SMIC Announces Reverse Stock Split   [Dec-08-16 07:11PM  PR Newswire]
▶ SMIC posts 3Q profit   [Nov-07-16 07:28AM  AP]
▶ SMIC Reports 2016 Third Quarter Results   [07:10AM  PR Newswire]
▶ Foundry SMIC Soars After Raising Growth Outlook   [Aug-10-16 09:56PM  at Barrons.com]
▶ SMIC posts 2Q profit   [09:50AM  AP]
▶ SMIC Reports 2016 Second Quarter Results   [09:03AM  PR Newswire]
▶ Which markets are closed for Whit Monday?   [May-16-16 04:32AM  at MarketWatch]
▶ Which markets are closed for Whit Monday?   [04:32AM  at MarketWatch]
▶ SMIC Reports 2016 First Quarter Results   [May-12-16 07:48AM  PR Newswire]
▶ SEMICONDUCTOR MANUFACTURING INTERNATIONAL CORP Financials   [Apr-28-16 01:04PM  EDGAR Online Financials]
▶ SMIC CEO TY Chiu Re-Elected to GSA Board   [Mar-25-16 01:40AM  at noodls]
▶ SMIC Reports 2015 Fourth Quarter Results   [Feb-18-16 06:31AM  PR Newswire]
▶ The Top 5 Semiconductor Penny Stocks for 2016 (ACLS, CAMT)   [Feb-03-16 10:48AM  at Investopedia]
▶ 3 Chinese Stocks Gearing Up for Driverless Cars   [Jan-15-16 12:01AM  at Barrons.com]
Stock chart of SMI Financial statements of SMI
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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