Intrinsic value of Semiconductor Manufacturing Internationa - SMI

Previous Close

$5.85

  Intrinsic Value

$3.70

stock screener

  Rating & Target

sell

-37%

  Value-price divergence*

+200%

Previous close

$5.85

 
Intrinsic value

$3.70

 
Up/down potential

-37%

 
Rating

sell

 
Value-price divergence*

+200%

*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 5.2

 

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
  25.10
  23.09
  21.28
  19.65
  18.19
  16.87
  15.68
  14.61
  13.65
  12.79
  12.01
  11.31
  10.68
  10.11
  9.60
  9.14
  8.72
  8.35
  8.02
  7.72
  7.44
  7.20
  6.98
  6.78
  6.60
  6.44
  6.30
  6.17
  6.05
  5.95
Revenue, $m
  2,914
  3,645
  4,487
  5,442
  6,512
  7,696
  8,994
  10,405
  11,925
  13,553
  15,286
  17,122
  19,058
  21,093
  23,225
  25,454
  27,780
  30,204
  32,726
  35,350
  38,077
  40,912
  43,857
  46,918
  50,100
  53,408
  56,849
  60,430
  64,158
  68,041
  72,087
Variable operating expenses, $m
 
  3,015
  3,711
  4,501
  5,385
  6,364
  7,438
  8,605
  9,862
  11,208
  12,642
  14,160
  15,761
  17,444
  19,207
  21,050
  22,974
  24,979
  27,065
  29,235
  31,490
  33,834
  36,270
  38,801
  41,433
  44,169
  47,014
  49,976
  53,058
  56,270
  59,616
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
  3,187
  3,888
  4,682
  5,570
  6,554
  7,633
  8,805
  10,067
  11,418
  12,857
  14,380
  15,987
  17,676
  19,444
  21,293
  23,223
  25,235
  27,327
  29,504
  31,765
  34,116
  36,559
  39,097
  41,737
  44,480
  47,333
  50,303
  53,393
  56,614
  59,968
Operating income, $m
  339
  458
  600
  761
  941
  1,141
  1,361
  1,600
  1,858
  2,135
  2,429
  2,742
  3,071
  3,417
  3,781
  4,160
  4,557
  4,970
  5,400
  5,847
  6,312
  6,796
  7,298
  7,820
  8,363
  8,928
  9,516
  10,127
  10,764
  11,427
  12,119
EBITDA, $m
  1,069
  1,088
  1,375
  1,700
  2,066
  2,470
  2,914
  3,397
  3,918
  4,475
  5,069
  5,699
  6,362
  7,060
  7,791
  8,556
  9,354
  10,186
  11,052
  11,952
  12,888
  13,861
  14,872
  15,923
  17,016
  18,152
  19,334
  20,563
  21,844
  23,178
  24,568
Interest expense (income), $m
  28
  84
  131
  184
  244
  312
  387
  469
  559
  655
  758
  868
  984
  1,106
  1,235
  1,370
  1,511
  1,659
  1,812
  1,972
  2,138
  2,311
  2,490
  2,676
  2,870
  3,072
  3,281
  3,499
  3,726
  3,962
  4,207
Earnings before tax, $m
  310
  374
  469
  577
  697
  829
  974
  1,131
  1,300
  1,480
  1,671
  1,874
  2,087
  2,311
  2,545
  2,790
  3,045
  3,311
  3,588
  3,875
  4,174
  4,485
  4,808
  5,144
  5,493
  5,857
  6,235
  6,628
  7,038
  7,466
  7,911
Tax expense, $m
  -6
  101
  127
  156
  188
  224
  263
  305
  351
  400
  451
  506
  564
  624
  687
  753
  822
  894
  969
  1,046
  1,127
  1,211
  1,298
  1,389
  1,483
  1,581
  1,683
  1,790
  1,900
  2,016
  2,136
Net income, $m
  377
  273
  342
  421
  509
  605
  711
  826
  949
  1,080
  1,220
  1,368
  1,524
  1,687
  1,858
  2,037
  2,223
  2,417
  2,619
  2,829
  3,047
  3,274
  3,510
  3,755
  4,010
  4,275
  4,551
  4,839
  5,138
  5,450
  5,775

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
  9,960
  12,260
  14,869
  17,791
  21,027
  24,574
  28,428
  32,582
  37,030
  41,765
  46,781
  52,070
  57,630
  63,456
  69,546
  75,902
  82,524
  89,417
  96,585
  104,037
  111,781
  119,828
  128,192
  136,885
  145,924
  155,326
  165,109
  175,294
  185,903
  196,958
Adjusted assets (=assets-cash), $m
  7,957
  9,960
  12,260
  14,869
  17,791
  21,027
  24,574
  28,428
  32,582
  37,030
  41,765
  46,781
  52,070
  57,630
  63,456
  69,546
  75,902
  82,524
  89,417
  96,585
  104,037
  111,781
  119,828
  128,192
  136,885
  145,924
  155,326
  165,109
  175,294
  185,903
  196,958
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
  5,032
  6,296
  7,749
  9,398
  11,245
  13,291
  15,533
  17,969
  20,594
  23,406
  26,399
  29,569
  32,913
  36,427
  40,109
  43,959
  47,976
  52,162
  56,519
  61,050
  65,760
  70,655
  75,741
  81,028
  86,522
  92,236
  98,179
  104,362
  110,800
  117,506
  124,494
Working capital, $m
  1,703
  299
  368
  446
  534
  631
  738
  853
  978
  1,111
  1,253
  1,404
  1,563
  1,730
  1,904
  2,087
  2,278
  2,477
  2,684
  2,899
  3,122
  3,355
  3,596
  3,847
  4,108
  4,379
  4,662
  4,955
  5,261
  5,579
  5,911
Total debt, $m
  3,106
  3,736
  5,258
  6,985
  8,920
  11,062
  13,410
  15,961
  18,711
  21,656
  24,791
  28,111
  31,613
  35,293
  39,150
  43,182
  47,389
  51,773
  56,336
  61,081
  66,014
  71,141
  76,468
  82,005
  87,760
  93,744
  99,968
  106,444
  113,187
  120,210
  127,528
Total liabilities, $m
  5,965
  6,594
  8,116
  9,843
  11,778
  13,920
  16,268
  18,819
  21,569
  24,514
  27,649
  30,969
  34,471
  38,151
  42,008
  46,040
  50,247
  54,631
  59,194
  63,939
  68,872
  73,999
  79,326
  84,863
  90,618
  96,602
  102,826
  109,302
  116,045
  123,068
  130,386
Total equity, $m
  4,151
  3,367
  4,144
  5,026
  6,013
  7,107
  8,306
  9,609
  11,013
  12,516
  14,117
  15,812
  17,600
  19,479
  21,448
  23,507
  25,655
  27,893
  30,223
  32,646
  35,164
  37,782
  40,502
  43,329
  46,267
  49,322
  52,500
  55,807
  59,249
  62,835
  66,572
Total liabilities and equity, $m
  10,116
  9,961
  12,260
  14,869
  17,791
  21,027
  24,574
  28,428
  32,582
  37,030
  41,766
  46,781
  52,071
  57,630
  63,456
  69,547
  75,902
  82,524
  89,417
  96,585
  104,036
  111,781
  119,828
  128,192
  136,885
  145,924
  155,326
  165,109
  175,294
  185,903
  196,958
Debt-to-equity ratio
  0.748
  1.110
  1.270
  1.390
  1.480
  1.560
  1.610
  1.660
  1.700
  1.730
  1.760
  1.780
  1.800
  1.810
  1.830
  1.840
  1.850
  1.860
  1.860
  1.870
  1.880
  1.880
  1.890
  1.890
  1.900
  1.900
  1.900
  1.910
  1.910
  1.910
  1.920
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
  273
  342
  421
  509
  605
  711
  826
  949
  1,080
  1,220
  1,368
  1,524
  1,687
  1,858
  2,037
  2,223
  2,417
  2,619
  2,829
  3,047
  3,274
  3,510
  3,755
  4,010
  4,275
  4,551
  4,839
  5,138
  5,450
  5,775
Depreciation, amort., depletion, $m
  730
  630
  775
  940
  1,125
  1,329
  1,553
  1,797
  2,059
  2,341
  2,640
  2,957
  3,291
  3,643
  4,011
  4,396
  4,798
  5,216
  5,652
  6,105
  6,576
  7,065
  7,574
  8,103
  8,652
  9,224
  9,818
  10,436
  11,080
  11,751
  12,449
Funds from operations, $m
  890
  903
  1,117
  1,361
  1,633
  1,934
  2,264
  2,622
  3,008
  3,421
  3,860
  4,325
  4,815
  5,330
  5,869
  6,433
  7,021
  7,633
  8,271
  8,934
  9,623
  10,340
  11,084
  11,858
  12,662
  13,499
  14,369
  15,275
  16,218
  17,201
  18,225
Change in working capital, $m
  -87
  60
  69
  78
  88
  97
  106
  116
  125
  134
  142
  151
  159
  167
  175
  183
  191
  199
  207
  215
  224
  232
  242
  251
  261
  271
  282
  294
  306
  318
  332
Cash from operations, $m
  977
  843
  1,048
  1,282
  1,545
  1,837
  2,158
  2,507
  2,884
  3,287
  3,718
  4,174
  4,656
  5,163
  5,694
  6,250
  6,830
  7,434
  8,064
  8,719
  9,400
  10,107
  10,843
  11,607
  12,401
  13,228
  14,087
  14,981
  15,912
  16,882
  17,893
Maintenance CAPEX, $m
  0
  -503
  -630
  -775
  -940
  -1,125
  -1,329
  -1,553
  -1,797
  -2,059
  -2,341
  -2,640
  -2,957
  -3,291
  -3,643
  -4,011
  -4,396
  -4,798
  -5,216
  -5,652
  -6,105
  -6,576
  -7,065
  -7,574
  -8,103
  -8,652
  -9,224
  -9,818
  -10,436
  -11,080
  -11,751
New CAPEX, $m
  -2,843
  -1,264
  -1,454
  -1,649
  -1,847
  -2,045
  -2,242
  -2,436
  -2,626
  -2,812
  -2,993
  -3,170
  -3,344
  -3,514
  -3,682
  -3,850
  -4,017
  -4,186
  -4,357
  -4,531
  -4,710
  -4,895
  -5,087
  -5,286
  -5,495
  -5,713
  -5,943
  -6,184
  -6,438
  -6,706
  -6,988
Cash from investing activities, $m
  -2,443
  -1,767
  -2,084
  -2,424
  -2,787
  -3,170
  -3,571
  -3,989
  -4,423
  -4,871
  -5,334
  -5,810
  -6,301
  -6,805
  -7,325
  -7,861
  -8,413
  -8,984
  -9,573
  -10,183
  -10,815
  -11,471
  -12,152
  -12,860
  -13,598
  -14,365
  -15,167
  -16,002
  -16,874
  -17,786
  -18,739
Free cash flow, $m
  -1,466
  -924
  -1,035
  -1,142
  -1,242
  -1,333
  -1,413
  -1,482
  -1,539
  -1,584
  -1,616
  -1,636
  -1,644
  -1,642
  -1,631
  -1,611
  -1,583
  -1,549
  -1,509
  -1,464
  -1,416
  -1,364
  -1,310
  -1,254
  -1,196
  -1,138
  -1,079
  -1,021
  -962
  -903
  -846
Issuance/(repayment) of debt, $m
  1,766
  1,324
  1,522
  1,727
  1,934
  2,142
  2,348
  2,551
  2,750
  2,945
  3,135
  3,320
  3,502
  3,680
  3,857
  4,032
  4,207
  4,384
  4,563
  4,746
  4,933
  5,127
  5,327
  5,536
  5,755
  5,984
  6,224
  6,477
  6,743
  7,023
  7,319
Issuance/(repurchase) of shares, $m
  18
  406
  435
  461
  479
  488
  488
  477
  455
  423
  380
  327
  264
  192
  111
  22
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  2,615
  1,730
  1,957
  2,188
  2,413
  2,630
  2,836
  3,028
  3,205
  3,368
  3,515
  3,647
  3,766
  3,872
  3,968
  4,054
  4,207
  4,384
  4,563
  4,746
  4,933
  5,127
  5,327
  5,536
  5,755
  5,984
  6,224
  6,477
  6,743
  7,023
  7,319
Total cash flow (excl. dividends), $m
  1,121
  806
  922
  1,047
  1,172
  1,298
  1,423
  1,546
  1,666
  1,784
  1,899
  2,012
  2,122
  2,230
  2,337
  2,443
  2,624
  2,835
  3,054
  3,281
  3,518
  3,763
  4,018
  4,283
  4,559
  4,846
  5,145
  5,456
  5,781
  6,120
  6,473
Retained Cash Flow (-), $m
  -421
  -680
  -777
  -882
  -988
  -1,094
  -1,199
  -1,303
  -1,404
  -1,503
  -1,600
  -1,695
  -1,788
  -1,879
  -1,969
  -2,059
  -2,148
  -2,238
  -2,330
  -2,423
  -2,519
  -2,618
  -2,720
  -2,827
  -2,938
  -3,055
  -3,178
  -3,307
  -3,443
  -3,586
  -3,737
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
 
  1,590
  145
  165
  184
  204
  224
  243
  262
  281
  299
  317
  334
  351
  368
  384
  476
  597
  724
  858
  999
  1,145
  1,298
  1,456
  1,620
  1,791
  1,967
  2,149
  2,338
  2,534
  2,736
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
 
  1,525
  133
  143
  152
  158
  162
  164
  164
  161
  157
  150
  142
  133
  123
  113
  121
  130
  133
  132
  127
  118
  108
  95
  83
  70
  57
  46
  36
  28
  21
Current shareholders' claim on cash, %
  100
  89.2
  80.8
  74.2
  68.9
  64.7
  61.3
  58.6
  56.5
  54.8
  53.5
  52.5
  51.8
  51.4
  51.2
  51.1
  51.1
  51.1
  51.1
  51.1
  51.1
  51.1
  51.1
  51.1
  51.1
  51.1
  51.1
  51.1
  51.1
  51.1
  51.1

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 66
Price to Sales 8.5
Price to Book 6
Price to Tangible Book
Price to Cash Flow 25.5
Price to Free Cash Flow -13.3
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 25.1% 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 172.7%.

Life of production assets of 10 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 885.37 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 $5.2 billion.

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COMPANY NEWS

▶ SMIC posts 1Q profit   [May-10-17 10:44AM  Associated Press]
▶ SMIC Reports 2017 First Quarter Results   [06:51AM  PR Newswire]
▶ SMIC Reports 2017 First Quarter Results   [06:34AM  PR Newswire]
▶ 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]
Stock chart of SMI Financial statements of SMI Annual reports 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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