Intrinsic value of China Petroleum&Chemical ADR - SNP

Previous Close

$71.01

  Intrinsic Value

$28.78

stock screener

  Rating & Target

str. sell

-59%

Previous close

$71.01

 
Intrinsic value

$28.78

 
Up/down potential

-59%

 
Rating

str. sell

We calculate the intrinsic value of SNP 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 100.0

 

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, %
  -4.43
  25.40
  23.36
  21.52
  19.87
  18.38
  17.05
  15.84
  14.76
  13.78
  12.90
  12.11
  11.40
  10.76
  10.19
  9.67
  9.20
  8.78
  8.40
  8.06
  7.76
  7.48
  7.23
  7.01
  6.81
  6.63
  6.46
  6.32
  6.19
  6.07
  5.96
Revenue, $m
  279,349
  350,304
  432,135
  525,147
  629,502
  745,233
  872,265
  1,010,444
  1,159,558
  1,319,363
  1,489,605
  1,670,042
  1,860,456
  2,060,670
  2,270,557
  2,490,049
  2,719,138
  2,957,883
  3,206,408
  3,464,907
  3,733,636
  4,012,918
  4,303,138
  4,604,742
  4,918,235
  5,244,177
  5,583,188
  5,935,937
  6,303,149
  6,685,601
  7,084,121
Variable operating expenses, $m
 
  340,472
  419,985
  510,362
  611,761
  724,213
  847,647
  981,911
  1,126,801
  1,282,079
  1,447,498
  1,622,731
  1,807,751
  2,002,293
  2,206,235
  2,419,508
  2,642,108
  2,874,089
  3,115,574
  3,366,749
  3,627,866
  3,899,236
  4,181,234
  4,474,294
  4,778,906
  5,095,615
  5,425,022
  5,767,778
  6,124,588
  6,496,205
  6,883,435
Fixed operating expenses, $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
Total operating expenses, $m
  268,181
  340,472
  419,985
  510,362
  611,761
  724,213
  847,647
  981,911
  1,126,801
  1,282,079
  1,447,498
  1,622,731
  1,807,751
  2,002,293
  2,206,235
  2,419,508
  2,642,108
  2,874,089
  3,115,574
  3,366,749
  3,627,866
  3,899,236
  4,181,234
  4,474,294
  4,778,906
  5,095,615
  5,425,022
  5,767,778
  6,124,588
  6,496,205
  6,883,435
Operating income, $m
  11,168
  9,832
  12,150
  14,785
  17,741
  21,020
  24,618
  28,533
  32,757
  37,284
  42,107
  47,311
  52,705
  58,377
  64,323
  70,541
  77,030
  83,794
  90,834
  98,157
  105,770
  113,682
  121,904
  130,448
  139,329
  148,562
  158,166
  168,159
  178,562
  189,396
  200,686
EBITDA, $m
  26,854
  29,523
  36,420
  44,259
  53,053
  62,807
  73,513
  85,159
  97,726
  111,194
  125,541
  140,748
  156,796
  173,670
  191,359
  209,857
  229,164
  249,285
  270,231
  292,017
  314,665
  338,202
  362,661
  388,080
  414,501
  441,971
  470,542
  500,271
  531,219
  563,451
  597,038
Interest expense (income), $m
  1,008
  595
  1,514
  2,572
  3,775
  5,124
  6,620
  8,262
  10,049
  11,977
  14,043
  16,244
  18,576
  21,038
  23,627
  26,340
  29,178
  32,139
  35,226
  38,439
  41,781
  45,255
  48,866
  52,618
  56,517
  60,570
  64,784
  69,167
  73,727
  78,475
  83,419
Earnings before tax, $m
  11,596
  9,237
  10,636
  12,213
  13,967
  15,896
  17,998
  20,271
  22,708
  25,308
  28,064
  31,067
  34,128
  37,339
  40,696
  44,201
  47,853
  51,654
  55,608
  59,718
  63,989
  68,427
  73,038
  77,830
  82,811
  87,992
  93,382
  98,992
  104,834
  110,921
  117,267
Tax expense, $m
  2,996
  2,494
  2,872
  3,297
  3,771
  4,292
  4,860
  5,473
  6,131
  6,833
  7,577
  8,388
  9,215
  10,081
  10,988
  11,934
  12,920
  13,947
  15,014
  16,124
  17,277
  18,475
  19,720
  21,014
  22,359
  23,758
  25,213
  26,728
  28,305
  29,949
  31,662
Net income, $m
  6,752
  6,743
  7,764
  8,915
  10,196
  11,604
  13,139
  14,798
  16,577
  18,475
  20,487
  22,679
  24,914
  27,257
  29,708
  32,266
  34,932
  37,708
  40,594
  43,594
  46,712
  49,951
  53,317
  56,816
  60,452
  64,234
  68,169
  72,264
  76,529
  80,973
  85,605

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  20,615
  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
  216,807
  246,000
  303,465
  368,783
  442,066
  523,338
  612,546
  709,582
  814,296
  926,519
  1,046,071
  1,172,782
  1,306,500
  1,447,099
  1,594,492
  1,748,630
  1,909,507
  2,077,165
  2,251,691
  2,433,221
  2,621,935
  2,818,060
  3,021,866
  3,233,667
  3,453,816
  3,682,709
  3,920,778
  4,168,495
  4,426,369
  4,694,945
  4,974,804
Adjusted assets (=assets-cash), $m
  196,192
  246,000
  303,465
  368,783
  442,066
  523,338
  612,546
  709,582
  814,296
  926,519
  1,046,071
  1,172,782
  1,306,500
  1,447,099
  1,594,492
  1,748,630
  1,909,507
  2,077,165
  2,251,691
  2,433,221
  2,621,935
  2,818,060
  3,021,866
  3,233,667
  3,453,816
  3,682,709
  3,920,778
  4,168,495
  4,426,369
  4,694,945
  4,974,804
Revenue / Adjusted assets
  1.424
  1.424
  1.424
  1.424
  1.424
  1.424
  1.424
  1.424
  1.424
  1.424
  1.424
  1.424
  1.424
  1.424
  1.424
  1.424
  1.424
  1.424
  1.424
  1.424
  1.424
  1.424
  1.424
  1.424
  1.424
  1.424
  1.424
  1.424
  1.424
  1.424
  1.424
Average production assets, $m
  123,402
  154,834
  191,003
  232,115
  278,240
  329,393
  385,541
  446,616
  512,525
  583,158
  658,406
  738,158
  822,321
  910,816
  1,003,586
  1,100,602
  1,201,859
  1,307,384
  1,417,232
  1,531,489
  1,650,267
  1,773,710
  1,901,987
  2,035,296
  2,173,860
  2,317,926
  2,467,769
  2,623,684
  2,785,992
  2,955,036
  3,131,181
Working capital, $m
  -10,602
  -25,572
  -31,546
  -38,336
  -45,954
  -54,402
  -63,675
  -73,762
  -84,648
  -96,313
  -108,741
  -121,913
  -135,813
  -150,429
  -165,751
  -181,774
  -198,497
  -215,925
  -234,068
  -252,938
  -272,555
  -292,943
  -314,129
  -336,146
  -359,031
  -382,825
  -407,573
  -433,323
  -460,130
  -488,049
  -517,141
Total debt, $m
  27,815
  43,265
  73,492
  107,849
  146,396
  189,145
  236,068
  287,109
  342,189
  401,218
  464,102
  530,752
  601,088
  675,043
  752,572
  833,648
  918,270
  1,006,458
  1,098,259
  1,193,743
  1,293,007
  1,396,169
  1,503,371
  1,614,778
  1,730,576
  1,850,974
  1,976,198
  2,106,497
  2,242,139
  2,383,410
  2,530,616
Total liabilities, $m
  113,946
  129,396
  159,623
  193,980
  232,527
  275,276
  322,199
  373,240
  428,320
  487,349
  550,233
  616,883
  687,219
  761,174
  838,703
  919,779
  1,004,401
  1,092,589
  1,184,390
  1,279,874
  1,379,138
  1,482,300
  1,589,502
  1,700,909
  1,816,707
  1,937,105
  2,062,329
  2,192,628
  2,328,270
  2,469,541
  2,616,747
Total equity, $m
  102,861
  116,604
  143,843
  174,803
  209,539
  248,062
  290,347
  336,342
  385,976
  439,170
  495,838
  555,899
  619,281
  685,925
  755,789
  828,851
  905,106
  984,576
  1,067,302
  1,153,347
  1,242,797
  1,335,761
  1,432,365
  1,532,758
  1,637,109
  1,745,604
  1,858,449
  1,975,867
  2,098,099
  2,225,404
  2,358,057
Total liabilities and equity, $m
  216,807
  246,000
  303,466
  368,783
  442,066
  523,338
  612,546
  709,582
  814,296
  926,519
  1,046,071
  1,172,782
  1,306,500
  1,447,099
  1,594,492
  1,748,630
  1,909,507
  2,077,165
  2,251,692
  2,433,221
  2,621,935
  2,818,061
  3,021,867
  3,233,667
  3,453,816
  3,682,709
  3,920,778
  4,168,495
  4,426,369
  4,694,945
  4,974,804
Debt-to-equity ratio
  0.270
  0.370
  0.510
  0.620
  0.700
  0.760
  0.810
  0.850
  0.890
  0.910
  0.940
  0.950
  0.970
  0.980
  1.000
  1.010
  1.010
  1.020
  1.030
  1.040
  1.040
  1.050
  1.050
  1.050
  1.060
  1.060
  1.060
  1.070
  1.070
  1.070
  1.070
Adjusted equity ratio
  0.446
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474
  0.474

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  6,752
  6,743
  7,764
  8,915
  10,196
  11,604
  13,139
  14,798
  16,577
  18,475
  20,487
  22,679
  24,914
  27,257
  29,708
  32,266
  34,932
  37,708
  40,594
  43,594
  46,712
  49,951
  53,317
  56,816
  60,452
  64,234
  68,169
  72,264
  76,529
  80,973
  85,605
Depreciation, amort., depletion, $m
  15,686
  19,691
  24,270
  29,474
  35,312
  41,787
  48,895
  56,626
  64,968
  73,909
  83,434
  93,438
  104,091
  115,293
  127,036
  139,317
  152,134
  165,492
  179,397
  193,859
  208,895
  224,520
  240,758
  257,632
  275,172
  293,408
  312,376
  332,112
  352,657
  374,055
  396,352
Funds from operations, $m
  34,501
  26,434
  32,034
  38,389
  45,508
  53,391
  62,033
  71,423
  81,546
  92,384
  103,921
  116,117
  129,005
  142,550
  156,744
  171,583
  187,067
  203,199
  219,991
  237,454
  255,607
  274,472
  294,075
  314,448
  335,624
  357,643
  380,545
  404,376
  429,186
  455,028
  481,957
Change in working capital, $m
  3,463
  -5,180
  -5,974
  -6,790
  -7,618
  -8,448
  -9,273
  -10,087
  -10,885
  -11,666
  -12,428
  -13,172
  -13,900
  -14,616
  -15,322
  -16,023
  -16,723
  -17,428
  -18,142
  -18,870
  -19,617
  -20,388
  -21,186
  -22,017
  -22,885
  -23,794
  -24,748
  -25,751
  -26,806
  -27,919
  -29,092
Cash from operations, $m
  31,038
  31,614
  38,007
  45,179
  53,126
  61,840
  71,307
  81,510
  92,431
  104,050
  116,349
  129,289
  142,905
  157,166
  172,066
  187,606
  203,790
  220,628
  238,133
  256,324
  275,224
  294,859
  315,261
  336,465
  358,509
  381,436
  405,292
  430,127
  455,993
  482,947
  511,049
Maintenance CAPEX, $m
  0
  -15,620
  -19,599
  -24,178
  -29,382
  -35,220
  -41,695
  -48,803
  -56,534
  -64,877
  -73,818
  -83,342
  -93,438
  -104,091
  -115,293
  -127,036
  -139,317
  -152,134
  -165,492
  -179,397
  -193,859
  -208,895
  -224,520
  -240,758
  -257,632
  -275,172
  -293,408
  -312,376
  -332,112
  -352,657
  -374,055
New CAPEX, $m
  -9,471
  -31,433
  -36,169
  -41,112
  -46,125
  -51,153
  -56,148
  -61,075
  -65,908
  -70,634
  -75,247
  -79,753
  -84,163
  -88,495
  -92,770
  -97,015
  -101,257
  -105,525
  -109,848
  -114,256
  -118,778
  -123,443
  -128,277
  -133,309
  -138,564
  -144,067
  -149,843
  -155,915
  -162,308
  -169,044
  -176,146
Cash from investing activities, $m
  -9,580
  -47,053
  -55,768
  -65,290
  -75,507
  -86,373
  -97,843
  -109,878
  -122,442
  -135,511
  -149,065
  -163,095
  -177,601
  -192,586
  -208,063
  -224,051
  -240,574
  -257,659
  -275,340
  -293,653
  -312,637
  -332,338
  -352,797
  -374,067
  -396,196
  -419,239
  -443,251
  -468,291
  -494,420
  -521,701
  -550,201
Free cash flow, $m
  21,458
  -15,439
  -17,761
  -20,110
  -22,381
  -24,534
  -26,537
  -28,368
  -30,011
  -31,460
  -32,716
  -33,807
  -34,695
  -35,420
  -35,997
  -36,446
  -36,784
  -37,031
  -37,207
  -37,329
  -37,414
  -37,478
  -37,536
  -37,602
  -37,687
  -37,802
  -37,959
  -38,164
  -38,427
  -38,754
  -39,152
Issuance/(repayment) of debt, $m
  -9,113
  26,274
  30,227
  34,357
  38,547
  42,749
  46,923
  51,041
  55,080
  59,029
  62,884
  66,650
  70,335
  73,955
  77,529
  81,076
  84,621
  88,188
  91,801
  95,485
  99,264
  103,162
  107,202
  111,407
  115,799
  120,397
  125,224
  130,299
  135,642
  141,271
  147,206
Issuance/(repurchase) of shares, $m
  0
  16,791
  19,475
  22,045
  24,541
  26,919
  29,146
  31,197
  33,058
  34,719
  36,181
  37,382
  38,468
  39,387
  40,156
  40,795
  41,323
  41,762
  42,131
  42,451
  42,739
  43,012
  43,287
  43,578
  43,899
  44,261
  44,676
  45,154
  45,703
  46,332
  47,049
Cash from financing (excl. dividends), $m  
  -11,020
  43,065
  49,702
  56,402
  63,088
  69,668
  76,069
  82,238
  88,138
  93,748
  99,065
  104,032
  108,803
  113,342
  117,685
  121,871
  125,944
  129,950
  133,932
  137,936
  142,003
  146,174
  150,489
  154,985
  159,698
  164,658
  169,900
  175,453
  181,345
  187,603
  194,255
Total cash flow (excl. dividends), $m
  10,475
  27,625
  31,940
  36,292
  40,707
  45,134
  49,532
  53,871
  58,126
  62,287
  66,350
  70,225
  74,108
  77,923
  81,688
  85,425
  89,161
  92,919
  96,725
  100,607
  104,588
  108,696
  112,953
  117,383
  122,010
  126,856
  131,942
  137,289
  142,918
  148,849
  155,103
Retained Cash Flow (-), $m
  -5,034
  -23,534
  -27,239
  -30,961
  -34,736
  -38,523
  -42,285
  -45,995
  -49,635
  -53,193
  -56,668
  -60,061
  -63,382
  -66,644
  -69,864
  -73,061
  -76,256
  -79,470
  -82,726
  -86,045
  -89,451
  -92,963
  -96,604
  -100,393
  -104,351
  -108,495
  -112,845
  -117,418
  -122,232
  -127,305
  -132,653
Prev. year cash balance distribution, $m
 
  9,791
  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
 
  13,883
  4,702
  5,331
  5,970
  6,611
  7,248
  7,876
  8,492
  9,094
  9,682
  10,164
  10,726
  11,278
  11,823
  12,364
  12,905
  13,449
  14,000
  14,562
  15,138
  15,732
  16,349
  16,990
  17,659
  18,361
  19,097
  19,871
  20,686
  21,544
  22,449
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
 
  13,310
  4,304
  4,640
  4,916
  5,124
  5,260
  5,321
  5,308
  5,224
  5,076
  4,827
  4,577
  4,288
  3,969
  3,630
  3,279
  2,926
  2,578
  2,242
  1,924
  1,627
  1,356
  1,114
  899
  714
  557
  426
  320
  235
  169
Current shareholders' claim on cash, %
  100
  84.4
  72.0
  62.2
  54.3
  48.0
  42.8
  38.6
  35.0
  32.1
  29.6
  27.4
  25.6
  24.0
  22.7
  21.5
  20.4
  19.5
  18.7
  17.9
  17.3
  16.7
  16.2
  15.7
  15.2
  14.8
  14.4
  14.1
  13.7
  13.4
  13.2

China Petroleum & Chemical Corporation is a China-based energy and chemical company. The Company's segments include Exploration and Development segment, Refining segment, Marketing and Distribution segment, Chemicals segment, and Corporate and Others segment. Exploration and Development segment explores and develops oil fields, as well as produces crude oil and natural gas. Refining segment processes and purifies crude oil, which is sourced from Exploration and Development segment and external suppliers. Marketing and Distribution segment owns and operates oil depots and service stations in China. Chemical segment manufactures and sells petrochemical products, derivative petrochemical products and other chemical products to external customers.

FINANCIAL RATIOS  of  China Petroleum&Chemical ADR (SNP)

Valuation Ratios
P/E Ratio 1273.3
Price to Sales 30.8
Price to Book 83.6
Price to Tangible Book
Price to Cash Flow 277
Price to Free Cash Flow 398.6
Growth Rates
Sales Growth Rate -4.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -31.4%
Cap. Spend. - 3 Yr. Gr. Rate -14.7%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 16.5%
Total Debt to Equity 27%
Interest Coverage 13
Management Effectiveness
Return On Assets 3.5%
Ret/ On Assets - 3 Yr. Avg. 3.3%
Return On Total Capital 5.1%
Ret/ On T. Cap. - 3 Yr. Avg. 4.6%
Return On Equity 6.7%
Return On Equity - 3 Yr. Avg. 6.6%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 27.8%
Gross Margin - 3 Yr. Avg. 23.3%
EBITDA Margin 10.1%
EBITDA Margin - 3 Yr. Avg. 8%
Operating Margin 4%
Oper. Margin - 3 Yr. Avg. 3.1%
Pre-Tax Margin 4.2%
Pre-Tax Margin - 3 Yr. Avg. 3.1%
Net Profit Margin 2.4%
Net Profit Margin - 3 Yr. Avg. 1.9%
Effective Tax Rate 25.8%
Eff/ Tax Rate - 3 Yr. Avg. 25%
Payout Ratio 36.2%

SNP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SNP stock intrinsic value calculation we used $279349 million for the last fiscal year's total revenue generated by China Petroleum&Chemical ADR. The default revenue input number comes from 2016 income statement of China Petroleum&Chemical 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 SNP stock valuation model: a) initial revenue growth rate of 25.4% 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 SNP is calculated based on our internal credit rating of China Petroleum&Chemical 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 China Petroleum&Chemical 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 SNP stock the variable cost ratio is equal to 97.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for SNP 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 China Petroleum&Chemical ADR.

Corporate tax rate of 27% is the nominal tax rate for China Petroleum&Chemical 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 SNP 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 SNP are equal to 44.2%.

Life of production assets of 7.9 years is the average useful life of capital assets used in China Petroleum&Chemical 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 SNP is equal to -7.3%. 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 - $102861 million for China Petroleum&Chemical 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 1408.61 million for China Petroleum&Chemical 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 China Petroleum&Chemical ADR at the current share price and the inputted number of shares is $100.0 billion.

RELATED COMPANIES Price Int.Val. Rating
PTR PetroChina ADR 69.10 12.46  str.sell
CEO CNOOC ADR 141.50 29.66  str.sell
XOM Exxon Mobil 82.90 9.87  str.sell
BP BP ADR 40.63 6.36  str.sell
SHI SINOPEC Shangh 57.90 31.16  str.sell

COMPANY NEWS

▶ Top Ranked Value Stocks to Buy for December 13th   [Dec-13-17 03:50PM  InvestorPlace]
▶ Even Lady Gaga can't save Tiffany from the 'Amazon effect'   [Nov-29-17 11:18AM  Yahoo Finance Video]
▶ Black Friday wasn't that bad for Macy's, Best Buy and Target   [Nov-27-17 12:05PM  Yahoo Finance Video]
▶ Invest in These 4 Large-Cap Oil Stocks   [Nov-24-17 02:25PM  Zacks]
▶ JCPenney throws a 'Hail Mary' to get holiday traffic   [Nov-07-17 12:30PM  Yahoo Finance Video]
▶ China Petro&Chm posts 3Q profit   [Oct-30-17 10:27AM  Associated Press]
▶ [$$] Foreign Companies in China Get a New Partner: The Communist Party   [Oct-29-17 11:19PM  The Wall Street Journal]
▶ IIROC Trading Halt - SNP   [09:07AM  PR Newswire]
▶ Hong Kong IPOs Head for Worst Year Since 2012   [Oct-16-17 12:00PM  Bloomberg]
▶ 3 Alibaba Must-Reads: $30 Billion In Planned Investments   [Oct-11-17 03:16PM  Barrons.com]
▶ IIROC Trade Resumption - SNP   [09:50AM  PR Newswire]
▶ IIROC Trade Resumption - SNP   [09:50AM  CNW Group]
▶ IIROC Trading Halt - SNP   [09:33AM  PR Newswire]
▶ China's Nigerian Misadventures   [Aug-31-17 04:00PM  Bloomberg]
▶ Sinopec's 1H Profit Jumps 40% Fueled by Chemicals Unit   [Aug-27-17 09:56PM  Bloomberg Video]
▶ [$$] Big Names Bow To Political Power   [Aug-15-17 12:30AM  The Wall Street Journal]
▶ War of Words With China Intensifies Over South China Sea   [Aug-07-17 09:00AM  TheStreet.com]
▶ OPEC: June Oil Production Rose, Except In Venezuela   [Jul-12-17 12:06PM  Barrons.com]
▶ China Aims For Market Share In African Refining Sector   [Jun-22-17 04:00PM  Oilprice.com]
▶ New Strong Sell Stocks for June 5th   [Jun-05-17 10:56AM  Zacks]
Financial statements of SNP
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.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.