Intrinsic value of Zhaopin ADR - ZPIN

Previous Close

$18.20

  Intrinsic Value

$24.12

stock screener

  Rating & Target

buy

+33%

  Value-price divergence*

-110%

Previous close

$18.20

 
Intrinsic value

$24.12

 
Up/down potential

+33%

 
Rating

buy

 
Value-price divergence*

-110%

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

We calculate the intrinsic value of ZPIN 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 2017), $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 1.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  25.00
  20.70
  19.13
  17.72
  16.45
  15.30
  14.27
  13.34
  12.51
  11.76
  11.08
  10.47
  9.93
  9.43
  8.99
  8.59
  8.23
  7.91
  7.62
  7.36
  7.12
  6.91
  6.72
  6.55
  6.39
  6.25
  6.13
  6.01
  5.91
  5.82
  5.74
Revenue, $m
  275
  332
  395
  465
  542
  625
  714
  809
  911
  1,018
  1,131
  1,249
  1,373
  1,503
  1,638
  1,778
  1,925
  2,077
  2,235
  2,400
  2,570
  2,748
  2,933
  3,125
  3,324
  3,532
  3,749
  3,974
  4,209
  4,454
  4,710
Variable operating expenses, $m
 
  265
  316
  372
  432
  498
  569
  645
  726
  811
  901
  994
  1,092
  1,195
  1,303
  1,415
  1,531
  1,652
  1,778
  1,909
  2,045
  2,186
  2,333
  2,486
  2,645
  2,810
  2,983
  3,162
  3,349
  3,544
  3,747
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
  232
  265
  316
  372
  432
  498
  569
  645
  726
  811
  901
  994
  1,092
  1,195
  1,303
  1,415
  1,531
  1,652
  1,778
  1,909
  2,045
  2,186
  2,333
  2,486
  2,645
  2,810
  2,983
  3,162
  3,349
  3,544
  3,747
Operating income, $m
  43
  67
  80
  94
  110
  127
  145
  164
  185
  207
  230
  255
  281
  307
  335
  363
  393
  424
  457
  490
  525
  562
  599
  639
  679
  722
  766
  812
  860
  910
  962
EBITDA, $m
  47
  70
  83
  98
  114
  131
  150
  170
  191
  213
  237
  262
  288
  315
  344
  373
  404
  436
  469
  503
  539
  576
  615
  655
  697
  741
  786
  834
  883
  934
  988
Interest expense (income), $m
  1
  1
  -2
  -1
  0
  2
  3
  5
  7
  9
  11
  13
  15
  18
  20
  23
  25
  28
  31
  34
  37
  41
  44
  48
  51
  55
  59
  63
  68
  72
  77
Earnings before tax, $m
  50
  66
  82
  95
  109
  125
  142
  159
  178
  198
  219
  242
  265
  290
  315
  341
  368
  396
  426
  456
  488
  521
  555
  591
  628
  667
  707
  749
  793
  838
  886
Tax expense, $m
  24
  18
  22
  26
  30
  34
  38
  43
  48
  54
  59
  65
  72
  78
  85
  92
  99
  107
  115
  123
  132
  141
  150
  160
  170
  180
  191
  202
  214
  226
  239
Net income, $m
  26
  48
  60
  69
  80
  91
  103
  116
  130
  145
  160
  177
  194
  211
  230
  249
  269
  289
  311
  333
  356
  380
  405
  431
  459
  487
  516
  547
  579
  612
  647

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  330
  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
  477
  177
  211
  249
  290
  334
  382
  433
  487
  544
  604
  668
  734
  803
  875
  950
  1,029
  1,110
  1,195
  1,283
  1,374
  1,469
  1,567
  1,670
  1,777
  1,888
  2,004
  2,124
  2,250
  2,381
  2,517
Adjusted assets (=assets-cash), $m
  147
  177
  211
  249
  290
  334
  382
  433
  487
  544
  604
  668
  734
  803
  875
  950
  1,029
  1,110
  1,195
  1,283
  1,374
  1,469
  1,567
  1,670
  1,777
  1,888
  2,004
  2,124
  2,250
  2,381
  2,517
Revenue / Adjusted assets
  1.871
  1.876
  1.872
  1.867
  1.869
  1.871
  1.869
  1.868
  1.871
  1.871
  1.873
  1.870
  1.871
  1.872
  1.872
  1.872
  1.871
  1.871
  1.870
  1.871
  1.870
  1.871
  1.872
  1.871
  1.871
  1.871
  1.871
  1.871
  1.871
  1.871
  1.871
Average production assets, $m
  8
  9
  11
  13
  15
  17
  19
  22
  25
  27
  31
  34
  37
  41
  44
  48
  52
  56
  60
  65
  69
  74
  79
  84
  90
  95
  101
  107
  114
  120
  127
Working capital, $m
  204
  -152
  -181
  -213
  -248
  -286
  -327
  -371
  -417
  -466
  -518
  -572
  -629
  -688
  -750
  -814
  -882
  -951
  -1,024
  -1,099
  -1,177
  -1,259
  -1,343
  -1,431
  -1,523
  -1,618
  -1,717
  -1,820
  -1,928
  -2,040
  -2,157
Total debt, $m
  25
  -62
  -32
  2
  39
  79
  122
  167
  216
  268
  322
  379
  438
  501
  566
  633
  704
  777
  853
  932
  1,014
  1,100
  1,189
  1,281
  1,377
  1,477
  1,581
  1,690
  1,803
  1,921
  2,043
Total liabilities, $m
  247
  160
  190
  224
  261
  301
  344
  389
  438
  490
  544
  601
  660
  723
  788
  855
  926
  999
  1,075
  1,154
  1,236
  1,322
  1,411
  1,503
  1,599
  1,699
  1,803
  1,912
  2,025
  2,143
  2,265
Total equity, $m
  230
  18
  21
  25
  29
  33
  38
  43
  49
  54
  60
  67
  73
  80
  88
  95
  103
  111
  119
  128
  137
  147
  157
  167
  178
  189
  200
  212
  225
  238
  252
Total liabilities and equity, $m
  477
  178
  211
  249
  290
  334
  382
  432
  487
  544
  604
  668
  733
  803
  876
  950
  1,029
  1,110
  1,194
  1,282
  1,373
  1,469
  1,568
  1,670
  1,777
  1,888
  2,003
  2,124
  2,250
  2,381
  2,517
Debt-to-equity ratio
  0.109
  -3.510
  -1.500
  0.080
  1.340
  2.350
  3.180
  3.870
  4.440
  4.920
  5.330
  5.670
  5.970
  6.240
  6.460
  6.660
  6.840
  7.000
  7.140
  7.270
  7.380
  7.490
  7.580
  7.670
  7.750
  7.820
  7.890
  7.950
  8.010
  8.070
  8.120
Adjusted equity ratio
  -0.680
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  26
  48
  60
  69
  80
  91
  103
  116
  130
  145
  160
  177
  194
  211
  230
  249
  269
  289
  311
  333
  356
  380
  405
  431
  459
  487
  516
  547
  579
  612
  647
Depreciation, amort., depletion, $m
  4
  3
  3
  4
  4
  5
  5
  6
  6
  7
  7
  7
  7
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
Funds from operations, $m
  78
  51
  63
  73
  84
  96
  108
  122
  136
  151
  167
  184
  201
  219
  239
  258
  279
  301
  323
  346
  370
  395
  421
  448
  476
  506
  536
  568
  601
  636
  672
Change in working capital, $m
  16
  -26
  -29
  -32
  -35
  -38
  -41
  -44
  -46
  -49
  -52
  -54
  -57
  -59
  -62
  -64
  -67
  -70
  -72
  -75
  -78
  -81
  -85
  -88
  -91
  -95
  -99
  -103
  -108
  -112
  -117
Cash from operations, $m
  62
  77
  92
  105
  119
  134
  149
  166
  183
  200
  219
  238
  258
  279
  300
  323
  346
  370
  395
  421
  448
  477
  506
  536
  568
  601
  635
  671
  709
  748
  789
Maintenance CAPEX, $m
  0
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -7
  -7
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
New CAPEX, $m
  -4
  -1
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
Cash from investing activities, $m
  -7
  -3
  -4
  -4
  -5
  -5
  -5
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -12
  -13
  -14
  -14
  -15
  -16
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -27
  -30
  -31
Free cash flow, $m
  55
  74
  89
  101
  115
  129
  143
  159
  175
  193
  210
  229
  248
  268
  289
  310
  333
  356
  380
  405
  431
  458
  486
  515
  546
  577
  611
  645
  681
  719
  758
Issuance/(repayment) of debt, $m
  -19
  -87
  31
  34
  37
  40
  43
  46
  49
  52
  54
  57
  60
  62
  65
  68
  70
  73
  76
  79
  82
  85
  89
  92
  96
  100
  104
  108
  113
  118
  123
Issuance/(repurchase) of shares, $m
  10
  70
  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  
  -9
  -17
  31
  34
  37
  40
  43
  46
  49
  52
  54
  57
  60
  62
  65
  68
  70
  73
  76
  79
  82
  85
  89
  92
  96
  100
  104
  108
  113
  118
  123
Total cash flow (excl. dividends), $m
  52
  57
  119
  135
  151
  169
  186
  205
  224
  244
  265
  286
  308
  330
  354
  378
  403
  429
  456
  484
  513
  543
  575
  608
  642
  677
  715
  754
  794
  837
  881
Retained Cash Flow (-), $m
  -31
  -118
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
Prev. year cash balance distribution, $m
 
  330
  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
 
  269
  116
  131
  147
  164
  182
  200
  219
  238
  259
  279
  301
  323
  346
  370
  395
  421
  447
  475
  504
  534
  565
  597
  631
  666
  703
  741
  782
  824
  867
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
 
  258
  106
  114
  121
  127
  132
  135
  137
  137
  136
  133
  128
  123
  116
  109
  100
  92
  82
  73
  64
  55
  47
  39
  32
  26
  21
  16
  12
  9
  7
Current shareholders' claim on cash, %
  100
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

Zhaopin Limited is a holding company. The Company, through its subsidiaries, is engaged in operating an online recruitment platform in the People's Republic of China. It also provides human resources related services, including campus recruitment, executive searches and print advertising. Its Website, zhaopin.com, is a career-focused Website in China. It provides a range of services, including online recruitment, assessment and other human resources related services. Through its zhaopin Websites and mobile applications, it provides job postings and display advertisements, resume access services and other online services. The Company provides campus recruitment services to customers seeking to recruit college and university students. These services include selecting campuses, organizing recruiting events, collecting and managing resumes, and conducting interviews and assessment tests with candidates. The Company provides online and offline assessment services.

FINANCIAL RATIOS  of  Zhaopin ADR (ZPIN)

Valuation Ratios
P/E Ratio 87.4
Price to Sales 8.3
Price to Book 9.9
Price to Tangible Book
Price to Cash Flow 36.7
Price to Free Cash Flow 39.2
Growth Rates
Sales Growth Rate 25%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -20%
Cap. Spend. - 3 Yr. Gr. Rate 5.9%
Financial Strength
Quick Ratio NaN
Current Ratio 0.3
LT Debt to Equity 10.9%
Total Debt to Equity 10.9%
Interest Coverage 51
Management Effectiveness
Return On Assets 6.2%
Ret/ On Assets - 3 Yr. Avg. 10.3%
Return On Total Capital 10.9%
Ret/ On T. Cap. - 3 Yr. Avg. 17.3%
Return On Equity 12.1%
Return On Equity - 3 Yr. Avg. 22.1%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 89.1%
Gross Margin - 3 Yr. Avg. 90.3%
EBITDA Margin 20%
EBITDA Margin - 3 Yr. Avg. 23.5%
Operating Margin 15.6%
Oper. Margin - 3 Yr. Avg. 19.3%
Pre-Tax Margin 18.2%
Pre-Tax Margin - 3 Yr. Avg. 21.6%
Net Profit Margin 9.5%
Net Profit Margin - 3 Yr. Avg. 15.9%
Effective Tax Rate 48%
Eff/ Tax Rate - 3 Yr. Avg. 27.3%
Payout Ratio 0%

ZPIN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ZPIN stock intrinsic value calculation we used $275 million for the last fiscal year's total revenue generated by Zhaopin ADR. The default revenue input number comes from 2017 income statement of Zhaopin 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 ZPIN stock valuation model: a) initial revenue growth rate of 20.7% 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 ZPIN is calculated based on our internal credit rating of Zhaopin 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 Zhaopin 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 ZPIN stock the variable cost ratio is equal to 80%.

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 ZPIN 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 4% for Zhaopin ADR.

Corporate tax rate of 27% is the nominal tax rate for Zhaopin 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 ZPIN 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 ZPIN are equal to 2.7%.

Life of production assets of 4.5 years is the average useful life of capital assets used in Zhaopin 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 ZPIN is equal to -45.8%. 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 - $230 million for Zhaopin 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 55.978 million for Zhaopin 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 Zhaopin ADR at the current share price and the inputted number of shares is $1.0 billion.

RELATED COMPANIES Price Int.Val. Rating
JOBS 51job ADR 63.13 67.41  hold
WUBA 58.com ADR 69.36 114.03  str.buy
DHX DHI Group 2.25 4.82  str.buy
ATHM Autohome ADR 60.10 64.86  hold
BITA Bitauto Holdin 52.64 114.44  str.buy
LEJU Leju Holdings 1.57 5.20  str.buy
Financial statements of ZPIN
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.