Intrinsic value of AirMedia Group ADR - AMCN

Previous Close

$0.32

  Intrinsic Value

$1.06

stock screener

  Rating & Target

str. buy

+232%

Previous close

$0.32

 
Intrinsic value

$1.06

 
Up/down potential

+232%

 
Rating

str. buy

We calculate the intrinsic value of AMCN 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 0001), $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 0.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  17
  17
  18
  18
  19
  19
  20
  21
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  33
  34
  36
  37
  39
  41
  43
  45
  47
  49
  52
  54
Variable operating expenses, $m
  10
  10
  10
  11
  11
  11
  12
  12
  13
  13
  13
  14
  15
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
Fixed operating expenses, $m
  100
  102
  105
  107
  109
  112
  114
  117
  119
  122
  125
  127
  130
  133
  136
  139
  142
  145
  148
  151
  155
  158
  162
  165
  169
  173
  176
  180
  184
  188
Total operating expenses, $m
  110
  112
  115
  118
  120
  123
  126
  129
  132
  135
  138
  141
  145
  148
  152
  155
  159
  163
  167
  171
  176
  180
  185
  189
  194
  199
  203
  208
  214
  219
Operating income, $m
  -93
  -95
  -97
  -99
  -102
  -104
  -106
  -108
  -110
  -113
  -115
  -117
  -119
  -122
  -124
  -127
  -129
  -132
  -134
  -137
  -140
  -142
  -145
  -148
  -151
  -154
  -157
  -159
  -162
  -165
EBITDA, $m
  -82
  -84
  -86
  -87
  -89
  -91
  -93
  -94
  -96
  -98
  -100
  -101
  -103
  -105
  -106
  -108
  -110
  -111
  -113
  -115
  -116
  -118
  -120
  -121
  -123
  -124
  -126
  -127
  -129
  -130
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  2
  2
  2
  3
  3
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  9
  9
  10
  11
  12
  12
Earnings before tax, $m
  -93
  -95
  -97
  -100
  -102
  -104
  -107
  -109
  -112
  -114
  -117
  -119
  -122
  -125
  -128
  -130
  -133
  -136
  -140
  -143
  -146
  -149
  -152
  -156
  -159
  -163
  -166
  -170
  -174
  -178
Tax expense, $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
Net income, $m
  -93
  -95
  -97
  -100
  -102
  -104
  -107
  -109
  -112
  -114
  -117
  -119
  -122
  -125
  -128
  -130
  -133
  -136
  -140
  -143
  -146
  -149
  -152
  -156
  -159
  -163
  -166
  -170
  -174
  -178

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  351
  359
  368
  379
  390
  403
  416
  431
  447
  464
  483
  502
  523
  545
  569
  594
  620
  648
  678
  709
  742
  776
  813
  851
  892
  934
  979
  1,026
  1,076
  1,128
Adjusted assets (=assets-cash), $m
  351
  359
  368
  379
  390
  403
  416
  431
  447
  464
  483
  502
  523
  545
  569
  594
  620
  648
  678
  709
  742
  776
  813
  851
  892
  934
  979
  1,026
  1,076
  1,128
Revenue / Adjusted assets
  0.048
  0.047
  0.049
  0.047
  0.049
  0.047
  0.048
  0.049
  0.047
  0.047
  0.048
  0.048
  0.048
  0.048
  0.047
  0.049
  0.048
  0.048
  0.049
  0.048
  0.049
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
Average production assets, $m
  55
  56
  58
  60
  61
  63
  65
  68
  70
  73
  76
  79
  82
  86
  89
  93
  97
  102
  107
  111
  117
  122
  128
  134
  140
  147
  154
  161
  169
  177
Working capital, $m
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
Total debt, $m
  -1
  2
  5
  8
  12
  16
  20
  25
  30
  35
  41
  47
  54
  61
  68
  76
  85
  94
  103
  113
  123
  134
  146
  158
  171
  185
  199
  214
  230
  246
Total liabilities, $m
  112
  114
  117
  120
  124
  128
  132
  137
  142
  148
  153
  160
  166
  173
  181
  189
  197
  206
  215
  225
  236
  247
  258
  271
  284
  297
  311
  326
  342
  359
Total equity, $m
  239
  245
  251
  258
  266
  275
  284
  294
  305
  317
  329
  343
  357
  372
  388
  405
  423
  442
  462
  483
  506
  529
  554
  580
  608
  637
  668
  700
  734
  770
Total liabilities and equity, $m
  351
  359
  368
  378
  390
  403
  416
  431
  447
  465
  482
  503
  523
  545
  569
  594
  620
  648
  677
  708
  742
  776
  812
  851
  892
  934
  979
  1,026
  1,076
  1,129
Debt-to-equity ratio
  0.000
  0.010
  0.020
  0.030
  0.040
  0.060
  0.070
  0.080
  0.100
  0.110
  0.120
  0.140
  0.150
  0.160
  0.180
  0.190
  0.200
  0.210
  0.220
  0.230
  0.240
  0.250
  0.260
  0.270
  0.280
  0.290
  0.300
  0.310
  0.310
  0.320
Adjusted equity ratio
  0.682
  0.682
  0.682
  0.682
  0.682
  0.682
  0.682
  0.682
  0.682
  0.682
  0.682
  0.682
  0.682
  0.682
  0.682
  0.682
  0.682
  0.682
  0.682
  0.682
  0.682
  0.682
  0.682
  0.682
  0.682
  0.682
  0.682
  0.682
  0.682
  0.682

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -93
  -95
  -97
  -100
  -102
  -104
  -107
  -109
  -112
  -114
  -117
  -119
  -122
  -125
  -128
  -130
  -133
  -136
  -140
  -143
  -146
  -149
  -152
  -156
  -159
  -163
  -166
  -170
  -174
  -178
Depreciation, amort., depletion, $m
  11
  11
  12
  12
  12
  13
  13
  14
  14
  15
  15
  16
  16
  17
  18
  19
  19
  20
  21
  22
  23
  24
  26
  27
  28
  29
  31
  32
  34
  35
Funds from operations, $m
  -82
  -84
  -86
  -88
  -90
  -91
  -93
  -95
  -97
  -99
  -101
  -103
  -106
  -108
  -110
  -112
  -114
  -116
  -118
  -120
  -123
  -125
  -127
  -129
  -131
  -133
  -136
  -138
  -140
  -142
Change in working capital, $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 from operations, $m
  -82
  -84
  -86
  -88
  -89
  -91
  -93
  -95
  -97
  -99
  -101
  -103
  -105
  -107
  -110
  -112
  -114
  -116
  -118
  -120
  -122
  -124
  -127
  -129
  -131
  -133
  -135
  -138
  -140
  -142
Maintenance CAPEX, $m
  -11
  -11
  -11
  -12
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -29
  -31
  -32
  -34
New CAPEX, $m
  1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
Cash from investing activities, $m
  -10
  -12
  -12
  -14
  -14
  -14
  -15
  -15
  -17
  -17
  -18
  -18
  -19
  -19
  -21
  -22
  -23
  -23
  -25
  -26
  -27
  -28
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -42
Free cash flow, $m
  -93
  -96
  -98
  -101
  -103
  -106
  -108
  -111
  -113
  -116
  -119
  -122
  -124
  -127
  -130
  -133
  -137
  -140
  -143
  -146
  -150
  -153
  -157
  -160
  -164
  -168
  -172
  -176
  -180
  -184
Issuance/(repayment) of debt, $m
  -1
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
Issuance/(repurchase) of shares, $m
  -2
  101
  104
  107
  110
  113
  116
  119
  123
  126
  129
  133
  136
  140
  144
  147
  151
  155
  160
  164
  168
  173
  177
  182
  187
  192
  197
  202
  208
  213
Cash from financing (excl. dividends), $m  
  -3
  104
  107
  110
  114
  117
  120
  124
  128
  131
  135
  139
  143
  147
  151
  155
  159
  164
  169
  174
  178
  184
  189
  194
  200
  206
  211
  217
  224
  230
Total cash flow (excl. dividends), $m
  -95
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  20
  21
  22
  23
  25
  26
  27
  29
  31
  32
  34
  36
  38
  40
  42
  44
  46
Retained Cash Flow (-), $m
  -91
  -101
  -104
  -107
  -110
  -113
  -116
  -119
  -123
  -126
  -129
  -133
  -136
  -140
  -144
  -147
  -151
  -155
  -160
  -164
  -168
  -173
  -177
  -182
  -187
  -192
  -197
  -202
  -208
  -213
Prev. year cash balance distribution, $m
  27
  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
  -91
  -93
  -95
  -97
  -100
  -102
  -104
  -106
  -108
  -111
  -113
  -115
  -118
  -120
  -123
  -126
  -128
  -131
  -134
  -136
  -139
  -142
  -145
  -148
  -151
  -154
  -158
  -161
  -164
  -167
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
  -87
  -86
  -83
  -80
  -77
  -74
  -70
  -66
  -62
  -58
  -54
  -49
  -45
  -40
  -36
  -32
  -28
  -24
  -21
  -17
  -14
  -12
  -10
  -8
  -6
  -5
  -3
  -2
  -2
  -1
Current shareholders' claim on cash, %
  100.0
  62.5
  38.9
  24.2
  15.1
  9.4
  5.8
  3.7
  2.3
  1.4
  0.9
  0.6
  0.4
  0.2
  0.2
  0.1
  0.1
  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

AirMedia Group Inc. is an operator of out-of-home advertising platforms in China. The Company is engaged in selling advertising time slots on its network, primarily air travel advertising network. It holds concession rights to install and operate wireless fidelity (Wi-Fi) systems on trains administered by over eight regional railway administrative bureaus in China. It also holds concession rights to install and operate Wi-Fi systems on various long-haul buses in China. It operates approximately 71,900 digital television screens on airplanes operated by over five airlines, including Air China, China Eastern Airlines, China Southern Airlines, Shanghai Airlines and Xiamen Airlines. It also holds concession rights to operate the advertising media platforms at Sinopec gas stations across China. It provides in-flight advertising and non-advertising contents. It offers advertising services from the platforms, digital television screens on airplanes and gas station media displays.

FINANCIAL RATIOS  of  AirMedia Group ADR (AMCN)

Valuation Ratios
P/E Ratio -0.6
Price to Sales 2.4
Price to Book 0.1
Price to Tangible Book
Price to Cash Flow -0.4
Price to Free Cash Flow -0.3
Growth Rates
Sales Growth Rate -66%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 120%
Cap. Spend. - 3 Yr. Gr. Rate -17.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0.5
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -14.5%
Ret/ On Assets - 3 Yr. Avg. 3.8%
Return On Total Capital -20.1%
Ret/ On T. Cap. - 3 Yr. Avg. 5.6%
Return On Equity -20.1%
Return On Equity - 3 Yr. Avg. 5.7%
Asset Turnover 0
Profitability Ratios
Gross Margin -194.1%
Gross Margin - 3 Yr. Avg. -100.5%
EBITDA Margin -423.5%
EBITDA Margin - 3 Yr. Avg. -207.4%
Operating Margin -523.5%
Oper. Margin - 3 Yr. Avg. -249.6%
Pre-Tax Margin -500%
Pre-Tax Margin - 3 Yr. Avg. -239.6%
Net Profit Margin -388.2%
Net Profit Margin - 3 Yr. Avg. -41%
Effective Tax Rate -4.7%
Eff/ Tax Rate - 3 Yr. Avg. -4.1%
Payout Ratio 0%

AMCN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AMCN stock intrinsic value calculation we used $16.513 million for the last fiscal year's total revenue generated by AirMedia Group ADR. The default revenue input number comes from 0001 income statement of AirMedia Group 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 AMCN stock valuation model: a) initial revenue growth rate of 2% 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 AMCN is calculated based on our internal credit rating of AirMedia Group 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 AirMedia Group 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 AMCN stock the variable cost ratio is equal to 58.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $98 million in the base year in the intrinsic value calculation for AMCN 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 5.4% for AirMedia Group ADR.

Corporate tax rate of 27% is the nominal tax rate for AirMedia Group 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 AMCN 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 AMCN are equal to 327.5%.

Life of production assets of 4.4 years is the average useful life of capital assets used in AirMedia Group 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 AMCN is equal to -14.8%. 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 - $268.737 million for AirMedia Group 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 62.815 million for AirMedia Group 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 AirMedia Group ADR at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ AirMedia Files Its Annual Report on Form 20-F   [Oct-17-18 08:34PM  PR Newswire]
▶ AirMedia Releases 2018 Chairman Letter for Shareholders   [Mar-21-18 06:00AM  PR Newswire]
▶ AirMedia Announces Enterprise Strategic Transformation   [Jan-16-18 08:00AM  PR Newswire]
▶ AirMedia Files Its Annual Report on Form 20-F   [Jun-28-17 11:00AM  PR Newswire]
▶ Wednesdays Biggest Early Market Movers   [09:45AM  24/7 Wall St.]
▶ AirMedia Files Its Annual Report on Form 20-F   [May-17-16 06:00AM  PR Newswire]
▶ Qihoo, Mindray Buyouts Move Ahead, Boost Sentiment   [Mar-04-16 09:05AM  at Forbes]
▶ AirMedia Agrees to Management-Led Buyout   [08:13AM  at The Wall Street Journal]
▶ Top Chinese Stocks Massively Higher in New York   [Jul-09  11:25AM  at 24/7 Wall St.]
▶ AirMedia Special Committee Appoints Advisors   [Jul-06  06:15AM  PR Newswire]

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