Intrinsic value of Amkor Technology, Inc. - AMKR

Previous Close

$7.56

  Intrinsic Value

$25.22

stock screener

  Rating & Target

str. buy

+234%

Previous close

$7.56

 
Intrinsic value

$25.22

 
Up/down potential

+234%

 
Rating

str. buy

We calculate the intrinsic value of AMKR 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 1.8

 

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
  4,402
  4,504
  4,619
  4,749
  4,893
  5,051
  5,223
  5,409
  5,610
  5,825
  6,056
  6,301
  6,563
  6,841
  7,136
  7,449
  7,780
  8,130
  8,500
  8,891
  9,303
  9,737
  10,196
  10,678
  11,187
  11,722
  12,285
  12,878
  13,502
  14,158
Variable operating expenses, $m
  3,974
  4,060
  4,157
  4,267
  4,388
  4,521
  4,666
  4,823
  4,992
  5,173
  5,103
  5,310
  5,530
  5,764
  6,013
  6,277
  6,556
  6,851
  7,162
  7,491
  7,839
  8,205
  8,591
  8,997
  9,426
  9,877
  10,351
  10,851
  11,377
  11,929
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
  3,974
  4,060
  4,157
  4,267
  4,388
  4,521
  4,666
  4,823
  4,992
  5,173
  5,103
  5,310
  5,530
  5,764
  6,013
  6,277
  6,556
  6,851
  7,162
  7,491
  7,839
  8,205
  8,591
  8,997
  9,426
  9,877
  10,351
  10,851
  11,377
  11,929
Operating income, $m
  428
  444
  462
  483
  505
  530
  557
  586
  618
  652
  953
  992
  1,033
  1,077
  1,123
  1,172
  1,225
  1,280
  1,338
  1,399
  1,464
  1,533
  1,605
  1,681
  1,761
  1,845
  1,934
  2,027
  2,125
  2,228
EBITDA, $m
  1,241
  1,269
  1,302
  1,338
  1,379
  1,423
  1,472
  1,524
  1,581
  1,642
  1,706
  1,776
  1,849
  1,928
  2,011
  2,099
  2,192
  2,291
  2,395
  2,505
  2,622
  2,744
  2,873
  3,009
  3,152
  3,303
  3,462
  3,629
  3,805
  3,990
Interest expense (income), $m
  87
  79
  82
  86
  90
  94
  100
  105
  112
  119
  126
  134
  142
  151
  161
  171
  181
  193
  205
  218
  231
  245
  260
  276
  293
  311
  329
  349
  369
  391
  413
Earnings before tax, $m
  349
  362
  377
  393
  411
  430
  452
  475
  499
  526
  819
  850
  882
  916
  953
  991
  1,032
  1,075
  1,120
  1,168
  1,219
  1,272
  1,329
  1,388
  1,450
  1,516
  1,585
  1,658
  1,734
  1,815
Tax expense, $m
  94
  98
  102
  106
  111
  116
  122
  128
  135
  142
  221
  229
  238
  247
  257
  268
  279
  290
  302
  315
  329
  344
  359
  375
  392
  409
  428
  448
  468
  490
Net income, $m
  255
  264
  275
  287
  300
  314
  330
  347
  365
  384
  598
  620
  644
  669
  695
  723
  753
  785
  818
  853
  890
  929
  970
  1,013
  1,059
  1,107
  1,157
  1,210
  1,266
  1,325

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
  4,586
  4,691
  4,812
  4,947
  5,097
  5,262
  5,441
  5,635
  5,844
  6,068
  6,308
  6,564
  6,837
  7,126
  7,434
  7,760
  8,104
  8,469
  8,854
  9,261
  9,690
  10,143
  10,620
  11,123
  11,653
  12,210
  12,797
  13,415
  14,064
  14,748
Adjusted assets (=assets-cash), $m
  4,586
  4,691
  4,812
  4,947
  5,097
  5,262
  5,441
  5,635
  5,844
  6,068
  6,308
  6,564
  6,837
  7,126
  7,434
  7,760
  8,104
  8,469
  8,854
  9,261
  9,690
  10,143
  10,620
  11,123
  11,653
  12,210
  12,797
  13,415
  14,064
  14,748
Revenue / Adjusted assets
  0.960
  0.960
  0.960
  0.960
  0.960
  0.960
  0.960
  0.960
  0.960
  0.960
  0.960
  0.960
  0.960
  0.960
  0.960
  0.960
  0.960
  0.960
  0.960
  0.960
  0.960
  0.960
  0.960
  0.960
  0.960
  0.960
  0.960
  0.960
  0.960
  0.960
Average production assets, $m
  2,738
  2,801
  2,873
  2,954
  3,044
  3,142
  3,249
  3,365
  3,489
  3,623
  3,767
  3,920
  4,082
  4,255
  4,439
  4,633
  4,839
  5,057
  5,287
  5,530
  5,786
  6,057
  6,342
  6,642
  6,958
  7,291
  7,641
  8,010
  8,398
  8,806
Working capital, $m
  -62
  -63
  -65
  -66
  -69
  -71
  -73
  -76
  -79
  -82
  -85
  -88
  -92
  -96
  -100
  -104
  -109
  -114
  -119
  -124
  -130
  -136
  -143
  -149
  -157
  -164
  -172
  -180
  -189
  -198
Total debt, $m
  1,387
  1,449
  1,521
  1,601
  1,690
  1,788
  1,894
  2,009
  2,133
  2,266
  2,408
  2,560
  2,722
  2,893
  3,076
  3,269
  3,473
  3,690
  3,918
  4,159
  4,414
  4,682
  4,965
  5,263
  5,577
  5,908
  6,256
  6,622
  7,008
  7,413
Total liabilities, $m
  2,719
  2,782
  2,853
  2,934
  3,023
  3,120
  3,226
  3,341
  3,465
  3,598
  3,741
  3,892
  4,054
  4,226
  4,408
  4,601
  4,806
  5,022
  5,251
  5,492
  5,746
  6,015
  6,298
  6,596
  6,910
  7,241
  7,589
  7,955
  8,340
  8,745
Total equity, $m
  1,866
  1,909
  1,958
  2,013
  2,075
  2,142
  2,214
  2,293
  2,378
  2,470
  2,567
  2,672
  2,783
  2,900
  3,026
  3,158
  3,298
  3,447
  3,604
  3,769
  3,944
  4,128
  4,322
  4,527
  4,743
  4,970
  5,208
  5,460
  5,724
  6,002
Total liabilities and equity, $m
  4,585
  4,691
  4,811
  4,947
  5,098
  5,262
  5,440
  5,634
  5,843
  6,068
  6,308
  6,564
  6,837
  7,126
  7,434
  7,759
  8,104
  8,469
  8,855
  9,261
  9,690
  10,143
  10,620
  11,123
  11,653
  12,211
  12,797
  13,415
  14,064
  14,747
Debt-to-equity ratio
  0.740
  0.760
  0.780
  0.800
  0.810
  0.830
  0.860
  0.880
  0.900
  0.920
  0.940
  0.960
  0.980
  1.000
  1.020
  1.040
  1.050
  1.070
  1.090
  1.100
  1.120
  1.130
  1.150
  1.160
  1.180
  1.190
  1.200
  1.210
  1.220
  1.230
Adjusted equity ratio
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407
  0.407

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  255
  264
  275
  287
  300
  314
  330
  347
  365
  384
  598
  620
  644
  669
  695
  723
  753
  785
  818
  853
  890
  929
  970
  1,013
  1,059
  1,107
  1,157
  1,210
  1,266
  1,325
Depreciation, amort., depletion, $m
  813
  825
  840
  856
  874
  893
  915
  938
  963
  990
  753
  784
  816
  851
  888
  927
  968
  1,011
  1,057
  1,106
  1,157
  1,211
  1,268
  1,328
  1,392
  1,458
  1,528
  1,602
  1,680
  1,761
Funds from operations, $m
  1,068
  1,090
  1,115
  1,143
  1,174
  1,208
  1,244
  1,284
  1,328
  1,374
  1,352
  1,404
  1,460
  1,520
  1,583
  1,650
  1,721
  1,796
  1,875
  1,959
  2,047
  2,140
  2,238
  2,341
  2,450
  2,565
  2,685
  2,812
  2,946
  3,086
Change in working capital, $m
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
Cash from operations, $m
  1,069
  1,091
  1,116
  1,144
  1,176
  1,210
  1,247
  1,287
  1,330
  1,377
  1,355
  1,408
  1,464
  1,524
  1,587
  1,655
  1,726
  1,801
  1,880
  1,964
  2,053
  2,146
  2,245
  2,348
  2,457
  2,572
  2,693
  2,821
  2,954
  3,095
Maintenance CAPEX, $m
  -537
  -548
  -560
  -575
  -591
  -609
  -628
  -650
  -673
  -698
  -725
  -753
  -784
  -816
  -851
  -888
  -927
  -968
  -1,011
  -1,057
  -1,106
  -1,157
  -1,211
  -1,268
  -1,328
  -1,392
  -1,458
  -1,528
  -1,602
  -1,680
New CAPEX, $m
  -53
  -63
  -72
  -81
  -90
  -98
  -107
  -116
  -125
  -134
  -143
  -153
  -163
  -173
  -184
  -195
  -206
  -218
  -230
  -243
  -256
  -270
  -285
  -300
  -316
  -333
  -350
  -369
  -388
  -408
Cash from investing activities, $m
  -590
  -611
  -632
  -656
  -681
  -707
  -735
  -766
  -798
  -832
  -868
  -906
  -947
  -989
  -1,035
  -1,083
  -1,133
  -1,186
  -1,241
  -1,300
  -1,362
  -1,427
  -1,496
  -1,568
  -1,644
  -1,725
  -1,808
  -1,897
  -1,990
  -2,088
Free cash flow, $m
  479
  480
  484
  489
  495
  503
  512
  521
  533
  545
  487
  501
  517
  534
  553
  572
  593
  615
  639
  664
  690
  719
  748
  780
  813
  848
  885
  924
  965
  1,008
Issuance/(repayment) of debt, $m
  54
  63
  71
  80
  89
  98
  106
  115
  124
  133
  142
  152
  162
  172
  182
  193
  204
  216
  228
  241
  255
  268
  283
  298
  314
  331
  348
  366
  385
  405
Issuance/(repurchase) of shares, $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 financing (excl. dividends), $m  
  54
  63
  71
  80
  89
  98
  106
  115
  124
  133
  142
  152
  162
  172
  182
  193
  204
  216
  228
  241
  255
  268
  283
  298
  314
  331
  348
  366
  385
  405
Total cash flow (excl. dividends), $m
  533
  543
  555
  569
  584
  600
  618
  637
  657
  678
  629
  653
  679
  706
  735
  765
  798
  832
  867
  905
  945
  987
  1,031
  1,078
  1,127
  1,178
  1,233
  1,290
  1,350
  1,413
Retained Cash Flow (-), $m
  -36
  -43
  -49
  -55
  -61
  -67
  -73
  -79
  -85
  -91
  -98
  -104
  -111
  -118
  -125
  -133
  -140
  -148
  -157
  -166
  -175
  -184
  -194
  -205
  -216
  -227
  -239
  -251
  -264
  -278
Prev. year cash balance distribution, $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 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
  498
  500
  506
  514
  523
  533
  545
  558
  571
  587
  531
  549
  568
  588
  610
  633
  657
  683
  711
  740
  770
  803
  837
  873
  911
  951
  994
  1,038
  1,085
  1,135
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
  477
  458
  441
  423
  405
  387
  368
  348
  328
  308
  252
  234
  216
  197
  179
  161
  143
  126
  109
  94
  80
  67
  55
  44
  35
  28
  21
  16
  12
  9
Current shareholders' claim on cash, %
  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

Amkor Technology, Inc. is a provider of outsourced semiconductor packaging and test services. The Company's packaging and test services are designed to meet application and chip specific requirements, including the type of interconnect technology; size, thickness and electrical, and mechanical and thermal performance. It provides packaging and test services, including semiconductor wafer bump, wafer probe, wafer backgrind, package design, packaging, system-level, and final test and drop shipment services. The Company provides its services to integrated device manufacturers (IDMs), fabless semiconductor companies and contract foundries. IDMs design, manufacture, package and test semiconductors in their own facilities. The Company offers a range of advanced and mainstream packaging and test services. The Company's mainstream packages include leadframe packages, substrate-based wirebond packages and micro-electro-mechanical systems packages.

FINANCIAL RATIOS  of  Amkor Technology, Inc. (AMKR)

Valuation Ratios
P/E Ratio 11
Price to Sales 0.5
Price to Book 1.3
Price to Tangible Book
Price to Cash Flow 2.5
Price to Free Cash Flow 22.8
Growth Rates
Sales Growth Rate 35%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 20.8%
Cap. Spend. - 3 Yr. Gr. Rate 2.8%
Financial Strength
Quick Ratio 16
Current Ratio 0
LT Debt to Equity 104%
Total Debt to Equity 106.6%
Interest Coverage 3
Management Effectiveness
Return On Assets 5.7%
Ret/ On Assets - 3 Yr. Avg. 4.8%
Return On Total Capital 5.8%
Ret/ On T. Cap. - 3 Yr. Avg. 4.2%
Return On Equity 12.7%
Return On Equity - 3 Yr. Avg. 9.9%
Asset Turnover 1
Profitability Ratios
Gross Margin 17.8%
Gross Margin - 3 Yr. Avg. 17.4%
EBITDA Margin 22%
EBITDA Margin - 3 Yr. Avg. 22.4%
Operating Margin 7.6%
Oper. Margin - 3 Yr. Avg. 6.6%
Pre-Tax Margin 5.5%
Pre-Tax Margin - 3 Yr. Avg. 4.1%
Net Profit Margin 4.2%
Net Profit Margin - 3 Yr. Avg. 3.4%
Effective Tax Rate 22.3%
Eff/ Tax Rate - 3 Yr. Avg. 29.5%
Payout Ratio 0%

AMKR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AMKR stock intrinsic value calculation we used $4316 million for the last fiscal year's total revenue generated by Amkor Technology, Inc.. The default revenue input number comes from 0001 income statement of Amkor Technology, Inc.. 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 AMKR 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 AMKR is calculated based on our internal credit rating of Amkor Technology, Inc., 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 Amkor Technology, Inc..
    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 AMKR stock the variable cost ratio is equal to 90.4%.

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 AMKR 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 5.9% for Amkor Technology, Inc..

Corporate tax rate of 27% is the nominal tax rate for Amkor Technology, Inc.. 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 AMKR 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 AMKR are equal to 62.2%.

Life of production assets of 4.7 years is the average useful life of capital assets used in Amkor Technology, Inc. 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 AMKR is equal to -1.4%. 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 - $1830.54 million for Amkor Technology, Inc. - 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 239.453 million for Amkor Technology, Inc. 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 Amkor Technology, Inc. at the current share price and the inputted number of shares is $1.8 billion.

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