Intrinsic value of Autohome Inc. - ATHM

Previous Close

$91.54

  Intrinsic Value

$34.27

stock screener

  Rating & Target

str. sell

-63%

Previous close

$91.54

 
Intrinsic value

$34.27

 
Up/down potential

-63%

 
Rating

str. sell

We calculate the intrinsic value of ATHM 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 10.7

 

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, %
  9.40
  8.96
  8.56
  8.21
  7.89
  7.60
  7.34
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.01
  5.91
  5.82
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.32
  5.28
  5.26
  5.23
  5.21
Revenue, $m
  1,027
  1,119
  1,215
  1,315
  1,419
  1,526
  1,638
  1,755
  1,876
  2,002
  2,132
  2,268
  2,410
  2,557
  2,711
  2,871
  3,038
  3,212
  3,394
  3,584
  3,782
  3,990
  4,207
  4,433
  4,671
  4,919
  5,179
  5,451
  5,736
  6,035
Variable operating expenses, $m
  824
  895
  970
  1,048
  1,129
  1,213
  1,300
  1,390
  1,485
  1,583
  1,661
  1,767
  1,877
  1,992
  2,112
  2,237
  2,367
  2,502
  2,644
  2,792
  2,946
  3,108
  3,277
  3,453
  3,638
  3,832
  4,034
  4,246
  4,468
  4,701
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
  824
  895
  970
  1,048
  1,129
  1,213
  1,300
  1,390
  1,485
  1,583
  1,661
  1,767
  1,877
  1,992
  2,112
  2,237
  2,367
  2,502
  2,644
  2,792
  2,946
  3,108
  3,277
  3,453
  3,638
  3,832
  4,034
  4,246
  4,468
  4,701
Operating income, $m
  204
  224
  245
  267
  290
  314
  339
  364
  391
  419
  471
  501
  533
  565
  599
  635
  672
  710
  750
  792
  836
  882
  930
  980
  1,032
  1,087
  1,145
  1,205
  1,268
  1,334
EBITDA, $m
  235
  256
  278
  301
  324
  349
  375
  401
  429
  458
  488
  519
  551
  585
  620
  657
  695
  735
  776
  820
  865
  913
  962
  1,014
  1,068
  1,125
  1,185
  1,247
  1,312
  1,380
Interest expense (income), $m
  0
  0
  3
  7
  10
  14
  18
  22
  26
  31
  35
  40
  45
  50
  56
  61
  67
  73
  79
  86
  93
  100
  107
  115
  123
  132
  141
  150
  160
  170
  181
Earnings before tax, $m
  204
  221
  238
  257
  276
  296
  316
  338
  360
  384
  431
  456
  483
  510
  538
  568
  599
  631
  664
  700
  736
  775
  815
  857
  900
  946
  994
  1,045
  1,098
  1,153
Tax expense, $m
  55
  60
  64
  69
  74
  80
  85
  91
  97
  104
  116
  123
  130
  138
  145
  153
  162
  170
  179
  189
  199
  209
  220
  231
  243
  256
  268
  282
  296
  311
Net income, $m
  149
  161
  174
  187
  201
  216
  231
  247
  263
  280
  315
  333
  352
  372
  393
  414
  437
  460
  485
  511
  537
  565
  595
  625
  657
  691
  726
  763
  801
  842

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
  1,327
  1,446
  1,570
  1,699
  1,833
  1,972
  2,117
  2,267
  2,423
  2,586
  2,755
  2,931
  3,114
  3,304
  3,503
  3,710
  3,925
  4,150
  4,385
  4,631
  4,887
  5,155
  5,435
  5,728
  6,034
  6,355
  6,691
  7,043
  7,411
  7,797
Adjusted assets (=assets-cash), $m
  1,327
  1,446
  1,570
  1,699
  1,833
  1,972
  2,117
  2,267
  2,423
  2,586
  2,755
  2,931
  3,114
  3,304
  3,503
  3,710
  3,925
  4,150
  4,385
  4,631
  4,887
  5,155
  5,435
  5,728
  6,034
  6,355
  6,691
  7,043
  7,411
  7,797
Revenue / Adjusted assets
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
  0.774
Average production assets, $m
  146
  159
  173
  187
  201
  217
  233
  249
  266
  284
  303
  322
  342
  363
  385
  408
  431
  456
  482
  509
  537
  567
  597
  630
  663
  698
  735
  774
  815
  857
Working capital, $m
  -295
  -321
  -349
  -377
  -407
  -438
  -470
  -504
  -538
  -574
  -612
  -651
  -692
  -734
  -778
  -824
  -872
  -922
  -974
  -1,029
  -1,086
  -1,145
  -1,207
  -1,272
  -1,340
  -1,412
  -1,486
  -1,564
  -1,646
  -1,732
Total debt, $m
  62
  126
  193
  263
  335
  410
  489
  570
  655
  743
  834
  929
  1,028
  1,131
  1,238
  1,350
  1,467
  1,589
  1,716
  1,849
  1,987
  2,132
  2,284
  2,442
  2,608
  2,782
  2,963
  3,154
  3,353
  3,562
Total liabilities, $m
  718
  782
  849
  919
  992
  1,067
  1,145
  1,227
  1,311
  1,399
  1,490
  1,586
  1,685
  1,788
  1,895
  2,007
  2,124
  2,245
  2,372
  2,505
  2,644
  2,789
  2,940
  3,099
  3,265
  3,438
  3,620
  3,810
  4,009
  4,218
Total equity, $m
  609
  664
  721
  780
  841
  905
  972
  1,041
  1,112
  1,187
  1,265
  1,345
  1,429
  1,517
  1,608
  1,703
  1,802
  1,905
  2,013
  2,125
  2,243
  2,366
  2,495
  2,629
  2,770
  2,917
  3,071
  3,233
  3,402
  3,579
Total liabilities and equity, $m
  1,327
  1,446
  1,570
  1,699
  1,833
  1,972
  2,117
  2,268
  2,423
  2,586
  2,755
  2,931
  3,114
  3,305
  3,503
  3,710
  3,926
  4,150
  4,385
  4,630
  4,887
  5,155
  5,435
  5,728
  6,035
  6,355
  6,691
  7,043
  7,411
  7,797
Debt-to-equity ratio
  0.100
  0.190
  0.270
  0.340
  0.400
  0.450
  0.500
  0.550
  0.590
  0.630
  0.660
  0.690
  0.720
  0.750
  0.770
  0.790
  0.810
  0.830
  0.850
  0.870
  0.890
  0.900
  0.920
  0.930
  0.940
  0.950
  0.960
  0.980
  0.990
  1.000
Adjusted equity ratio
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  149
  161
  174
  187
  201
  216
  231
  247
  263
  280
  315
  333
  352
  372
  393
  414
  437
  460
  485
  511
  537
  565
  595
  625
  657
  691
  726
  763
  801
  842
Depreciation, amort., depletion, $m
  31
  32
  33
  34
  34
  35
  36
  37
  38
  39
  16
  18
  19
  20
  21
  22
  23
  25
  26
  28
  29
  31
  32
  34
  36
  38
  40
  42
  44
  47
Funds from operations, $m
  180
  193
  207
  221
  236
  251
  267
  284
  301
  319
  331
  351
  371
  392
  414
  437
  460
  485
  511
  538
  567
  596
  627
  659
  693
  729
  766
  805
  845
  888
Change in working capital, $m
  -25
  -26
  -28
  -29
  -30
  -31
  -32
  -33
  -35
  -36
  -38
  -39
  -41
  -42
  -44
  -46
  -48
  -50
  -52
  -54
  -57
  -60
  -62
  -65
  -68
  -71
  -75
  -78
  -82
  -86
Cash from operations, $m
  205
  220
  234
  250
  266
  282
  299
  317
  336
  355
  369
  390
  411
  434
  458
  483
  508
  535
  563
  593
  624
  656
  689
  725
  761
  800
  840
  883
  927
  974
Maintenance CAPEX, $m
  -7
  -8
  -9
  -9
  -10
  -11
  -12
  -13
  -14
  -14
  -15
  -16
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -28
  -29
  -31
  -32
  -34
  -36
  -38
  -40
  -42
  -44
New CAPEX, $m
  -12
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -34
  -35
  -37
  -39
  -40
  -42
Cash from investing activities, $m
  -19
  -21
  -23
  -23
  -25
  -26
  -28
  -30
  -31
  -32
  -34
  -35
  -38
  -40
  -42
  -44
  -46
  -48
  -51
  -53
  -56
  -58
  -62
  -64
  -68
  -71
  -75
  -79
  -82
  -86
Free cash flow, $m
  186
  199
  212
  226
  241
  256
  272
  288
  305
  323
  335
  354
  374
  395
  416
  439
  462
  487
  513
  540
  568
  597
  628
  660
  694
  729
  766
  804
  845
  887
Issuance/(repayment) of debt, $m
  62
  64
  67
  70
  72
  75
  78
  81
  85
  88
  91
  95
  99
  103
  107
  112
  117
  122
  127
  133
  139
  145
  152
  158
  166
  174
  182
  190
  199
  209
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  
  62
  64
  67
  70
  72
  75
  78
  81
  85
  88
  91
  95
  99
  103
  107
  112
  117
  122
  127
  133
  139
  145
  152
  158
  166
  174
  182
  190
  199
  209
Total cash flow (excl. dividends), $m
  247
  263
  279
  296
  313
  331
  350
  369
  390
  411
  426
  449
  473
  498
  524
  551
  579
  609
  640
  672
  706
  742
  779
  818
  859
  902
  947
  995
  1,044
  1,096
Retained Cash Flow (-), $m
  -52
  -55
  -57
  -59
  -61
  -64
  -66
  -69
  -72
  -75
  -78
  -81
  -84
  -87
  -91
  -95
  -99
  -103
  -108
  -113
  -118
  -123
  -129
  -134
  -141
  -147
  -154
  -161
  -169
  -177
Prev. year cash balance distribution, $m
  645
  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
  840
  208
  222
  237
  252
  267
  283
  300
  318
  336
  349
  368
  389
  410
  433
  456
  480
  506
  532
  560
  589
  619
  651
  684
  719
  755
  793
  833
  875
  919
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
  805
  191
  193
  195
  195
  194
  192
  188
  183
  176
  166
  157
  148
  138
  127
  116
  104
  93
  82
  71
  61
  51
  43
  35
  28
  22
  17
  13
  10
  7
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

Autohome Inc. is an online destination for automobile consumers in China. The Company is engaged in the provision of online advertising and dealer subscription services in the People's Republic of China (PRC). The Company, through its Websites, autohome.com.cn and che168.com, and mobile applications, delivers content to automobile buyers and owners. These services are offered to automakers and dealers, and advertising agencies that represent automakers and dealers in the automobile industry. The Company's autohome.com.cn targets automobile consumers with a focus on new automobiles. The Company's professionally produced content is created by editorial team and includes automobile-related articles and reviews, pricing trends in various local markets, and photos and video clips. Its database also includes new and used automobile listings and promotional information. Its dealer subscription services allow dealers to market their inventory and services through its Websites.

FINANCIAL RATIOS  of  Autohome Inc. (ATHM)

Valuation Ratios
P/E Ratio 59.3
Price to Sales 12.2
Price to Book 11.5
Price to Tangible Book
Price to Cash Flow 44.9
Price to Free Cash Flow 47.5
Growth Rates
Sales Growth Rate 72.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 13.2%
Financial Strength
Quick Ratio 207
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0.4%
Interest Coverage 0
Management Effectiveness
Return On Assets 14.5%
Ret/ On Assets - 3 Yr. Avg. 15.7%
Return On Total Capital 21.6%
Ret/ On T. Cap. - 3 Yr. Avg. 23.2%
Return On Equity 21.9%
Return On Equity - 3 Yr. Avg. 23.5%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 59.9%
Gross Margin - 3 Yr. Avg. 74.1%
EBITDA Margin 22.2%
EBITDA Margin - 3 Yr. Avg. 35.5%
Operating Margin 19.3%
Oper. Margin - 3 Yr. Avg. 32.1%
Pre-Tax Margin 21%
Pre-Tax Margin - 3 Yr. Avg. 34%
Net Profit Margin 20.6%
Net Profit Margin - 3 Yr. Avg. 28%
Effective Tax Rate 2.8%
Eff/ Tax Rate - 3 Yr. Avg. 15.4%
Payout Ratio 0%

ATHM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ATHM stock intrinsic value calculation we used $939 million for the last fiscal year's total revenue generated by Autohome Inc.. The default revenue input number comes from 0001 income statement of Autohome 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 ATHM stock valuation model: a) initial revenue growth rate of 9.4% 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 ATHM is calculated based on our internal credit rating of Autohome 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 Autohome 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 ATHM stock the variable cost ratio is equal to 80.4%.

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 ATHM 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 Autohome Inc..

Corporate tax rate of 27% is the nominal tax rate for Autohome 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 ATHM 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 ATHM are equal to 14.2%.

Life of production assets of 18.4 years is the average useful life of capital assets used in Autohome 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 ATHM is equal to -28.7%. 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 - $1201.87983676 million for Autohome 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 117.126 million for Autohome 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 Autohome Inc. at the current share price and the inputted number of shares is $10.7 billion.

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