Intrinsic value of Braskem ADR - BAK

Previous Close

$25.37

  Intrinsic Value

$2,412

stock screener

  Rating & Target

str. buy

+999%

Previous close

$25.37

 
Intrinsic value

$2,412

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of BAK 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 0.7

 

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, %
  21.50
  19.85
  18.37
  17.03
  15.83
  14.74
  13.77
  12.89
  12.10
  11.39
  10.75
  10.18
  9.66
  9.19
  8.77
  8.40
  8.06
  7.75
  7.48
  7.23
  7.01
  6.81
  6.62
  6.46
  6.32
  6.18
  6.07
  5.96
  5.86
  5.78
Revenue, $m
  17,786
  21,317
  25,232
  29,528
  34,201
  39,243
  44,647
  50,403
  56,503
  62,940
  69,708
  76,802
  84,222
  91,965
  100,035
  108,435
  117,172
  126,255
  135,694
  145,503
  155,697
  166,293
  177,310
  188,768
  200,691
  213,103
  226,030
  239,500
  253,543
  268,191
Variable operating expenses, $m
  9,444
  11,301
  13,361
  15,621
  18,080
  20,732
  23,575
  26,603
  29,813
  33,199
  36,674
  40,406
  44,310
  48,383
  52,629
  57,048
  61,645
  66,423
  71,390
  76,550
  81,913
  87,488
  93,284
  99,312
  105,585
  112,115
  118,916
  126,003
  133,391
  141,097
Fixed operating expenses, $m
  4,060
  4,150
  4,241
  4,334
  4,430
  4,527
  4,627
  4,729
  4,833
  4,939
  5,048
  5,159
  5,272
  5,388
  5,507
  5,628
  5,752
  5,878
  6,007
  6,140
  6,275
  6,413
  6,554
  6,698
  6,845
  6,996
  7,150
  7,307
  7,468
  7,632
Total operating expenses, $m
  13,504
  15,451
  17,602
  19,955
  22,510
  25,259
  28,202
  31,332
  34,646
  38,138
  41,722
  45,565
  49,582
  53,771
  58,136
  62,676
  67,397
  72,301
  77,397
  82,690
  88,188
  93,901
  99,838
  106,010
  112,430
  119,111
  126,066
  133,310
  140,859
  148,729
Operating income, $m
  4,282
  5,866
  7,630
  9,573
  11,692
  13,984
  16,445
  19,071
  21,857
  24,802
  27,986
  31,238
  34,640
  38,194
  41,899
  45,759
  49,775
  53,953
  58,297
  62,814
  67,509
  72,393
  77,472
  82,758
  88,261
  93,992
  99,964
  106,191
  112,685
  119,462
EBITDA, $m
  5,326
  7,100
  9,075
  11,249
  13,620
  16,183
  18,935
  21,871
  24,986
  28,277
  31,740
  35,373
  39,175
  43,146
  47,286
  51,598
  56,085
  60,752
  65,604
  70,648
  75,893
  81,347
  87,020
  92,923
  99,067
  105,467
  112,135
  119,087
  126,337
  133,903
Interest expense (income), $m
  486
  1,120
  1,359
  1,715
  2,109
  2,542
  3,013
  3,521
  4,065
  4,645
  5,260
  5,909
  6,591
  7,305
  8,053
  8,833
  9,646
  10,493
  11,373
  12,288
  13,239
  14,228
  15,255
  16,323
  17,433
  18,587
  19,789
  21,039
  22,342
  23,699
  25,114
Earnings before tax, $m
  3,163
  4,507
  5,915
  7,463
  9,150
  10,971
  12,924
  15,005
  17,212
  19,541
  22,078
  24,647
  27,335
  30,141
  33,066
  36,112
  39,283
  42,580
  46,009
  49,574
  53,282
  57,138
  61,150
  65,325
  69,674
  74,204
  78,925
  83,849
  88,986
  94,348
Tax expense, $m
  854
  1,217
  1,597
  2,015
  2,470
  2,962
  3,489
  4,051
  4,647
  5,276
  5,961
  6,655
  7,380
  8,138
  8,928
  9,750
  10,606
  11,497
  12,422
  13,385
  14,386
  15,427
  16,510
  17,638
  18,812
  20,035
  21,310
  22,639
  24,026
  25,474
Net income, $m
  2,309
  3,290
  4,318
  5,448
  6,679
  8,009
  9,434
  10,954
  12,565
  14,265
  16,117
  17,992
  19,954
  22,003
  24,138
  26,362
  28,676
  31,083
  33,586
  36,189
  38,895
  41,710
  44,639
  47,688
  50,862
  54,169
  57,615
  61,210
  64,960
  68,874

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
  19,333
  23,170
  27,426
  32,096
  37,175
  42,656
  48,529
  54,785
  61,416
  68,413
  75,769
  83,481
  91,545
  99,962
  108,733
  117,864
  127,361
  137,233
  147,494
  158,156
  169,236
  180,754
  192,728
  205,183
  218,143
  231,634
  245,685
  260,326
  275,591
  291,512
Adjusted assets (=assets-cash), $m
  19,333
  23,170
  27,426
  32,096
  37,175
  42,656
  48,529
  54,785
  61,416
  68,413
  75,769
  83,481
  91,545
  99,962
  108,733
  117,864
  127,361
  137,233
  147,494
  158,156
  169,236
  180,754
  192,728
  205,183
  218,143
  231,634
  245,685
  260,326
  275,591
  291,512
Revenue / Adjusted assets
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
Average production assets, $m
  11,205
  13,430
  15,896
  18,603
  21,547
  24,723
  28,127
  31,754
  35,597
  39,652
  43,916
  48,386
  53,060
  57,938
  63,022
  68,314
  73,818
  79,540
  85,487
  91,667
  98,089
  104,765
  111,705
  118,924
  126,436
  134,255
  142,399
  150,885
  159,732
  168,960
Working capital, $m
  -711
  -853
  -1,009
  -1,181
  -1,368
  -1,570
  -1,786
  -2,016
  -2,260
  -2,518
  -2,788
  -3,072
  -3,369
  -3,679
  -4,001
  -4,337
  -4,687
  -5,050
  -5,428
  -5,820
  -6,228
  -6,652
  -7,092
  -7,551
  -8,028
  -8,524
  -9,041
  -9,580
  -10,142
  -10,728
Total debt, $m
  13,194
  16,648
  20,477
  24,680
  29,252
  34,185
  39,470
  45,101
  51,069
  57,366
  63,987
  70,927
  78,185
  85,760
  93,654
  101,872
  110,419
  119,304
  128,539
  138,135
  148,107
  158,472
  169,250
  180,459
  192,123
  204,265
  216,911
  230,088
  243,826
  258,155
Total liabilities, $m
  17,400
  20,853
  24,683
  28,886
  33,458
  38,390
  43,676
  49,307
  55,274
  61,571
  68,192
  75,133
  82,391
  89,966
  97,860
  106,077
  114,625
  123,510
  132,744
  142,340
  152,313
  162,678
  173,455
  184,665
  196,328
  208,470
  221,116
  234,294
  248,032
  262,361
Total equity, $m
  1,933
  2,317
  2,743
  3,210
  3,718
  4,266
  4,853
  5,479
  6,142
  6,841
  7,577
  8,348
  9,155
  9,996
  10,873
  11,786
  12,736
  13,723
  14,749
  15,816
  16,924
  18,075
  19,273
  20,518
  21,814
  23,163
  24,568
  26,033
  27,559
  29,151
Total liabilities and equity, $m
  19,333
  23,170
  27,426
  32,096
  37,176
  42,656
  48,529
  54,786
  61,416
  68,412
  75,769
  83,481
  91,546
  99,962
  108,733
  117,863
  127,361
  137,233
  147,493
  158,156
  169,237
  180,753
  192,728
  205,183
  218,142
  231,633
  245,684
  260,327
  275,591
  291,512
Debt-to-equity ratio
  6.820
  7.180
  7.470
  7.690
  7.870
  8.010
  8.130
  8.230
  8.320
  8.390
  8.440
  8.500
  8.540
  8.580
  8.610
  8.640
  8.670
  8.690
  8.710
  8.730
  8.750
  8.770
  8.780
  8.800
  8.810
  8.820
  8.830
  8.840
  8.850
  8.860
Adjusted equity ratio
  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
  2,309
  3,290
  4,318
  5,448
  6,679
  8,009
  9,434
  10,954
  12,565
  14,265
  16,117
  17,992
  19,954
  22,003
  24,138
  26,362
  28,676
  31,083
  33,586
  36,189
  38,895
  41,710
  44,639
  47,688
  50,862
  54,169
  57,615
  61,210
  64,960
  68,874
Depreciation, amort., depletion, $m
  1,044
  1,234
  1,445
  1,676
  1,928
  2,199
  2,490
  2,800
  3,129
  3,475
  3,753
  4,136
  4,535
  4,952
  5,386
  5,839
  6,309
  6,798
  7,307
  7,835
  8,384
  8,954
  9,547
  10,164
  10,806
  11,475
  12,171
  12,896
  13,652
  14,441
Funds from operations, $m
  3,353
  4,524
  5,763
  7,125
  8,607
  10,208
  11,925
  13,754
  15,693
  17,741
  19,870
  22,128
  24,489
  26,955
  29,525
  32,201
  34,986
  37,882
  40,893
  44,024
  47,279
  50,665
  54,187
  57,852
  61,668
  65,643
  69,786
  74,106
  78,612
  83,315
Change in working capital, $m
  -126
  -141
  -157
  -172
  -187
  -202
  -216
  -230
  -244
  -257
  -271
  -284
  -297
  -310
  -323
  -336
  -349
  -363
  -378
  -392
  -408
  -424
  -441
  -458
  -477
  -496
  -517
  -539
  -562
  -586
Cash from operations, $m
  3,479
  4,665
  5,919
  7,296
  8,794
  10,410
  12,141
  13,984
  15,937
  17,998
  20,141
  22,412
  24,786
  27,264
  29,847
  32,537
  35,335
  38,245
  41,271
  44,416
  47,687
  51,089
  54,627
  58,310
  62,145
  66,140
  70,303
  74,645
  79,174
  83,901
Maintenance CAPEX, $m
  -788
  -958
  -1,148
  -1,359
  -1,590
  -1,842
  -2,113
  -2,404
  -2,714
  -3,042
  -3,389
  -3,753
  -4,136
  -4,535
  -4,952
  -5,386
  -5,839
  -6,309
  -6,798
  -7,307
  -7,835
  -8,384
  -8,954
  -9,547
  -10,164
  -10,806
  -11,475
  -12,171
  -12,896
  -13,652
New CAPEX, $m
  -1,983
  -2,224
  -2,466
  -2,707
  -2,944
  -3,177
  -3,404
  -3,626
  -3,843
  -4,055
  -4,264
  -4,470
  -4,674
  -4,878
  -5,084
  -5,292
  -5,504
  -5,722
  -5,947
  -6,180
  -6,422
  -6,675
  -6,941
  -7,219
  -7,511
  -7,819
  -8,144
  -8,486
  -8,847
  -9,228
Cash from investing activities, $m
  -2,771
  -3,182
  -3,614
  -4,066
  -4,534
  -5,019
  -5,517
  -6,030
  -6,557
  -7,097
  -7,653
  -8,223
  -8,810
  -9,413
  -10,036
  -10,678
  -11,343
  -12,031
  -12,745
  -13,487
  -14,257
  -15,059
  -15,895
  -16,766
  -17,675
  -18,625
  -19,619
  -20,657
  -21,743
  -22,880
Free cash flow, $m
  707
  1,483
  2,305
  3,231
  4,260
  5,392
  6,624
  7,954
  9,380
  10,900
  12,488
  14,188
  15,976
  17,851
  19,812
  21,858
  23,992
  26,214
  28,525
  30,930
  33,430
  36,029
  38,733
  41,544
  44,469
  47,514
  50,685
  53,988
  57,430
  61,021
Issuance/(repayment) of debt, $m
  2,325
  3,454
  3,830
  4,203
  4,571
  4,933
  5,286
  5,631
  5,967
  6,297
  6,621
  6,941
  7,258
  7,575
  7,894
  8,217
  8,547
  8,885
  9,234
  9,596
  9,972
  10,366
  10,777
  11,209
  11,664
  12,142
  12,646
  13,177
  13,738
  14,329
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  
  2,325
  3,454
  3,830
  4,203
  4,571
  4,933
  5,286
  5,631
  5,967
  6,297
  6,621
  6,941
  7,258
  7,575
  7,894
  8,217
  8,547
  8,885
  9,234
  9,596
  9,972
  10,366
  10,777
  11,209
  11,664
  12,142
  12,646
  13,177
  13,738
  14,329
Total cash flow (excl. dividends), $m
  3,032
  4,937
  6,135
  7,434
  8,831
  10,324
  11,909
  13,585
  15,348
  17,197
  19,109
  21,129
  23,234
  25,426
  27,706
  30,076
  32,539
  35,099
  37,760
  40,526
  43,402
  46,395
  49,510
  52,753
  56,133
  59,656
  63,330
  67,165
  71,168
  75,350
Retained Cash Flow (-), $m
  -1,092
  -384
  -426
  -467
  -508
  -548
  -587
  -626
  -663
  -700
  -736
  -771
  -806
  -842
  -877
  -913
  -950
  -987
  -1,026
  -1,066
  -1,108
  -1,152
  -1,197
  -1,245
  -1,296
  -1,349
  -1,405
  -1,464
  -1,526
  -1,592
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
  1,940
  4,553
  5,710
  6,967
  8,324
  9,776
  11,322
  12,959
  14,685
  16,498
  18,373
  20,358
  22,428
  24,584
  26,829
  29,163
  31,589
  34,112
  36,734
  39,460
  42,294
  45,243
  48,312
  51,508
  54,837
  58,307
  61,925
  65,701
  69,642
  73,758
Discount rate, %
  9.00
  9.45
  9.92
  10.42
  10.94
  11.49
  12.06
  12.66
  13.30
  13.96
  14.66
  15.39
  16.16
  16.97
  17.82
  18.71
  19.65
  20.63
  21.66
  22.74
  23.88
  25.07
  26.33
  27.64
  29.03
  30.48
  32.00
  33.60
  35.28
  37.05
PV of cash for distribution, $m
  1,780
  3,801
  4,299
  4,687
  4,953
  5,091
  5,102
  4,992
  4,774
  4,465
  4,080
  3,652
  3,198
  2,739
  2,293
  1,875
  1,497
  1,166
  886
  655
  471
  330
  224
  147
  94
  58
  34
  20
  11
  6
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

Braskem S.A. produces thermoplastic resins. The Company's segments are Basic petrochemicals, Polyolefins, Vinyls, the United States and Europe, and Chemical distribution. It is also engaged in the import and export of chemicals, petrochemicals and fuels, the production, supply and sale of utilities such as steam, water, compressed air, industrial gases, the provision of industrial services, and the production, supply and sale of electric energy. It also invests in other companies, either as a partner or as shareholder. It operates over 40 industrial units, over 30 of which are located in the Brazilian states of Alagoas, Bahia, Rio de Janeiro, Rio Grande do Sul and Sao Paulo; over five are located in the United States, in the states of Pennsylvania, Texas and West Virginia, and over two are located in Germany, in the cities of Wesseling and Schkopau. These units produce thermoplastic resins–polyethylene, polypropylene and polyvinyl chloride, as well as basic petrochemicals.

FINANCIAL RATIOS  of  Braskem ADR (BAK)

Valuation Ratios
P/E Ratio -155.3
Price to Sales 1.3
Price to Book 23.3
Price to Tangible Book
Price to Cash Flow 13.5
Price to Free Cash Flow 34.1
Growth Rates
Sales Growth Rate 1.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -30.3%
Cap. Spend. - 3 Yr. Gr. Rate -12.7%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 1161.5%
Total Debt to Equity 1290.5%
Interest Coverage 1
Management Effectiveness
Return On Assets 14.1%
Ret/ On Assets - 3 Yr. Avg. 7.6%
Return On Total Capital -1%
Ret/ On T. Cap. - 3 Yr. Avg. 3%
Return On Equity -18.8%
Return On Equity - 3 Yr. Avg. 24.5%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 26.7%
Gross Margin - 3 Yr. Avg. 20.4%
EBITDA Margin 8.6%
EBITDA Margin - 3 Yr. Avg. 10.9%
Operating Margin 12.5%
Oper. Margin - 3 Yr. Avg. 11.6%
Pre-Tax Margin -0.3%
Pre-Tax Margin - 3 Yr. Avg. 3.8%
Net Profit Margin -0.9%
Net Profit Margin - 3 Yr. Avg. 2.4%
Effective Tax Rate -443.2%
Eff/ Tax Rate - 3 Yr. Avg. -119.9%
Payout Ratio -486.2%

BAK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BAK stock intrinsic value calculation we used $14638.8169533 million for the last fiscal year's total revenue generated by Braskem ADR. The default revenue input number comes from 0001 income statement of Braskem 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 BAK stock valuation model: a) initial revenue growth rate of 21.5% 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 9%, whose default value for BAK is calculated based on our internal credit rating of Braskem 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 Braskem 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 BAK stock the variable cost ratio is equal to 53.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $3973 million in the base year in the intrinsic value calculation for BAK 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 10.3% for Braskem ADR.

Corporate tax rate of 27% is the nominal tax rate for Braskem 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 BAK 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 BAK are equal to 63%.

Life of production assets of 11.7 years is the average useful life of capital assets used in Braskem 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 BAK is equal to -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 - $841.09029484 million for Braskem 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 27.937 million for Braskem 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 Braskem ADR at the current share price and the inputted number of shares is $0.7 billion.

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WLK Westlake Chemi 67.36 137.98  buy
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COMPANY NEWS

▶ Braskem does not want to redraft Pemex ethane deal   [Nov-13-18 01:27PM  Reuters]
▶ Brazil's Braskem sees profit rise 68 pct in Q3   [Nov-12-18 06:38PM  Reuters]
▶ 6 Undervalued Stocks With a Margin of Safety   [Sep-19-18 03:51PM  GuruFocus.com]
▶ Eagles go even greener with Braskem partnership   [Sep-04-18 11:59AM  American City Business Journals]
▶ [$$] LyondellBasell, Braskem Confirm Merger Talks   [Jun-17-18 07:42PM  The Wall Street Journal]
▶ [$$] LyondellBasell, Braskem Confirm Merger Talks   [Jun-15-18 07:07PM  The Wall Street Journal]
▶ LyondellBasell confirms talks about Braskem deal   [01:31PM  American City Business Journals]
▶ Braskem: 1Q Earnings Snapshot   [05:04AM  Associated Press]
▶ Record EBITDA of US$3.9 billion in 2017   [05:28AM  PR Newswire]
▶ [$$] How do you steer a company hit by corruption?   [Feb-24-18 10:00PM  Financial Times]
▶ The Long-Term Trend That Makes Braskem an Awesome Buy   [Feb-07-18 06:18AM  Motley Fool]
▶ The Long-Term Trend That Makes Braskem an Awesome Buy   [Feb-06-18 06:18AM  Motley Fool]
▶ Braskem Shows Market Leadership With Jump To 84 RS Rating   [Jan-17-18 03:00AM  Investor's Business Daily]
▶ 3 Top Green Stocks to Consider Buying Now   [Jan-09-18 01:32PM  Motley Fool]
▶ 3 Top Dividend Stocks to Buy in January   [06:05AM  Motley Fool]
▶ ETFs with exposure to Braskem SA : December 18, 2017   [Dec-18-17 02:43PM  Capital Cube]
▶ New Strong Buy Stocks for November 28th   [Nov-28-17 06:37AM  Zacks]
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