Intrinsic value of Braskem S.A. - BAK

Previous Close

$25.27

  Intrinsic Value

$169.32

stock screener

  Rating & Target

str. buy

+570%

Previous close

$25.27

 
Intrinsic value

$169.32

 
Up/down potential

+570%

 
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 10.1

 

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
  34,202
  39,244
  44,647
  50,403
  56,503
  62,940
  69,709
  76,803
  84,223
  91,966
  100,036
  108,436
  117,173
  126,256
  135,696
  145,505
  155,699
  166,295
  177,312
  188,771
  200,694
  213,106
  226,033
  239,503
  253,547
  268,194
Variable operating expenses, $m
  9,444
  11,301
  13,361
  15,621
  18,080
  20,733
  23,575
  26,604
  29,813
  33,200
  36,674
  40,407
  44,310
  48,384
  52,629
  57,049
  61,645
  66,424
  71,390
  76,551
  81,914
  87,489
  93,285
  99,313
  105,586
  112,116
  118,917
  126,004
  133,392
  141,098
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
  25,260
  28,202
  31,333
  34,646
  38,139
  41,722
  45,566
  49,582
  53,772
  58,136
  62,677
  67,397
  72,302
  77,397
  82,691
  88,189
  93,902
  99,839
  106,011
  112,431
  119,112
  126,067
  133,311
  140,860
  148,730
Operating income, $m
  4,282
  5,866
  7,630
  9,573
  11,692
  13,984
  16,445
  19,071
  21,858
  24,802
  27,987
  31,238
  34,641
  38,194
  41,900
  45,760
  49,776
  53,954
  58,298
  62,815
  67,511
  72,394
  77,474
  82,760
  88,263
  93,994
  99,966
  106,192
  112,687
  119,464
EBITDA, $m
  5,326
  7,100
  9,075
  11,249
  13,620
  16,183
  18,935
  21,871
  24,987
  28,277
  31,741
  35,374
  39,176
  43,146
  47,286
  51,598
  56,086
  60,753
  65,605
  70,650
  75,894
  81,348
  87,021
  92,924
  99,069
  105,469
  112,137
  119,089
  126,339
  133,905
Interest expense (income), $m
  486
  1,120
  1,359
  1,715
  2,109
  2,542
  3,013
  3,521
  4,066
  4,645
  5,260
  5,909
  6,591
  7,306
  8,053
  8,833
  9,647
  10,493
  11,373
  12,288
  13,240
  14,228
  15,255
  16,323
  17,433
  18,588
  19,789
  21,040
  22,342
  23,699
  25,114
Earnings before tax, $m
  3,163
  4,507
  5,915
  7,464
  9,150
  10,971
  12,924
  15,005
  17,212
  19,542
  22,078
  24,647
  27,335
  30,141
  33,067
  36,113
  39,283
  42,581
  46,010
  49,575
  53,283
  57,139
  61,151
  65,327
  69,675
  74,205
  78,927
  83,850
  88,987
  94,350
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
  9,751
  10,607
  11,497
  12,423
  13,385
  14,386
  15,427
  16,511
  17,638
  18,812
  20,035
  21,310
  22,640
  24,027
  25,474
Net income, $m
  2,309
  3,290
  4,318
  5,448
  6,679
  8,009
  9,435
  10,954
  12,565
  14,266
  16,117
  17,993
  19,955
  22,003
  24,139
  26,363
  28,677
  31,084
  33,587
  36,190
  38,896
  41,711
  44,640
  47,688
  50,863
  54,170
  57,616
  61,211
  64,961
  68,875

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
  23,171
  27,426
  32,096
  37,176
  42,656
  48,530
  54,786
  61,417
  68,413
  75,770
  83,482
  91,546
  99,963
  108,735
  117,865
  127,362
  137,235
  147,496
  158,158
  169,238
  180,756
  192,731
  205,186
  218,145
  231,637
  245,688
  260,330
  275,594
  291,516
Adjusted assets (=assets-cash), $m
  19,333
  23,171
  27,426
  32,096
  37,176
  42,656
  48,530
  54,786
  61,417
  68,413
  75,770
  83,482
  91,546
  99,963
  108,735
  117,865
  127,362
  137,235
  147,496
  158,158
  169,238
  180,756
  192,731
  205,186
  218,145
  231,637
  245,688
  260,330
  275,594
  291,516
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
  24,724
  28,128
  31,754
  35,597
  39,652
  43,916
  48,386
  53,060
  57,939
  63,023
  68,315
  73,819
  79,541
  85,488
  91,668
  98,091
  104,766
  111,707
  118,926
  126,437
  134,257
  142,401
  150,887
  159,734
  168,963
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
  20,478
  24,681
  29,252
  34,185
  39,471
  45,102
  51,069
  57,366
  63,987
  70,928
  78,186
  85,761
  93,655
  101,873
  110,420
  119,306
  128,540
  138,136
  148,109
  158,474
  169,252
  180,461
  192,125
  204,267
  216,913
  230,091
  243,829
  258,158
Total liabilities, $m
  17,400
  20,854
  24,683
  28,887
  33,458
  38,391
  43,677
  49,307
  55,275
  61,572
  68,193
  75,134
  82,392
  89,967
  97,861
  106,079
  114,626
  123,512
  132,746
  142,342
  152,315
  162,680
  173,458
  184,667
  196,331
  208,473
  221,119
  234,297
  248,035
  262,364
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
  11,787
  12,736
  13,724
  14,750
  15,816
  16,924
  18,076
  19,273
  20,519
  21,815
  23,164
  24,569
  26,033
  27,559
  29,152
Total liabilities and equity, $m
  19,333
  23,171
  27,426
  32,097
  37,176
  42,657
  48,530
  54,786
  61,417
  68,413
  75,770
  83,482
  91,547
  99,963
  108,734
  117,866
  127,362
  137,236
  147,496
  158,158
  169,239
  180,756
  192,731
  205,186
  218,146
  231,637
  245,688
  260,330
  275,594
  291,516
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
  9,435
  10,954
  12,565
  14,266
  16,117
  17,993
  19,955
  22,003
  24,139
  26,363
  28,677
  31,084
  33,587
  36,190
  38,896
  41,711
  44,640
  47,688
  50,863
  54,170
  57,616
  61,211
  64,961
  68,875
Depreciation, amort., depletion, $m
  1,044
  1,234
  1,445
  1,676
  1,928
  2,199
  2,490
  2,800
  3,129
  3,475
  3,754
  4,136
  4,535
  4,952
  5,387
  5,839
  6,309
  6,798
  7,307
  7,835
  8,384
  8,954
  9,548
  10,165
  10,807
  11,475
  12,171
  12,896
  13,653
  14,441
Funds from operations, $m
  3,353
  4,524
  5,763
  7,125
  8,607
  10,208
  11,925
  13,754
  15,694
  17,741
  19,871
  22,128
  24,490
  26,955
  29,525
  32,201
  34,986
  37,882
  40,894
  44,025
  47,280
  50,666
  54,188
  57,853
  61,669
  65,645
  69,787
  74,107
  78,613
  83,316
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
  5,920
  7,297
  8,794
  10,410
  12,141
  13,985
  15,938
  17,998
  20,141
  22,412
  24,786
  27,265
  29,848
  32,537
  35,336
  38,246
  41,271
  44,417
  47,688
  51,089
  54,628
  58,311
  62,146
  66,141
  70,305
  74,646
  79,175
  83,902
Maintenance CAPEX, $m
  -788
  -958
  -1,148
  -1,359
  -1,590
  -1,842
  -2,113
  -2,404
  -2,714
  -3,042
  -3,389
  -3,754
  -4,136
  -4,535
  -4,952
  -5,387
  -5,839
  -6,309
  -6,798
  -7,307
  -7,835
  -8,384
  -8,954
  -9,548
  -10,165
  -10,807
  -11,475
  -12,171
  -12,896
  -13,653
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
  -7,512
  -7,820
  -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
  -8,224
  -8,810
  -9,413
  -10,036
  -10,679
  -11,343
  -12,031
  -12,745
  -13,487
  -14,257
  -15,059
  -15,895
  -16,767
  -17,677
  -18,627
  -19,619
  -20,657
  -21,743
  -22,881
Free cash flow, $m
  707
  1,483
  2,305
  3,231
  4,260
  5,392
  6,624
  7,954
  9,381
  10,901
  12,488
  14,189
  15,977
  17,851
  19,812
  21,859
  23,992
  26,214
  28,526
  30,930
  33,431
  36,030
  38,733
  41,545
  44,470
  47,515
  50,685
  53,989
  57,431
  61,022
Issuance/(repayment) of debt, $m
  2,325
  3,454
  3,830
  4,203
  4,571
  4,933
  5,286
  5,631
  5,968
  6,297
  6,621
  6,941
  7,258
  7,575
  7,894
  8,218
  8,547
  8,886
  9,234
  9,596
  9,973
  10,366
  10,777
  11,209
  11,664
  12,142
  12,646
  13,178
  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
  5,968
  6,297
  6,621
  6,941
  7,258
  7,575
  7,894
  8,218
  8,547
  8,886
  9,234
  9,596
  9,973
  10,366
  10,777
  11,209
  11,664
  12,142
  12,646
  13,178
  13,738
  14,329
Total cash flow (excl. dividends), $m
  3,032
  4,937
  6,135
  7,434
  8,832
  10,324
  11,910
  13,585
  15,348
  17,198
  19,109
  21,129
  23,235
  25,426
  27,706
  30,076
  32,540
  35,100
  37,760
  40,527
  43,403
  46,396
  49,511
  52,754
  56,134
  59,657
  63,332
  67,166
  71,169
  75,351
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
  4,554
  5,710
  6,967
  8,324
  9,776
  11,322
  12,959
  14,685
  16,498
  18,374
  20,358
  22,428
  24,585
  26,829
  29,163
  31,590
  34,112
  36,734
  39,460
  42,295
  45,244
  48,313
  51,509
  54,838
  58,308
  61,926
  65,702
  69,643
  73,759
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 S.A. (BAK)

Valuation Ratios
P/E Ratio -154.7
Price to Sales 1.3
Price to Book 23.2
Price to Tangible Book
Price to Cash Flow 13.4
Price to Free Cash Flow 34
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 $14639 million for the last fiscal year's total revenue generated by Braskem S.A.. The default revenue input number comes from 0001 income statement of Braskem S.A.. 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 S.A., 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 S.A..
    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 S.A..

Corporate tax rate of 27% is the nominal tax rate for Braskem S.A.. 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 S.A. 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 S.A. - 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 397.981 million for Braskem S.A. 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 S.A. at the current share price and the inputted number of shares is $10.1 billion.

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