Intrinsic value of China Biologic Products - CBPO

Previous Close

$72.83

  Intrinsic Value

$45.29

stock screener

  Rating & Target

sell

-38%

Previous close

$72.83

 
Intrinsic value

$45.29

 
Up/down potential

-38%

 
Rating

sell

We calculate the intrinsic value of CBPO 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 2.4

 

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
  378
  387
  396
  408
  420
  434
  448
  464
  481
  500
  520
  541
  563
  587
  612
  639
  668
  698
  729
  763
  798
  836
  875
  916
  960
  1,006
  1,054
  1,105
  1,159
  1,215
Variable operating expenses, $m
  218
  223
  229
  235
  242
  250
  259
  268
  278
  288
  297
  309
  322
  335
  350
  365
  381
  399
  417
  436
  456
  477
  500
  524
  548
  575
  602
  631
  662
  694
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
  218
  223
  229
  235
  242
  250
  259
  268
  278
  288
  297
  309
  322
  335
  350
  365
  381
  399
  417
  436
  456
  477
  500
  524
  548
  575
  602
  631
  662
  694
Operating income, $m
  159
  163
  167
  172
  178
  183
  190
  197
  204
  212
  223
  232
  241
  252
  263
  274
  286
  299
  313
  327
  342
  358
  375
  393
  412
  431
  452
  474
  497
  521
EBITDA, $m
  174
  178
  183
  188
  194
  200
  207
  214
  222
  231
  240
  249
  260
  271
  283
  295
  308
  322
  337
  352
  368
  386
  404
  423
  443
  464
  486
  510
  535
  561
Interest expense (income), $m
  0
  0
  0
  0
  1
  1
  1
  1
  2
  2
  2
  3
  3
  4
  4
  5
  5
  6
  6
  7
  8
  8
  9
  10
  11
  12
  12
  13
  14
  16
  17
Earnings before tax, $m
  159
  163
  167
  172
  177
  182
  188
  195
  202
  209
  220
  229
  238
  248
  258
  269
  281
  293
  306
  320
  334
  349
  365
  382
  400
  419
  439
  459
  481
  504
Tax expense, $m
  43
  44
  45
  46
  48
  49
  51
  53
  55
  57
  59
  62
  64
  67
  70
  73
  76
  79
  83
  86
  90
  94
  99
  103
  108
  113
  118
  124
  130
  136
Net income, $m
  116
  119
  122
  125
  129
  133
  137
  142
  147
  153
  161
  167
  174
  181
  188
  196
  205
  214
  223
  233
  244
  255
  267
  279
  292
  306
  320
  335
  351
  368

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
  632
  646
  663
  682
  702
  725
  750
  776
  805
  836
  869
  904
  942
  982
  1,024
  1,069
  1,117
  1,167
  1,220
  1,276
  1,335
  1,397
  1,463
  1,532
  1,605
  1,682
  1,763
  1,848
  1,938
  2,032
Adjusted assets (=assets-cash), $m
  632
  646
  663
  682
  702
  725
  750
  776
  805
  836
  869
  904
  942
  982
  1,024
  1,069
  1,117
  1,167
  1,220
  1,276
  1,335
  1,397
  1,463
  1,532
  1,605
  1,682
  1,763
  1,848
  1,938
  2,032
Revenue / Adjusted assets
  0.598
  0.599
  0.597
  0.598
  0.598
  0.599
  0.597
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
Average production assets, $m
  165
  169
  173
  178
  184
  189
  196
  203
  210
  218
  227
  236
  246
  257
  268
  279
  292
  305
  319
  333
  349
  365
  382
  400
  420
  440
  461
  483
  506
  531
Working capital, $m
  189
  193
  198
  204
  210
  217
  224
  232
  241
  250
  260
  270
  282
  294
  306
  320
  334
  349
  365
  382
  399
  418
  437
  458
  480
  503
  527
  553
  579
  608
Total debt, $m
  3
  7
  10
  15
  20
  25
  31
  37
  44
  51
  59
  67
  76
  85
  95
  105
  117
  128
  141
  154
  168
  182
  198
  214
  231
  249
  268
  288
  309
  331
Total liabilities, $m
  148
  151
  155
  159
  164
  170
  175
  182
  188
  196
  203
  212
  220
  230
  240
  250
  261
  273
  285
  299
  312
  327
  342
  359
  376
  394
  413
  432
  453
  475
Total equity, $m
  484
  495
  508
  522
  538
  555
  574
  595
  617
  640
  666
  693
  722
  752
  785
  819
  855
  894
  934
  977
  1,023
  1,070
  1,121
  1,174
  1,230
  1,289
  1,351
  1,416
  1,484
  1,556
Total liabilities and equity, $m
  632
  646
  663
  681
  702
  725
  749
  777
  805
  836
  869
  905
  942
  982
  1,025
  1,069
  1,116
  1,167
  1,219
  1,276
  1,335
  1,397
  1,463
  1,533
  1,606
  1,683
  1,764
  1,848
  1,937
  2,031
Debt-to-equity ratio
  0.010
  0.010
  0.020
  0.030
  0.040
  0.040
  0.050
  0.060
  0.070
  0.080
  0.090
  0.100
  0.100
  0.110
  0.120
  0.130
  0.140
  0.140
  0.150
  0.160
  0.160
  0.170
  0.180
  0.180
  0.190
  0.190
  0.200
  0.200
  0.210
  0.210
Adjusted equity ratio
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766
  0.766

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  116
  119
  122
  125
  129
  133
  137
  142
  147
  153
  161
  167
  174
  181
  188
  196
  205
  214
  223
  233
  244
  255
  267
  279
  292
  306
  320
  335
  351
  368
Depreciation, amort., depletion, $m
  15
  15
  15
  16
  16
  17
  17
  18
  18
  19
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  33
  34
  36
  38
  40
Funds from operations, $m
  131
  134
  137
  141
  145
  150
  155
  160
  166
  172
  178
  185
  192
  200
  208
  217
  227
  237
  247
  258
  270
  282
  295
  309
  323
  339
  355
  371
  389
  408
Change in working capital, $m
  4
  4
  5
  6
  6
  7
  7
  8
  9
  9
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
Cash from operations, $m
  128
  130
  132
  136
  139
  143
  147
  152
  157
  162
  168
  174
  181
  188
  196
  204
  212
  222
  231
  241
  252
  264
  276
  288
  302
  316
  330
  346
  362
  380
Maintenance CAPEX, $m
  -12
  -12
  -13
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -31
  -33
  -34
  -36
  -38
New CAPEX, $m
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
Cash from investing activities, $m
  -16
  -16
  -17
  -18
  -18
  -20
  -20
  -22
  -23
  -24
  -25
  -26
  -28
  -28
  -30
  -32
  -33
  -35
  -37
  -39
  -40
  -42
  -44
  -47
  -49
  -51
  -54
  -56
  -59
  -63
Free cash flow, $m
  112
  114
  115
  118
  120
  123
  127
  130
  134
  139
  143
  148
  153
  159
  165
  172
  179
  187
  195
  203
  212
  221
  231
  242
  253
  264
  276
  289
  303
  317
Issuance/(repayment) of debt, $m
  3
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
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  
  3
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
Total cash flow (excl. dividends), $m
  115
  117
  119
  122
  125
  129
  132
  137
  141
  146
  150
  156
  162
  169
  175
  183
  190
  198
  207
  216
  226
  236
  246
  258
  270
  282
  295
  309
  324
  339
Retained Cash Flow (-), $m
  -10
  -11
  -13
  -14
  -16
  -17
  -19
  -20
  -22
  -24
  -25
  -27
  -29
  -31
  -32
  -34
  -36
  -38
  -41
  -43
  -45
  -48
  -50
  -53
  -56
  -59
  -62
  -65
  -69
  -72
Prev. year cash balance distribution, $m
  191
  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
  295
  106
  107
  108
  109
  111
  113
  116
  119
  122
  125
  129
  133
  138
  143
  148
  154
  160
  166
  173
  180
  188
  196
  205
  214
  223
  233
  244
  255
  267
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
  283
  97
  93
  89
  85
  81
  77
  73
  68
  64
  59
  55
  51
  46
  42
  38
  33
  29
  26
  22
  19
  16
  13
  10
  8
  7
  5
  4
  3
  2
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

China Biologic Products, Inc. engages in the research, development, manufacture, and sale of human plasma-based biopharmaceutical products to hospitals and inoculation centers in the People’s Republic of China. It offers human albumin for treating shock caused by blood loss trauma or burn; raised intracranial pressure caused by hydrocephalus or trauma; oedema or ascites caused by hepatocirrhosis and nephropathy; and neonatal hyperbilirubinemia, as well as for the prevention and treatment of low-density-lipoproteinemia. The company also provides human immunoglobulin and immunoglobulin for intravenous injection products for original and secondary immunoglobulin deficiency, and auto-immune deficiency diseases; human hepatitis B immunoglobulin for the prevention of measles and contagious hepatitis; human rabies immunoglobulin primarily for passive immunity from bites or claws by rabies or other infected animals; and human tetanus immunoglobulin for the prevention and therapy of tetanus. In addition, it offers placenta polypeptide for the treatment of cell immunity deficiency diseases, viral infection, and leucopenia, as well as assists in postoperative healing; factor VIII for treating coagulopathies; and human prothrombin complex concentrate for treating congenital and acquired clotting factor II, VII, IX, X deficiency, as well as excessive anticoagulant, vitamin K deficiency, etc. Further, the company is developing human hepatitis B immunoglobulin (pH4) for intravenous injection; human fibrinogen; immune globulin intravenous; human antithrombin III; human cytomegalovirus immunoglobulin; human coagulation factor IX; and human fibrin sealant products. The company sells its products directly, as well as through distributors. China Biologic Products, Inc. is headquartered in Beijing, the People’s Republic of China.

FINANCIAL RATIOS  of  China Biologic Products (CBPO)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

CBPO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CBPO stock intrinsic value calculation we used $370.40684 million for the last fiscal year's total revenue generated by China Biologic Products. The default revenue input number comes from 0001 income statement of China Biologic Products. 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 CBPO 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 CBPO is calculated based on our internal credit rating of China Biologic Products, 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 China Biologic Products.
    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 CBPO stock the variable cost ratio is equal to 57.8%.

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 CBPO 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 China Biologic Products.

Corporate tax rate of 27% is the nominal tax rate for China Biologic Products. 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 CBPO 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 CBPO are equal to 43.7%.

Life of production assets of 13.4 years is the average useful life of capital assets used in China Biologic Products 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 CBPO is equal to 50%. 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 - $664.324997 million for China Biologic Products - 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 33.133 million for China Biologic Products 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 China Biologic Products at the current share price and the inputted number of shares is $2.4 billion.

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COMPANY NEWS

▶ China Biologic Products: 3Q Earnings Snapshot   [Nov-01-18 07:20PM  Associated Press]
▶ Deals of the day-Mergers and acquisitions   [Aug-21-18 04:05PM  Reuters]
▶ China Biologic Names Bing Li as New CEO   [Aug-13-18 08:00AM  PR Newswire]
▶ China Biologic Products: 2Q Earnings Snapshot   [Aug-03-18 04:40PM  Associated Press]
▶ Stocks Slide; Intel Downgraded; JD.com Spikes On Google Deal   [09:42AM  Investor's Business Daily]
▶ China Biologic Products: 1Q Earnings Snapshot   [May-04-18 04:37PM  Associated Press]
▶ China Biologic Announces Corporate Update   [08:00AM  PR Newswire]
▶ China Biologic Products posts 3Q profit   [Nov-02-17 05:47AM  Associated Press]
▶ China Biologic Agrees to Acquire TianXinFu from PWM   [Oct-12-17 08:30AM  PR Newswire]
▶ China Biologic Products posts 2Q profit   [Aug-04-17 02:36AM  Associated Press]

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