Intrinsic value of China Customer Relations Centers - CCRC

Previous Close

$12.41

  Intrinsic Value

$6.82

stock screener

  Rating & Target

sell

-45%

Previous close

$12.41

 
Intrinsic value

$6.82

 
Up/down potential

-45%

 
Rating

sell

We calculate the intrinsic value of CCRC 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 0.2

 

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, %
  22.30
  20.57
  19.01
  17.61
  16.35
  15.22
  14.19
  13.27
  12.45
  11.70
  11.03
  10.43
  9.89
  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
  5.81
Revenue, $m
  109
  131
  156
  184
  214
  246
  281
  318
  358
  400
  444
  490
  539
  590
  642
  697
  755
  814
  876
  940
  1,007
  1,076
  1,149
  1,224
  1,302
  1,383
  1,467
  1,556
  1,647
  1,743
Variable operating expenses, $m
  97
  117
  139
  163
  190
  219
  250
  283
  318
  355
  394
  435
  479
  524
  570
  619
  670
  723
  778
  835
  894
  956
  1,020
  1,087
  1,156
  1,228
  1,303
  1,381
  1,463
  1,548
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
  97
  117
  139
  163
  190
  219
  250
  283
  318
  355
  394
  435
  479
  524
  570
  619
  670
  723
  778
  835
  894
  956
  1,020
  1,087
  1,156
  1,228
  1,303
  1,381
  1,463
  1,548
Operating income, $m
  12
  15
  17
  21
  24
  28
  31
  36
  40
  45
  50
  55
  60
  66
  72
  78
  85
  91
  98
  105
  113
  121
  129
  137
  146
  155
  164
  174
  185
  195
EBITDA, $m
  13
  16
  19
  23
  26
  30
  35
  39
  44
  50
  55
  61
  67
  73
  80
  86
  93
  101
  108
  116
  125
  133
  142
  151
  161
  171
  182
  193
  204
  216
Interest expense (income), $m
  0
  0
  0
  1
  1
  1
  1
  1
  2
  2
  2
  3
  3
  3
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  9
  9
  10
  10
  11
  12
  12
Earnings before tax, $m
  12
  14
  17
  20
  23
  26
  30
  34
  38
  42
  47
  52
  57
  62
  68
  74
  80
  86
  92
  99
  106
  113
  121
  129
  137
  145
  154
  163
  173
  183
Tax expense, $m
  3
  4
  5
  5
  6
  7
  8
  9
  10
  11
  13
  14
  15
  17
  18
  20
  21
  23
  25
  27
  29
  31
  33
  35
  37
  39
  42
  44
  47
  49
Net income, $m
  9
  10
  12
  14
  17
  19
  22
  25
  28
  31
  34
  38
  42
  45
  50
  54
  58
  63
  67
  72
  77
  83
  88
  94
  100
  106
  112
  119
  126
  133

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
  59
  71
  85
  100
  116
  134
  153
  173
  194
  217
  241
  266
  293
  320
  349
  379
  410
  442
  476
  510
  547
  584
  624
  664
  707
  751
  797
  845
  894
  946
Adjusted assets (=assets-cash), $m
  59
  71
  85
  100
  116
  134
  153
  173
  194
  217
  241
  266
  293
  320
  349
  379
  410
  442
  476
  510
  547
  584
  624
  664
  707
  751
  797
  845
  894
  946
Revenue / Adjusted assets
  1.847
  1.845
  1.835
  1.840
  1.845
  1.836
  1.837
  1.838
  1.845
  1.843
  1.842
  1.842
  1.840
  1.844
  1.840
  1.839
  1.841
  1.842
  1.840
  1.843
  1.841
  1.842
  1.841
  1.843
  1.842
  1.842
  1.841
  1.841
  1.842
  1.842
Average production assets, $m
  6
  8
  9
  11
  13
  15
  17
  19
  21
  24
  26
  29
  32
  35
  38
  41
  45
  48
  52
  55
  59
  64
  68
  72
  77
  82
  87
  92
  97
  103
Working capital, $m
  18
  21
  25
  30
  34
  40
  45
  51
  58
  64
  71
  79
  87
  95
  103
  112
  121
  131
  141
  151
  162
  173
  185
  197
  210
  223
  236
  250
  265
  281
Total debt, $m
  7
  10
  14
  18
  22
  27
  32
  37
  43
  49
  55
  62
  69
  76
  84
  92
  100
  109
  118
  127
  137
  147
  157
  168
  180
  191
  204
  216
  230
  244
Total liabilities, $m
  16
  19
  23
  27
  31
  36
  41
  46
  52
  58
  64
  71
  78
  85
  93
  101
  109
  118
  127
  136
  146
  156
  166
  177
  189
  200
  213
  225
  239
  253
Total equity, $m
  43
  52
  62
  73
  85
  98
  112
  127
  142
  159
  177
  195
  214
  235
  256
  277
  300
  324
  349
  374
  401
  428
  457
  487
  518
  550
  584
  619
  656
  694
Total liabilities and equity, $m
  59
  71
  85
  100
  116
  134
  153
  173
  194
  217
  241
  266
  292
  320
  349
  378
  409
  442
  476
  510
  547
  584
  623
  664
  707
  750
  797
  844
  895
  947
Debt-to-equity ratio
  0.150
  0.190
  0.220
  0.240
  0.260
  0.270
  0.280
  0.290
  0.300
  0.310
  0.310
  0.320
  0.320
  0.330
  0.330
  0.330
  0.330
  0.340
  0.340
  0.340
  0.340
  0.340
  0.340
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
Adjusted equity ratio
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  9
  10
  12
  14
  17
  19
  22
  25
  28
  31
  34
  38
  42
  45
  50
  54
  58
  63
  67
  72
  77
  83
  88
  94
  100
  106
  112
  119
  126
  133
Depreciation, amort., depletion, $m
  1
  2
  2
  2
  3
  3
  3
  4
  4
  5
  5
  6
  6
  7
  8
  8
  9
  10
  10
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  21
Funds from operations, $m
  10
  12
  14
  17
  19
  22
  25
  29
  32
  36
  40
  44
  48
  52
  57
  62
  67
  72
  78
  83
  89
  95
  102
  108
  115
  122
  130
  138
  146
  154
Change in working capital, $m
  3
  4
  4
  4
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
Cash from operations, $m
  7
  8
  10
  12
  14
  17
  20
  23
  26
  29
  33
  36
  40
  44
  49
  53
  58
  63
  68
  73
  78
  84
  90
  96
  103
  109
  116
  123
  131
  139
Maintenance CAPEX, $m
  -1
  -1
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
New CAPEX, $m
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
Cash from investing activities, $m
  -2
  -2
  -3
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
Free cash flow, $m
  5
  6
  7
  9
  11
  12
  15
  17
  20
  22
  25
  28
  32
  35
  39
  42
  46
  50
  54
  59
  63
  68
  73
  78
  84
  89
  95
  101
  107
  114
Issuance/(repayment) of debt, $m
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
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
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
Total cash flow (excl. dividends), $m
  7
  9
  11
  13
  15
  17
  20
  22
  25
  28
  32
  35
  39
  42
  46
  50
  54
  59
  63
  68
  73
  78
  84
  89
  95
  101
  107
  114
  120
  127
Retained Cash Flow (-), $m
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -32
  -34
  -35
  -37
  -38
Prev. year cash balance distribution, $m
  4
  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
  3
  0
  1
  2
  3
  4
  6
  8
  10
  12
  14
  17
  19
  22
  25
  28
  32
  35
  39
  43
  47
  51
  55
  59
  64
  69
  73
  79
  84
  89
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
  3
  0
  1
  1
  2
  3
  4
  5
  5
  6
  7
  7
  7
  7
  7
  7
  7
  6
  6
  5
  5
  4
  4
  3
  2
  2
  2
  1
  1
  1
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 Customer Relations Centers, Inc. is a business process outsourcing (BPO) service provider focusing on the complex, voice-based segment of customer care services, including customer relationship management, technical support, sales, customer retention, marketing surveys and research for certain major enterprises in the People's Republic of China (PRC). The Company's customers are the provincial subsidiaries of various telecommunications carriers in the PRC. It also provides outsourcing services to its clients whereby they can lease its employees to work at their offices. The Company operates its business through contractual arrangements between its subsidiary, wholly foreign owned enterprise (WFOE) and its variable interest entity, Shandong Taiying Technology Co., Ltd (Taiying). Its line of services includes Inbound Customer Care Service and Outbound Customer Care Service. The Company's inbound customer support service offers answering service hotlines in China, round the clock.

FINANCIAL RATIOS  of  China Customer Relations Centers (CCRC)

Valuation Ratios
P/E Ratio 28.4
Price to Sales 3.1
Price to Book 7.8
Price to Tangible Book
Price to Cash Flow 37.9
Price to Free Cash Flow 37.9
Growth Rates
Sales Growth Rate 23.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -100%
Cap. Spend. - 3 Yr. Gr. Rate -100%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 23.2%
Ret/ On Assets - 3 Yr. Avg. 19.7%
Return On Total Capital 30.2%
Ret/ On T. Cap. - 3 Yr. Avg. 24.2%
Return On Equity 31.4%
Return On Equity - 3 Yr. Avg. 32.3%
Asset Turnover 2.1
Profitability Ratios
Gross Margin 27.4%
Gross Margin - 3 Yr. Avg. 21.3%
EBITDA Margin 16.4%
EBITDA Margin - 3 Yr. Avg. 12.5%
Operating Margin 12.3%
Oper. Margin - 3 Yr. Avg. 8.5%
Pre-Tax Margin 13.7%
Pre-Tax Margin - 3 Yr. Avg. 9.5%
Net Profit Margin 11%
Net Profit Margin - 3 Yr. Avg. 8%
Effective Tax Rate 20%
Eff/ Tax Rate - 3 Yr. Avg. 12.2%
Payout Ratio 0%

CCRC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CCRC stock intrinsic value calculation we used $88.971787 million for the last fiscal year's total revenue generated by China Customer Relations Centers. The default revenue input number comes from 0001 income statement of China Customer Relations Centers. 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 CCRC stock valuation model: a) initial revenue growth rate of 22.3% 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 CCRC is calculated based on our internal credit rating of China Customer Relations Centers, 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 Customer Relations Centers.
    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 CCRC stock the variable cost ratio is equal to 88.8%.

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 CCRC 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 Customer Relations Centers.

Corporate tax rate of 27% is the nominal tax rate for China Customer Relations Centers. 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 CCRC 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 CCRC are equal to 5.9%.

Life of production assets of 2.8 years is the average useful life of capital assets used in China Customer Relations Centers 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 CCRC is equal to 16.1%. 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 - $39.191027 million for China Customer Relations Centers - 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 18.33 million for China Customer Relations Centers 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 Customer Relations Centers at the current share price and the inputted number of shares is $0.2 billion.

RELATED COMPANIES Price Int.Val. Rating
SRT Startek 6.35 1.10  str.sell
ATTO Atento 6.03 18.64  str.buy

COMPANY NEWS

▶ LD Micro Index Reconstitution as of August 1, 2017   [Aug-01-17 09:40AM  ACCESSWIRE]

CONTACT US       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.