Intrinsic value of China Unicom (Hong Kong) ADR - CHU

Previous Close

$11.92

  Intrinsic Value

$321.00

stock screener

  Rating & Target

str. buy

+999%

Previous close

$11.92

 
Intrinsic value

$321.00

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of CHU 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 0.4

 

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, %
  5.20
  5.18
  5.16
  5.15
  5.13
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
  5.06
  5.06
  5.05
  5.05
  5.04
  5.04
  5.03
  5.03
  5.03
  5.02
  5.02
  5.02
  5.02
  5.02
  5.01
  5.01
  5.01
  5.01
  5.01
Revenue, $m
  43,700
  45,964
  48,336
  50,824
  53,432
  56,166
  59,034
  62,043
  65,198
  68,508
  71,982
  75,626
  79,450
  83,463
  87,674
  92,094
  96,733
  101,602
  106,712
  112,077
  117,708
  123,619
  129,824
  136,339
  143,177
  150,357
  157,894
  165,807
  174,115
  182,837
Variable operating expenses, $m
  39,328
  41,363
  43,496
  45,732
  48,076
  50,535
  53,113
  55,818
  58,654
  61,630
  64,711
  67,987
  71,425
  75,032
  78,818
  82,792
  86,962
  91,339
  95,933
  100,756
  105,818
  111,132
  116,711
  122,567
  128,715
  135,169
  141,945
  149,059
  156,528
  164,369
Fixed operating expenses, $m
  3,734
  3,817
  3,901
  3,986
  4,074
  4,164
  4,255
  4,349
  4,445
  4,542
  4,642
  4,744
  4,849
  4,955
  5,064
  5,176
  5,290
  5,406
  5,525
  5,647
  5,771
  5,898
  6,028
  6,160
  6,296
  6,434
  6,576
  6,720
  6,868
  7,019
Total operating expenses, $m
  43,062
  45,180
  47,397
  49,718
  52,150
  54,699
  57,368
  60,167
  63,099
  66,172
  69,353
  72,731
  76,274
  79,987
  83,882
  87,968
  92,252
  96,745
  101,458
  106,403
  111,589
  117,030
  122,739
  128,727
  135,011
  141,603
  148,521
  155,779
  163,396
  171,388
Operating income, $m
  638
  784
  940
  1,105
  1,281
  1,468
  1,666
  1,876
  2,099
  2,336
  2,628
  2,894
  3,176
  3,475
  3,791
  4,126
  4,481
  4,857
  5,254
  5,674
  6,119
  6,589
  7,086
  7,611
  8,166
  8,753
  9,373
  10,027
  10,719
  11,449
EBITDA, $m
  12,955
  13,738
  14,560
  15,424
  16,332
  17,287
  18,291
  19,346
  20,456
  21,622
  22,849
  24,138
  25,495
  26,920
  28,420
  29,996
  31,654
  33,397
  35,230
  37,157
  39,184
  41,314
  43,555
  45,910
  48,386
  50,990
  53,727
  56,604
  59,629
  62,809
Interest expense (income), $m
  714
  606
  720
  840
  964
  1,095
  1,233
  1,377
  1,528
  1,686
  1,852
  2,027
  2,209
  2,401
  2,603
  2,814
  3,036
  3,268
  3,513
  3,769
  4,038
  4,320
  4,617
  4,928
  5,255
  5,598
  5,958
  6,336
  6,733
  7,149
  7,587
Earnings before tax, $m
  31
  64
  100
  141
  186
  235
  289
  348
  413
  483
  602
  685
  775
  872
  977
  1,091
  1,213
  1,344
  1,485
  1,636
  1,798
  1,972
  2,158
  2,356
  2,569
  2,795
  3,037
  3,295
  3,569
  3,862
Tax expense, $m
  8
  17
  27
  38
  50
  63
  78
  94
  112
  131
  163
  185
  209
  236
  264
  295
  327
  363
  401
  442
  486
  532
  583
  636
  694
  755
  820
  890
  964
  1,043
Net income, $m
  23
  47
  73
  103
  136
  172
  211
  254
  301
  353
  439
  500
  566
  637
  714
  796
  885
  981
  1,084
  1,194
  1,313
  1,439
  1,575
  1,720
  1,875
  2,041
  2,217
  2,405
  2,606
  2,819

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
  91,042
  95,758
  100,701
  105,883
  111,316
  117,013
  122,988
  129,255
  135,829
  142,726
  149,962
  157,554
  165,521
  173,881
  182,655
  191,862
  201,527
  211,670
  222,317
  233,493
  245,225
  257,540
  270,467
  284,039
  298,286
  313,243
  328,946
  345,431
  362,739
  380,910
Adjusted assets (=assets-cash), $m
  91,042
  95,758
  100,701
  105,883
  111,316
  117,013
  122,988
  129,255
  135,829
  142,726
  149,962
  157,554
  165,521
  173,881
  182,655
  191,862
  201,527
  211,670
  222,317
  233,493
  245,225
  257,540
  270,467
  284,039
  298,286
  313,243
  328,946
  345,431
  362,739
  380,910
Revenue / Adjusted assets
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
Average production assets, $m
  67,517
  71,014
  74,680
  78,523
  82,552
  86,777
  91,208
  95,856
  100,731
  105,846
  111,212
  116,842
  122,750
  128,950
  135,457
  142,285
  149,452
  156,975
  164,871
  173,159
  181,859
  190,991
  200,579
  210,643
  221,209
  232,301
  243,946
  256,172
  269,007
  282,483
Working capital, $m
  -24,122
  -25,372
  -26,682
  -28,055
  -29,494
  -31,004
  -32,587
  -34,247
  -35,989
  -37,817
  -39,734
  -41,746
  -43,856
  -46,071
  -48,396
  -50,836
  -53,397
  -56,084
  -58,905
  -61,866
  -64,975
  -68,238
  -71,663
  -75,259
  -79,034
  -82,997
  -87,157
  -91,525
  -96,111
  -100,926
Total debt, $m
  13,341
  15,548
  17,861
  20,286
  22,829
  25,495
  28,291
  31,224
  34,301
  37,529
  40,915
  44,468
  48,197
  52,109
  56,215
  60,525
  65,047
  69,795
  74,777
  80,008
  85,498
  91,261
  97,312
  103,663
  110,331
  117,331
  124,679
  132,395
  140,495
  148,999
Total liabilities, $m
  42,608
  44,815
  47,128
  49,553
  52,096
  54,762
  57,558
  60,491
  63,568
  66,796
  70,182
  73,735
  77,464
  81,376
  85,482
  89,792
  94,314
  99,062
  104,044
  109,275
  114,765
  120,529
  126,579
  132,930
  139,598
  146,598
  153,947
  161,662
  169,762
  178,266
Total equity, $m
  48,434
  50,943
  53,573
  56,330
  59,220
  62,251
  65,430
  68,764
  72,261
  75,930
  79,780
  83,819
  88,057
  92,505
  97,172
  102,071
  107,212
  112,609
  118,273
  124,218
  130,460
  137,011
  143,889
  151,109
  158,688
  166,645
  174,999
  183,769
  192,977
  202,644
Total liabilities and equity, $m
  91,042
  95,758
  100,701
  105,883
  111,316
  117,013
  122,988
  129,255
  135,829
  142,726
  149,962
  157,554
  165,521
  173,881
  182,654
  191,863
  201,526
  211,671
  222,317
  233,493
  245,225
  257,540
  270,468
  284,039
  298,286
  313,243
  328,946
  345,431
  362,739
  380,910
Debt-to-equity ratio
  0.280
  0.310
  0.330
  0.360
  0.390
  0.410
  0.430
  0.450
  0.470
  0.490
  0.510
  0.530
  0.550
  0.560
  0.580
  0.590
  0.610
  0.620
  0.630
  0.640
  0.660
  0.670
  0.680
  0.690
  0.700
  0.700
  0.710
  0.720
  0.730
  0.740
Adjusted equity ratio
  0.532
  0.532
  0.532
  0.532
  0.532
  0.532
  0.532
  0.532
  0.532
  0.532
  0.532
  0.532
  0.532
  0.532
  0.532
  0.532
  0.532
  0.532
  0.532
  0.532
  0.532
  0.532
  0.532
  0.532
  0.532
  0.532
  0.532
  0.532
  0.532
  0.532

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  23
  47
  73
  103
  136
  172
  211
  254
  301
  353
  439
  500
  566
  637
  714
  796
  885
  981
  1,084
  1,194
  1,313
  1,439
  1,575
  1,720
  1,875
  2,041
  2,217
  2,405
  2,606
  2,819
Depreciation, amort., depletion, $m
  12,318
  12,954
  13,620
  14,319
  15,051
  15,820
  16,625
  17,470
  18,357
  19,287
  20,220
  21,244
  22,318
  23,445
  24,628
  25,870
  27,173
  28,541
  29,976
  31,483
  33,065
  34,726
  36,469
  38,299
  40,220
  42,237
  44,354
  46,577
  48,910
  51,361
Funds from operations, $m
  12,341
  13,000
  13,693
  14,422
  15,187
  15,991
  16,836
  17,724
  18,658
  19,639
  20,660
  21,744
  22,884
  24,082
  25,342
  26,666
  28,058
  29,522
  31,060
  32,678
  34,378
  36,165
  38,044
  40,019
  42,095
  44,277
  46,571
  48,982
  51,516
  54,180
Change in working capital, $m
  -1,192
  -1,250
  -1,310
  -1,373
  -1,440
  -1,510
  -1,583
  -1,661
  -1,742
  -1,827
  -1,917
  -2,012
  -2,111
  -2,215
  -2,325
  -2,440
  -2,561
  -2,688
  -2,821
  -2,961
  -3,108
  -3,263
  -3,425
  -3,596
  -3,775
  -3,963
  -4,161
  -4,368
  -4,586
  -4,815
Cash from operations, $m
  13,533
  14,250
  15,003
  15,795
  16,626
  17,501
  18,419
  19,385
  20,400
  21,467
  22,577
  23,756
  24,995
  26,297
  27,667
  29,106
  30,619
  32,210
  33,881
  35,639
  37,486
  39,428
  41,469
  43,615
  45,870
  48,240
  50,731
  53,350
  56,102
  58,994
Maintenance CAPEX, $m
  -11,667
  -12,276
  -12,912
  -13,578
  -14,277
  -15,009
  -15,778
  -16,583
  -17,428
  -18,315
  -19,245
  -20,220
  -21,244
  -22,318
  -23,445
  -24,628
  -25,870
  -27,173
  -28,541
  -29,976
  -31,483
  -33,065
  -34,726
  -36,469
  -38,299
  -40,220
  -42,237
  -44,354
  -46,577
  -48,910
New CAPEX, $m
  -3,351
  -3,497
  -3,666
  -3,843
  -4,029
  -4,225
  -4,431
  -4,648
  -4,875
  -5,115
  -5,366
  -5,630
  -5,908
  -6,200
  -6,507
  -6,829
  -7,167
  -7,522
  -7,896
  -8,288
  -8,700
  -9,133
  -9,587
  -10,064
  -10,566
  -11,092
  -11,645
  -12,226
  -12,835
  -13,476
Cash from investing activities, $m
  -15,018
  -15,773
  -16,578
  -17,421
  -18,306
  -19,234
  -20,209
  -21,231
  -22,303
  -23,430
  -24,611
  -25,850
  -27,152
  -28,518
  -29,952
  -31,457
  -33,037
  -34,695
  -36,437
  -38,264
  -40,183
  -42,198
  -44,313
  -46,533
  -48,865
  -51,312
  -53,882
  -56,580
  -59,412
  -62,386
Free cash flow, $m
  -1,484
  -1,523
  -1,574
  -1,626
  -1,680
  -1,734
  -1,789
  -1,846
  -1,904
  -1,963
  -2,034
  -2,095
  -2,157
  -2,221
  -2,285
  -2,351
  -2,418
  -2,486
  -2,555
  -2,626
  -2,697
  -2,770
  -2,844
  -2,919
  -2,995
  -3,072
  -3,150
  -3,230
  -3,310
  -3,392
Issuance/(repayment) of debt, $m
  2,110
  2,207
  2,313
  2,425
  2,543
  2,666
  2,796
  2,933
  3,077
  3,228
  3,386
  3,553
  3,728
  3,913
  4,106
  4,309
  4,523
  4,747
  4,983
  5,230
  5,490
  5,763
  6,050
  6,351
  6,668
  7,000
  7,349
  7,715
  8,100
  8,504
Issuance/(repurchase) of shares, $m
  2,455
  2,462
  2,556
  2,654
  2,755
  2,859
  2,968
  3,080
  3,196
  3,316
  3,410
  3,539
  3,672
  3,811
  3,954
  4,102
  4,256
  4,415
  4,580
  4,751
  4,928
  5,112
  5,302
  5,500
  5,704
  5,917
  6,137
  6,365
  6,602
  6,848
Cash from financing (excl. dividends), $m  
  4,565
  4,669
  4,869
  5,079
  5,298
  5,525
  5,764
  6,013
  6,273
  6,544
  6,796
  7,092
  7,400
  7,724
  8,060
  8,411
  8,779
  9,162
  9,563
  9,981
  10,418
  10,875
  11,352
  11,851
  12,372
  12,917
  13,486
  14,080
  14,702
  15,352
Total cash flow (excl. dividends), $m
  3,080
  3,146
  3,295
  3,453
  3,618
  3,792
  3,975
  4,167
  4,369
  4,581
  4,763
  4,997
  5,244
  5,503
  5,775
  6,061
  6,361
  6,676
  7,008
  7,356
  7,722
  8,106
  8,509
  8,933
  9,377
  9,845
  10,335
  10,851
  11,392
  11,960
Retained Cash Flow (-), $m
  -2,478
  -2,509
  -2,630
  -2,757
  -2,890
  -3,031
  -3,179
  -3,334
  -3,497
  -3,669
  -3,849
  -4,039
  -4,238
  -4,448
  -4,668
  -4,899
  -5,141
  -5,396
  -5,664
  -5,946
  -6,241
  -6,552
  -6,878
  -7,220
  -7,580
  -7,957
  -8,354
  -8,770
  -9,208
  -9,667
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
  603
  637
  666
  696
  728
  761
  796
  833
  872
  912
  913
  958
  1,005
  1,055
  1,107
  1,162
  1,220
  1,280
  1,344
  1,410
  1,480
  1,554
  1,631
  1,713
  1,798
  1,888
  1,982
  2,080
  2,184
  2,293
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
  578
  583
  579
  573
  564
  552
  538
  520
  501
  478
  434
  409
  382
  354
  325
  295
  265
  236
  207
  179
  153
  129
  107
  87
  70
  55
  43
  32
  24
  17
Current shareholders' claim on cash, %
  92.9
  86.6
  80.8
  75.5
  70.6
  66.0
  61.8
  57.9
  54.3
  51.0
  47.9
  45.0
  42.4
  39.9
  37.6
  35.5
  33.5
  31.6
  29.9
  28.3
  26.7
  25.3
  24.0
  22.8
  21.6
  20.5
  19.5
  18.5
  17.6
  16.8

China Unicom (Hong Kong) Limited is a Hong Kong-based investment holding company principally engaged in the provision of telecommunications services. The Company's businesses include mobile businesses, fixed-line businesses and others. Its mobile businesses include the provision of call services, roaming services, mobile broadband services, traditional value-added services such as short message services, multimedia message services and wireless Internet access card, as well as new value-added services such as mobile music, mobile television and Wo portal services. Its fixed-line businesses include broadband and Internet networks businesses, among others. The Company's subsidiaries include CUCL, China Unicom Global Limited and China Unicom (Europe) Operations Limited.

FINANCIAL RATIOS  of  China Unicom (Hong Kong) ADR (CHU)

Valuation Ratios
P/E Ratio 3171.6
Price to Sales 7.2
Price to Book 8.7
Price to Tangible Book
Price to Cash Flow 26.4
Price to Free Cash Flow -71
Growth Rates
Sales Growth Rate -1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 10.1%
Cap. Spend. - 3 Yr. Gr. Rate 5.4%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 17.8%
Total Debt to Equity 77.1%
Interest Coverage 1
Management Effectiveness
Return On Assets 0.8%
Ret/ On Assets - 3 Yr. Avg. 2%
Return On Total Capital 0.2%
Ret/ On T. Cap. - 3 Yr. Avg. 2.1%
Return On Equity 0.3%
Return On Equity - 3 Yr. Avg. 3.4%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 52%
Gross Margin - 3 Yr. Avg. 57.4%
EBITDA Margin 30.1%
EBITDA Margin - 3 Yr. Avg. 32.6%
Operating Margin 1%
Oper. Margin - 3 Yr. Avg. 4.9%
Pre-Tax Margin 0.3%
Pre-Tax Margin - 3 Yr. Avg. 3.6%
Net Profit Margin 0.2%
Net Profit Margin - 3 Yr. Avg. 2.8%
Effective Tax Rate 19.5%
Eff/ Tax Rate - 3 Yr. Avg. 22.8%
Payout Ratio 654.4%

CHU stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CHU stock intrinsic value calculation we used $41540.0544135 million for the last fiscal year's total revenue generated by China Unicom (Hong Kong) ADR. The default revenue input number comes from 0001 income statement of China Unicom (Hong Kong) 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 CHU stock valuation model: a) initial revenue growth rate of 5.2% 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 CHU is calculated based on our internal credit rating of China Unicom (Hong Kong) 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 China Unicom (Hong Kong) 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 CHU stock the variable cost ratio is equal to 90%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $3654 million in the base year in the intrinsic value calculation for CHU 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 Unicom (Hong Kong) ADR.

Corporate tax rate of 27% is the nominal tax rate for China Unicom (Hong Kong) 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 CHU 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 CHU are equal to 154.5%.

Life of production assets of 5.5 years is the average useful life of capital assets used in China Unicom (Hong Kong) 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 CHU is equal to -55.2%. 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 - $45956.7714631 million for China Unicom (Hong Kong) 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 35.466 million for China Unicom (Hong Kong) 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 China Unicom (Hong Kong) ADR at the current share price and the inputted number of shares is $0.4 billion.

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