Intrinsic value of China Internet Nationwide Financial Serv - CIFS

Previous Close

$14.59

  Intrinsic Value

$191.69

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  Rating & Target

str. buy

+999%

Previous close

$14.59

 
Intrinsic value

$191.69

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of CIFS 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 2016), $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 0.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  26
  40
  59
  86
  121
  166
  223
  293
  378
  477
  592
  724
  873
  1,038
  1,221
  1,420
  1,636
  1,868
  2,115
  2,378
  2,656
  2,949
  3,256
  3,577
  3,913
  4,263
  4,628
  5,007
  5,402
  5,812
Variable operating expenses, $m
  2
  2
  4
  5
  8
  10
  14
  18
  24
  30
  37
  46
  55
  65
  77
  89
  103
  118
  133
  150
  167
  186
  205
  225
  247
  269
  292
  315
  340
  366
Fixed operating expenses, $m
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
Total operating expenses, $m
  4
  4
  6
  7
  10
  12
  16
  20
  26
  32
  40
  49
  58
  68
  80
  92
  106
  121
  136
  153
  170
  189
  208
  228
  250
  273
  296
  319
  344
  370
Operating income, $m
  22
  35
  53
  78
  111
  154
  207
  273
  351
  444
  552
  676
  815
  970
  1,141
  1,328
  1,530
  1,747
  1,979
  2,225
  2,485
  2,760
  3,047
  3,348
  3,663
  3,991
  4,333
  4,688
  5,058
  5,442
EBITDA, $m
  22
  35
  53
  78
  111
  154
  207
  273
  351
  444
  552
  676
  815
  970
  1,141
  1,328
  1,530
  1,747
  1,979
  2,226
  2,486
  2,760
  3,048
  3,349
  3,664
  3,992
  4,334
  4,689
  5,059
  5,443
Interest expense (income), $m
  0
  0
  0
  0
  1
  1
  2
  2
  3
  4
  5
  7
  8
  10
  13
  15
  18
  21
  24
  27
  31
  35
  39
  43
  48
  52
  57
  62
  68
  73
  79
Earnings before tax, $m
  22
  35
  53
  78
  110
  152
  205
  270
  347
  439
  546
  667
  805
  958
  1,126
  1,310
  1,509
  1,723
  1,952
  2,194
  2,451
  2,721
  3,004
  3,301
  3,611
  3,934
  4,270
  4,620
  4,984
  5,363
Tax expense, $m
  6
  9
  14
  21
  30
  41
  55
  73
  94
  119
  147
  180
  217
  259
  304
  354
  407
  465
  527
  592
  662
  735
  811
  891
  975
  1,062
  1,153
  1,248
  1,346
  1,448
Net income, $m
  16
  25
  39
  57
  80
  111
  150
  197
  253
  320
  398
  487
  587
  699
  822
  956
  1,102
  1,258
  1,425
  1,602
  1,789
  1,986
  2,193
  2,410
  2,636
  2,872
  3,117
  3,373
  3,639
  3,915

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
  21
  33
  49
  72
  101
  139
  186
  245
  315
  398
  494
  604
  728
  866
  1,018
  1,184
  1,364
  1,558
  1,764
  1,983
  2,215
  2,459
  2,715
  2,984
  3,264
  3,556
  3,860
  4,176
  4,505
  4,847
Adjusted assets (=assets-cash), $m
  21
  33
  49
  72
  101
  139
  186
  245
  315
  398
  494
  604
  728
  866
  1,018
  1,184
  1,364
  1,558
  1,764
  1,983
  2,215
  2,459
  2,715
  2,984
  3,264
  3,556
  3,860
  4,176
  4,505
  4,847
Revenue / Adjusted assets
  1.238
  1.212
  1.204
  1.194
  1.198
  1.194
  1.199
  1.196
  1.200
  1.198
  1.198
  1.199
  1.199
  1.199
  1.199
  1.199
  1.199
  1.199
  1.199
  1.199
  1.199
  1.199
  1.199
  1.199
  1.199
  1.199
  1.199
  1.199
  1.199
  1.199
Average production assets, $m
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  2
  2
  2
  3
  3
  4
  4
  5
  5
  6
  7
  7
  8
  9
  9
  10
  11
  12
Working capital, $m
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -2
  -2
  -3
  -3
  -4
  -4
  -5
  -6
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
Total debt, $m
  2
  6
  11
  19
  28
  41
  56
  75
  98
  125
  156
  192
  233
  278
  327
  381
  440
  503
  570
  642
  717
  797
  881
  968
  1,059
  1,154
  1,254
  1,357
  1,464
  1,575
Total liabilities, $m
  7
  11
  16
  23
  33
  45
  61
  80
  103
  130
  161
  197
  237
  282
  332
  386
  445
  508
  575
  647
  722
  802
  885
  973
  1,064
  1,159
  1,258
  1,361
  1,469
  1,580
Total equity, $m
  14
  22
  33
  48
  68
  94
  126
  165
  212
  268
  333
  407
  491
  584
  686
  798
  920
  1,050
  1,189
  1,337
  1,493
  1,658
  1,830
  2,011
  2,200
  2,396
  2,601
  2,815
  3,037
  3,267
Total liabilities and equity, $m
  21
  33
  49
  71
  101
  139
  187
  245
  315
  398
  494
  604
  728
  866
  1,018
  1,184
  1,365
  1,558
  1,764
  1,984
  2,215
  2,460
  2,715
  2,984
  3,264
  3,555
  3,859
  4,176
  4,506
  4,847
Debt-to-equity ratio
  0.160
  0.270
  0.340
  0.390
  0.410
  0.430
  0.450
  0.460
  0.460
  0.470
  0.470
  0.470
  0.470
  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
Adjusted equity ratio
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  16
  25
  39
  57
  80
  111
  150
  197
  253
  320
  398
  487
  587
  699
  822
  956
  1,102
  1,258
  1,425
  1,602
  1,789
  1,986
  2,193
  2,410
  2,636
  2,872
  3,117
  3,373
  3,639
  3,915
Depreciation, amort., depletion, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
Funds from operations, $m
  16
  25
  39
  57
  80
  111
  150
  197
  254
  321
  398
  487
  588
  699
  822
  957
  1,102
  1,258
  1,425
  1,602
  1,790
  1,987
  2,194
  2,410
  2,637
  2,873
  3,118
  3,374
  3,640
  3,916
Change in working capital, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
Cash from operations, $m
  16
  25
  39
  57
  81
  111
  150
  197
  254
  321
  399
  488
  588
  700
  823
  957
  1,103
  1,259
  1,426
  1,603
  1,790
  1,988
  2,195
  2,411
  2,638
  2,874
  3,119
  3,375
  3,641
  3,917
Maintenance CAPEX, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
New CAPEX, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
Cash from investing activities, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
Free cash flow, $m
  16
  25
  39
  57
  81
  111
  150
  197
  254
  321
  398
  487
  588
  699
  822
  957
  1,102
  1,258
  1,425
  1,602
  1,789
  1,987
  2,193
  2,410
  2,636
  2,872
  3,118
  3,373
  3,639
  3,915
Issuance/(repayment) of debt, $m
  2
  4
  5
  7
  10
  12
  15
  19
  23
  27
  31
  36
  40
  45
  50
  54
  59
  63
  67
  71
  76
  80
  84
  87
  91
  95
  99
  103
  107
  111
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
  4
  5
  7
  10
  12
  15
  19
  23
  27
  31
  36
  40
  45
  50
  54
  59
  63
  67
  71
  76
  80
  84
  87
  91
  95
  99
  103
  107
  111
Total cash flow (excl. dividends), $m
  19
  29
  44
  64
  90
  123
  165
  216
  276
  348
  430
  523
  628
  744
  872
  1,011
  1,161
  1,321
  1,492
  1,674
  1,865
  2,066
  2,277
  2,497
  2,728
  2,967
  3,217
  3,477
  3,746
  4,027
Retained Cash Flow (-), $m
  -6
  -8
  -11
  -15
  -20
  -26
  -32
  -39
  -47
  -56
  -65
  -74
  -84
  -93
  -103
  -112
  -121
  -130
  -139
  -148
  -156
  -165
  -173
  -181
  -189
  -197
  -205
  -213
  -222
  -230
Prev. year cash balance distribution, $m
  16
  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
  29
  21
  33
  49
  70
  98
  133
  177
  229
  292
  365
  449
  544
  651
  769
  899
  1,039
  1,191
  1,353
  1,526
  1,709
  1,902
  2,104
  2,317
  2,539
  2,771
  3,012
  3,263
  3,525
  3,796
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
  28
  20
  29
  40
  54
  71
  90
  110
  132
  153
  173
  192
  207
  219
  226
  228
  226
  219
  208
  194
  177
  158
  138
  118
  99
  81
  65
  50
  38
  29
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 Internet Nationwide Financial Services Inc is a holding company. The Company is engaged in the business of providing financial advisory services small-to-medium sized enterprises (SMEs). The Company, through its subsidiaries offers commercial payment advisory services, international corporate financing advisory services and intermediary bank loan advisory services. Commercial payment advisory service provides commercial payment advisory services to its clients. International corporate financing advisory services help its clients obtain financing to support their overseas business development. The Company’s subsidiaries include Hongkong Internet Financial Services Limited (HKIFS), Beijing Yingxin Yijia Network Technology Co., Ltd (WFOE), Sheng Ying Xin (Beijing) Management Consulting Co., Ltd (Sheng Ying Xin or SYX), and Kashgar Sheng Yingxin Enterprise Consulting Co., Ltd. (Kashgar SYX).

FINANCIAL RATIOS  of  China Internet Nationwide Financial Serv (CIFS)

Valuation Ratios
P/E Ratio 2.1
Price to Sales 1.8
Price to Book 1.2
Price to Tangible Book
Price to Cash Flow 2.1
Price to Free Cash Flow 2.1
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 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 45.9%
Ret/ On Assets - 3 Yr. Avg. 28.2%
Return On Total Capital 52.8%
Ret/ On T. Cap. - 3 Yr. Avg. 31.9%
Return On Equity 52.8%
Return On Equity - 3 Yr. Avg. 31.9%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 93.8%
Gross Margin - 3 Yr. Avg. 64.6%
EBITDA Margin 100%
EBITDA Margin - 3 Yr. Avg. 62.5%
Operating Margin 87.5%
Oper. Margin - 3 Yr. Avg. 54.2%
Pre-Tax Margin 100%
Pre-Tax Margin - 3 Yr. Avg. 62.5%
Net Profit Margin 87.5%
Net Profit Margin - 3 Yr. Avg. 54.2%
Effective Tax Rate 12.5%
Eff/ Tax Rate - 3 Yr. Avg. 8.9%
Payout Ratio 0%

CIFS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CIFS stock intrinsic value calculation we used $16 million for the last fiscal year's total revenue generated by China Internet Nationwide Financial Serv. The default revenue input number comes from 2016 income statement of China Internet Nationwide Financial Serv. 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 CIFS stock valuation model: a) initial revenue growth rate of 60% 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 CIFS is calculated based on our internal credit rating of China Internet Nationwide Financial Serv, 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 Internet Nationwide Financial Serv.
    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 CIFS stock the variable cost ratio is equal to 6.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $2 million in the base year in the intrinsic value calculation for CIFS 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 Internet Nationwide Financial Serv.

Corporate tax rate of 27% is the nominal tax rate for China Internet Nationwide Financial Serv. 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 CIFS 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 CIFS are equal to 0.2%.

Life of production assets of 10 years is the average useful life of capital assets used in China Internet Nationwide Financial Serv 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 CIFS is equal to -0.3%. 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 - $25 million for China Internet Nationwide Financial Serv - 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 20 million for China Internet Nationwide Financial Serv 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 Internet Nationwide Financial Serv at the current share price and the inputted number of shares is $0.3 billion.

COMPANY NEWS

▶ Carson Block on Short of China Internet Nationwide   [Dec-20-17 12:27PM  Bloomberg Video]
▶ Carson Block Shorts CIFS, Calls it 'Worthless'   [11:22AM  Bloomberg Video]
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