Intrinsic value of Ciner Resources LP - CINR

Previous Close

$24.67

  Intrinsic Value

$39.75

stock screener

  Rating & Target

str. buy

+61%

Previous close

$24.67

 
Intrinsic value

$39.75

 
Up/down potential

+61%

 
Rating

str. buy

We calculate the intrinsic value of CINR 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 0.5

 

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, %
  2.90
  3.11
  3.30
  3.47
  3.62
  3.76
  3.88
  4.00
  4.10
  4.19
  4.27
  4.34
  4.41
  4.47
  4.52
  4.57
  4.61
  4.65
  4.68
  4.72
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
Revenue, $m
  501
  517
  534
  552
  572
  594
  617
  642
  668
  696
  725
  757
  790
  826
  863
  902
  944
  988
  1,034
  1,083
  1,134
  1,188
  1,245
  1,305
  1,368
  1,435
  1,504
  1,578
  1,655
  1,736
Variable operating expenses, $m
  410
  423
  437
  452
  469
  486
  505
  525
  547
  570
  594
  620
  647
  676
  707
  739
  773
  809
  847
  887
  929
  973
  1,020
  1,069
  1,121
  1,175
  1,232
  1,292
  1,355
  1,422
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
  410
  423
  437
  452
  469
  486
  505
  525
  547
  570
  594
  620
  647
  676
  707
  739
  773
  809
  847
  887
  929
  973
  1,020
  1,069
  1,121
  1,175
  1,232
  1,292
  1,355
  1,422
Operating income, $m
  91
  94
  97
  100
  104
  107
  112
  116
  121
  126
  131
  137
  143
  149
  156
  163
  171
  179
  187
  196
  205
  215
  225
  236
  248
  260
  272
  286
  300
  314
EBITDA, $m
  120
  124
  128
  132
  137
  142
  148
  154
  160
  167
  174
  182
  190
  198
  207
  216
  226
  237
  248
  260
  272
  285
  299
  313
  328
  344
  361
  379
  397
  416
Interest expense (income), $m
  3
  5
  6
  6
  7
  7
  8
  9
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  20
  21
  22
  24
  25
  27
  29
  31
  33
  35
  37
  39
  42
Earnings before tax, $m
  85
  88
  90
  93
  96
  99
  103
  107
  111
  115
  119
  124
  129
  135
  140
  146
  153
  159
  166
  174
  181
  190
  198
  207
  217
  227
  237
  249
  260
  273
Tax expense, $m
  23
  24
  24
  25
  26
  27
  28
  29
  30
  31
  32
  34
  35
  36
  38
  39
  41
  43
  45
  47
  49
  51
  54
  56
  59
  61
  64
  67
  70
  74
Net income, $m
  62
  64
  66
  68
  70
  73
  75
  78
  81
  84
  87
  91
  94
  98
  102
  107
  111
  116
  121
  127
  132
  138
  145
  151
  158
  166
  173
  181
  190
  199

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
  447
  461
  476
  493
  511
  530
  550
  572
  596
  621
  647
  675
  705
  736
  770
  805
  842
  881
  922
  966
  1,012
  1,060
  1,111
  1,164
  1,221
  1,280
  1,342
  1,408
  1,476
  1,549
Adjusted assets (=assets-cash), $m
  447
  461
  476
  493
  511
  530
  550
  572
  596
  621
  647
  675
  705
  736
  770
  805
  842
  881
  922
  966
  1,012
  1,060
  1,111
  1,164
  1,221
  1,280
  1,342
  1,408
  1,476
  1,549
Revenue / Adjusted assets
  1.121
  1.121
  1.122
  1.120
  1.119
  1.121
  1.122
  1.122
  1.121
  1.121
  1.121
  1.121
  1.121
  1.122
  1.121
  1.120
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.121
  1.120
  1.121
  1.121
  1.121
  1.121
  1.121
Average production assets, $m
  266
  274
  283
  293
  303
  315
  327
  340
  354
  369
  384
  401
  419
  438
  457
  478
  500
  524
  548
  574
  601
  630
  660
  692
  725
  760
  797
  836
  877
  920
Working capital, $m
  69
  71
  73
  76
  78
  81
  85
  88
  91
  95
  99
  104
  108
  113
  118
  124
  129
  135
  142
  148
  155
  163
  171
  179
  187
  197
  206
  216
  227
  238
Total debt, $m
  107
  116
  126
  137
  148
  160
  174
  188
  203
  219
  236
  254
  274
  294
  316
  338
  362
  388
  414
  442
  472
  503
  536
  570
  607
  645
  685
  728
  772
  819
Total liabilities, $m
  289
  298
  308
  318
  330
  342
  355
  370
  385
  401
  418
  436
  455
  476
  497
  520
  544
  569
  596
  624
  654
  685
  718
  752
  789
  827
  867
  909
  954
  1,000
Total equity, $m
  158
  163
  169
  174
  181
  188
  195
  203
  211
  220
  229
  239
  250
  261
  272
  285
  298
  312
  327
  342
  358
  375
  393
  412
  432
  453
  475
  498
  523
  548
Total liabilities and equity, $m
  447
  461
  477
  492
  511
  530
  550
  573
  596
  621
  647
  675
  705
  737
  769
  805
  842
  881
  923
  966
  1,012
  1,060
  1,111
  1,164
  1,221
  1,280
  1,342
  1,407
  1,477
  1,548
Debt-to-equity ratio
  0.680
  0.710
  0.750
  0.780
  0.820
  0.860
  0.890
  0.930
  0.960
  1.000
  1.030
  1.060
  1.100
  1.130
  1.160
  1.190
  1.220
  1.240
  1.270
  1.290
  1.320
  1.340
  1.360
  1.380
  1.400
  1.420
  1.440
  1.460
  1.480
  1.490
Adjusted equity ratio
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  62
  64
  66
  68
  70
  73
  75
  78
  81
  84
  87
  91
  94
  98
  102
  107
  111
  116
  121
  127
  132
  138
  145
  151
  158
  166
  173
  181
  190
  199
Depreciation, amort., depletion, $m
  30
  30
  31
  33
  34
  35
  36
  38
  39
  41
  43
  45
  47
  49
  51
  53
  56
  58
  61
  64
  67
  70
  73
  77
  81
  84
  89
  93
  97
  102
Funds from operations, $m
  92
  94
  97
  101
  104
  108
  112
  116
  120
  125
  130
  135
  141
  147
  153
  160
  167
  174
  182
  191
  199
  208
  218
  228
  239
  250
  262
  274
  287
  301
Change in working capital, $m
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
Cash from operations, $m
  90
  92
  95
  98
  101
  105
  108
  112
  117
  121
  126
  131
  136
  142
  148
  155
  161
  168
  176
  184
  192
  201
  210
  220
  230
  241
  252
  264
  277
  290
Maintenance CAPEX, $m
  -29
  -30
  -30
  -31
  -33
  -34
  -35
  -36
  -38
  -39
  -41
  -43
  -45
  -47
  -49
  -51
  -53
  -56
  -58
  -61
  -64
  -67
  -70
  -73
  -77
  -81
  -84
  -89
  -93
  -97
New CAPEX, $m
  -8
  -8
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -32
  -33
  -35
  -37
  -39
  -41
  -43
Cash from investing activities, $m
  -37
  -38
  -39
  -41
  -44
  -45
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -66
  -69
  -72
  -75
  -79
  -83
  -87
  -91
  -96
  -100
  -105
  -110
  -116
  -121
  -128
  -134
  -140
Free cash flow, $m
  54
  55
  56
  57
  58
  60
  61
  63
  65
  67
  69
  72
  74
  77
  80
  83
  86
  90
  93
  97
  101
  106
  110
  115
  120
  125
  131
  137
  143
  150
Issuance/(repayment) of debt, $m
  8
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  20
  22
  23
  24
  25
  27
  28
  30
  31
  33
  35
  36
  38
  40
  42
  44
  47
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  
  8
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  20
  22
  23
  24
  25
  27
  28
  30
  31
  33
  35
  36
  38
  40
  42
  44
  47
Total cash flow (excl. dividends), $m
  62
  64
  65
  67
  70
  72
  74
  77
  80
  83
  86
  90
  93
  97
  101
  106
  110
  115
  120
  125
  131
  137
  143
  149
  156
  164
  171
  179
  188
  196
Retained Cash Flow (-), $m
  -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
  -23
  -24
  -26
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
  57
  59
  60
  62
  63
  65
  67
  69
  72
  74
  77
  80
  83
  86
  89
  93
  97
  101
  105
  110
  115
  120
  125
  130
  136
  143
  149
  156
  163
  171
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
  55
  54
  52
  51
  49
  47
  45
  43
  41
  39
  37
  34
  31
  29
  26
  24
  21
  19
  16
  14
  12
  10
  8
  7
  5
  4
  3
  2
  2
  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

Ciner Resources LP, through its subsidiary, Ciner Wyoming LLC (Ciner Wyoming), produces soda ash and serves a global market from its facility in the Green River Basin of Wyoming. The Company processes trona ore into soda ash, a raw material in flat glass, container glass, detergents, chemicals, paper and other consumer and industrial products. As of December 31, 2016, its Green River Basin surface operations were situated on approximately 880 acres in Wyoming, and the Company's mining operations included approximately 23,500 acres of leased and licensed subsurface mining area. The Company's mining leases and license are located in two mining beds, designated by the United States Geological Survey as beds 24 and 25, at depths of 800 to 1100 feet, respectively, below the surface. The Company uses a continuous mining technique to mine trona and roof bolt the ceiling simultaneously. The Company's soda ash is shipped by rail or truck from its Green River Basin operations.

FINANCIAL RATIOS  of  Ciner Resources LP (CINR)

Valuation Ratios
P/E Ratio 12.1
Price to Sales 1
Price to Book 3.2
Price to Tangible Book
Price to Cash Flow 3.9
Price to Free Cash Flow 4.8
Growth Rates
Sales Growth Rate -2.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -30.6%
Cap. Spend. - 3 Yr. Gr. Rate 9.3%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 58.2%
Total Debt to Equity 64.1%
Interest Coverage 30
Management Effectiveness
Return On Assets 10.5%
Ret/ On Assets - 3 Yr. Avg. 11.5%
Return On Total Capital 15.9%
Ret/ On T. Cap. - 3 Yr. Avg. 16.5%
Return On Equity 26.5%
Return On Equity - 3 Yr. Avg. 30.5%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 24%
Gross Margin - 3 Yr. Avg. 25.3%
EBITDA Margin 24.4%
EBITDA Margin - 3 Yr. Avg. 25.9%
Operating Margin 18.9%
Oper. Margin - 3 Yr. Avg. 20.7%
Pre-Tax Margin 18.1%
Pre-Tax Margin - 3 Yr. Avg. 19.9%
Net Profit Margin 8.6%
Net Profit Margin - 3 Yr. Avg. 9.7%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 107.3%

CINR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CINR stock intrinsic value calculation we used $487 million for the last fiscal year's total revenue generated by Ciner Resources LP. The default revenue input number comes from 0001 income statement of Ciner Resources LP. 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 CINR stock valuation model: a) initial revenue growth rate of 2.9% 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 CINR is calculated based on our internal credit rating of Ciner Resources LP, 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 Ciner Resources LP.
    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 CINR stock the variable cost ratio is equal to 81.9%.

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 CINR 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 Ciner Resources LP.

Corporate tax rate of 27% is the nominal tax rate for Ciner Resources LP. 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 CINR 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 CINR are equal to 53%.

Life of production assets of 9 years is the average useful life of capital assets used in Ciner Resources LP 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 CINR is equal to 13.7%. 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 - $153.9 million for Ciner Resources LP - 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 19.744 million for Ciner Resources LP 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 Ciner Resources LP at the current share price and the inputted number of shares is $0.5 billion.

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