Intrinsic value of Global Cord Blood Corporation - CO

Previous Close

$6.99

  Intrinsic Value

$23.21

stock screener

  Rating & Target

str. buy

+232%

Previous close

$6.99

 
Intrinsic value

$23.21

 
Up/down potential

+232%

 
Rating

str. buy

We calculate the intrinsic value of CO 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 0.8

 

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, %
  34.40
  31.46
  28.81
  26.43
  24.29
  22.36
  20.62
  19.06
  17.66
  16.39
  15.25
  14.23
  13.30
  12.47
  11.73
  11.05
  10.45
  9.90
  9.41
  8.97
  8.57
  8.22
  7.90
  7.61
  7.35
  7.11
  6.90
  6.71
  6.54
  6.38
Revenue, $m
  199
  261
  337
  426
  529
  648
  781
  930
  1,094
  1,274
  1,468
  1,677
  1,900
  2,137
  2,388
  2,651
  2,928
  3,218
  3,521
  3,837
  4,166
  4,509
  4,865
  5,235
  5,619
  6,019
  6,434
  6,866
  7,315
  7,782
Variable operating expenses, $m
  129
  168
  217
  273
  339
  415
  500
  595
  700
  815
  937
  1,070
  1,213
  1,364
  1,524
  1,692
  1,869
  2,054
  2,247
  2,449
  2,659
  2,877
  3,105
  3,341
  3,586
  3,841
  4,106
  4,382
  4,668
  4,966
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
  129
  168
  217
  273
  339
  415
  500
  595
  700
  815
  937
  1,070
  1,213
  1,364
  1,524
  1,692
  1,869
  2,054
  2,247
  2,449
  2,659
  2,877
  3,105
  3,341
  3,586
  3,841
  4,106
  4,382
  4,668
  4,966
Operating income, $m
  70
  93
  120
  152
  190
  233
  281
  335
  394
  459
  531
  607
  687
  773
  864
  959
  1,060
  1,164
  1,274
  1,388
  1,507
  1,631
  1,760
  1,894
  2,033
  2,178
  2,328
  2,484
  2,646
  2,815
EBITDA, $m
  82
  108
  139
  175
  218
  267
  322
  383
  451
  524
  604
  690
  782
  880
  983
  1,092
  1,206
  1,325
  1,450
  1,580
  1,715
  1,856
  2,003
  2,155
  2,314
  2,478
  2,649
  2,827
  3,012
  3,204
Interest expense (income), $m
  14
  0
  -2
  5
  13
  22
  33
  46
  60
  76
  94
  113
  134
  156
  180
  205
  232
  260
  290
  321
  354
  387
  423
  459
  497
  537
  578
  621
  665
  712
  760
Earnings before tax, $m
  70
  95
  116
  140
  168
  199
  235
  275
  318
  365
  418
  473
  531
  593
  658
  727
  799
  874
  953
  1,035
  1,120
  1,209
  1,301
  1,397
  1,496
  1,599
  1,707
  1,819
  1,935
  2,056
Tax expense, $m
  19
  26
  31
  38
  45
  54
  63
  74
  86
  99
  113
  128
  143
  160
  178
  196
  216
  236
  257
  279
  302
  326
  351
  377
  404
  432
  461
  491
  522
  555
Net income, $m
  51
  69
  84
  102
  122
  146
  172
  200
  232
  267
  305
  345
  388
  433
  481
  531
  583
  638
  696
  755
  818
  882
  950
  1,019
  1,092
  1,168
  1,246
  1,328
  1,412
  1,501

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
  438
  576
  742
  938
  1,166
  1,427
  1,721
  2,049
  2,411
  2,806
  3,234
  3,694
  4,185
  4,707
  5,259
  5,840
  6,450
  7,089
  7,756
  8,452
  9,177
  9,931
  10,715
  11,530
  12,377
  13,257
  14,172
  15,122
  16,111
  17,140
Adjusted assets (=assets-cash), $m
  438
  576
  742
  938
  1,166
  1,427
  1,721
  2,049
  2,411
  2,806
  3,234
  3,694
  4,185
  4,707
  5,259
  5,840
  6,450
  7,089
  7,756
  8,452
  9,177
  9,931
  10,715
  11,530
  12,377
  13,257
  14,172
  15,122
  16,111
  17,140
Revenue / Adjusted assets
  0.454
  0.453
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
Average production assets, $m
  123
  162
  209
  264
  328
  401
  484
  576
  677
  788
  909
  1,038
  1,176
  1,323
  1,478
  1,641
  1,813
  1,992
  2,180
  2,375
  2,579
  2,791
  3,011
  3,240
  3,478
  3,726
  3,983
  4,250
  4,528
  4,817
Working capital, $m
  -66
  -87
  -112
  -141
  -176
  -215
  -259
  -309
  -363
  -423
  -487
  -557
  -631
  -709
  -793
  -880
  -972
  -1,069
  -1,169
  -1,274
  -1,383
  -1,497
  -1,615
  -1,738
  -1,866
  -1,998
  -2,136
  -2,279
  -2,428
  -2,583
Total debt, $m
  -38
  86
  236
  412
  617
  852
  1,117
  1,412
  1,737
  2,093
  2,478
  2,892
  3,334
  3,804
  4,301
  4,824
  5,373
  5,948
  6,549
  7,175
  7,827
  8,506
  9,211
  9,945
  10,707
  11,499
  12,322
  13,178
  14,068
  14,994
Total liabilities, $m
  394
  518
  668
  844
  1,049
  1,284
  1,549
  1,844
  2,169
  2,525
  2,910
  3,324
  3,766
  4,236
  4,733
  5,256
  5,805
  6,380
  6,981
  7,607
  8,259
  8,938
  9,644
  10,377
  11,139
  11,931
  12,754
  13,610
  14,500
  15,426
Total equity, $m
  44
  58
  74
  94
  117
  143
  172
  205
  241
  281
  323
  369
  418
  471
  526
  584
  645
  709
  776
  845
  918
  993
  1,072
  1,153
  1,238
  1,326
  1,417
  1,512
  1,611
  1,714
Total liabilities and equity, $m
  438
  576
  742
  938
  1,166
  1,427
  1,721
  2,049
  2,410
  2,806
  3,233
  3,693
  4,184
  4,707
  5,259
  5,840
  6,450
  7,089
  7,757
  8,452
  9,177
  9,931
  10,716
  11,530
  12,377
  13,257
  14,171
  15,122
  16,111
  17,140
Debt-to-equity ratio
  -0.860
  1.500
  3.180
  4.390
  5.290
  5.970
  6.490
  6.890
  7.210
  7.460
  7.660
  7.830
  7.970
  8.080
  8.180
  8.260
  8.330
  8.390
  8.440
  8.490
  8.530
  8.560
  8.600
  8.630
  8.650
  8.670
  8.700
  8.710
  8.730
  8.750
Adjusted equity ratio
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  51
  69
  84
  102
  122
  146
  172
  200
  232
  267
  305
  345
  388
  433
  481
  531
  583
  638
  696
  755
  818
  882
  950
  1,019
  1,092
  1,168
  1,246
  1,328
  1,412
  1,501
Depreciation, amort., depletion, $m
  12
  15
  18
  23
  28
  34
  41
  48
  56
  65
  73
  84
  95
  107
  119
  132
  146
  161
  176
  192
  208
  225
  243
  261
  281
  300
  321
  343
  365
  388
Funds from operations, $m
  63
  84
  103
  125
  150
  179
  212
  249
  288
  332
  379
  429
  483
  540
  600
  663
  729
  799
  871
  947
  1,026
  1,107
  1,192
  1,281
  1,373
  1,468
  1,567
  1,670
  1,778
  1,889
Change in working capital, $m
  -17
  -21
  -25
  -30
  -34
  -39
  -44
  -49
  -55
  -60
  -64
  -69
  -74
  -79
  -83
  -88
  -92
  -96
  -101
  -105
  -109
  -114
  -118
  -123
  -128
  -133
  -138
  -143
  -149
  -155
Cash from operations, $m
  80
  105
  128
  154
  185
  219
  257
  298
  343
  392
  443
  498
  557
  618
  683
  751
  821
  895
  972
  1,052
  1,135
  1,221
  1,311
  1,404
  1,500
  1,601
  1,705
  1,814
  1,927
  2,044
Maintenance CAPEX, $m
  -7
  -10
  -13
  -17
  -21
  -26
  -32
  -39
  -46
  -55
  -64
  -73
  -84
  -95
  -107
  -119
  -132
  -146
  -161
  -176
  -192
  -208
  -225
  -243
  -261
  -281
  -300
  -321
  -343
  -365
New CAPEX, $m
  -31
  -39
  -47
  -55
  -64
  -73
  -83
  -92
  -102
  -111
  -120
  -129
  -138
  -147
  -155
  -163
  -171
  -180
  -188
  -196
  -204
  -212
  -220
  -229
  -238
  -247
  -257
  -267
  -278
  -289
Cash from investing activities, $m
  -38
  -49
  -60
  -72
  -85
  -99
  -115
  -131
  -148
  -166
  -184
  -202
  -222
  -242
  -262
  -282
  -303
  -326
  -349
  -372
  -396
  -420
  -445
  -472
  -499
  -528
  -557
  -588
  -621
  -654
Free cash flow, $m
  41
  56
  68
  83
  99
  119
  142
  167
  195
  226
  259
  296
  335
  377
  421
  468
  518
  569
  624
  680
  740
  801
  865
  932
  1,001
  1,073
  1,148
  1,225
  1,306
  1,390
Issuance/(repayment) of debt, $m
  -38
  124
  149
  176
  205
  235
  265
  295
  326
  356
  385
  414
  442
  470
  497
  523
  549
  575
  601
  626
  652
  679
  706
  733
  762
  792
  823
  856
  890
  926
Issuance/(repurchase) of shares, $m
  98
  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  
  60
  124
  149
  176
  205
  235
  265
  295
  326
  356
  385
  414
  442
  470
  497
  523
  549
  575
  601
  626
  652
  679
  706
  733
  762
  792
  823
  856
  890
  926
Total cash flow (excl. dividends), $m
  102
  180
  217
  259
  305
  354
  406
  462
  520
  581
  644
  710
  777
  847
  918
  991
  1,067
  1,144
  1,224
  1,307
  1,392
  1,480
  1,571
  1,665
  1,763
  1,865
  1,971
  2,081
  2,196
  2,316
Retained Cash Flow (-), $m
  -150
  -14
  -17
  -20
  -23
  -26
  -29
  -33
  -36
  -40
  -43
  -46
  -49
  -52
  -55
  -58
  -61
  -64
  -67
  -70
  -72
  -75
  -78
  -81
  -85
  -88
  -91
  -95
  -99
  -103
Prev. year cash balance distribution, $m
  598
  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
  550
  166
  201
  239
  282
  328
  377
  429
  484
  542
  601
  664
  728
  794
  863
  933
  1,006
  1,081
  1,158
  1,237
  1,319
  1,404
  1,492
  1,584
  1,678
  1,777
  1,879
  1,986
  2,097
  2,213
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
  528
  152
  175
  197
  218
  238
  255
  268
  278
  284
  286
  283
  277
  267
  253
  237
  219
  199
  178
  157
  136
  117
  98
  81
  65
  52
  40
  31
  23
  17
Current shareholders' claim on cash, %
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

China Cord Blood Corporation is a provider of cord blood banking services in China. The Company and its subsidiaries are principally engaged in the provision of umbilical cord blood storage and ancillary services in the People's Republic of China. It provides cord blood testing, processing and storage services under the direction of subscribers for a cord blood processing fee and a storage fee. It also tests, processes and stores donated cord blood, and provides matching services to the public for a fee. The Company provides cord blood processing and storage services for expectant parents interested in capturing the opportunities made available by evolving medical treatments and technologies, such as cord blood transplants. It also preserves cord blood units donated by the public; provides matching services on such donated units, and delivers matching units to patients in need of transplants. As of March 31, 2016, the Company had three operating cord blood banks.

FINANCIAL RATIOS  of  Global Cord Blood Corporation (CO)

Valuation Ratios
P/E Ratio 28.3
Price to Sales 4.6
Price to Book 1.9
Price to Tangible Book
Price to Cash Flow 5.5
Price to Free Cash Flow 5.8
Growth Rates
Sales Growth Rate 14.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 100%
Cap. Spend. - 3 Yr. Gr. Rate -28.9%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 56%
Interest Coverage 3
Management Effectiveness
Return On Assets 4.1%
Ret/ On Assets - 3 Yr. Avg. 3.5%
Return On Total Capital 4.5%
Ret/ On T. Cap. - 3 Yr. Avg. 4.3%
Return On Equity 7%
Return On Equity - 3 Yr. Avg. 6.7%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 80.9%
Gross Margin - 3 Yr. Avg. 79.5%
EBITDA Margin 41.8%
EBITDA Margin - 3 Yr. Avg. 39.5%
Operating Margin 34.5%
Oper. Margin - 3 Yr. Avg. 33.2%
Pre-Tax Margin 21.8%
Pre-Tax Margin - 3 Yr. Avg. 22.2%
Net Profit Margin 16.4%
Net Profit Margin - 3 Yr. Avg. 15.8%
Effective Tax Rate 20.8%
Eff/ Tax Rate - 3 Yr. Avg. 27.7%
Payout Ratio 0%

CO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CO stock intrinsic value calculation we used $148 million for the last fiscal year's total revenue generated by Global Cord Blood Corporation. The default revenue input number comes from 0001 income statement of Global Cord Blood Corporation. 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 CO stock valuation model: a) initial revenue growth rate of 34.4% 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 CO is calculated based on our internal credit rating of Global Cord Blood Corporation, 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 Global Cord Blood Corporation.
    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 CO stock the variable cost ratio is equal to 64.9%.

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 CO 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 Global Cord Blood Corporation.

Corporate tax rate of 27% is the nominal tax rate for Global Cord Blood Corporation. 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 CO 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 CO are equal to 61.9%.

Life of production assets of 12.4 years is the average useful life of capital assets used in Global Cord Blood Corporation 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 CO is equal to -33.2%. 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 - $492.541211834 million for Global Cord Blood Corporation - 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 121.551 million for Global Cord Blood Corporation 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 Global Cord Blood Corporation at the current share price and the inputted number of shares is $0.8 billion.

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