Intrinsic value of China Cord Blood - CO

Previous Close

$10.52

  Intrinsic Value

$15.09

stock screener

  Rating & Target

buy

+43%

Previous close

$10.52

 
Intrinsic value

$15.09

 
Up/down potential

+43%

 
Rating

buy

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

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.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of China Cord Blood (CO) stock.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  14.58
  25.90
  23.81
  21.93
  20.24
  18.71
  17.34
  16.11
  15.00
  14.00
  13.10
  12.29
  11.56
  10.90
  10.31
  9.78
  9.30
  8.87
  8.49
  8.14
  7.82
  7.54
  7.29
  7.06
  6.85
  6.67
  6.50
  6.35
  6.22
  6.09
  5.98
Revenue, $m
  110
  138
  171
  209
  251
  298
  350
  407
  468
  533
  603
  677
  755
  837
  924
  1,014
  1,108
  1,207
  1,309
  1,416
  1,526
  1,642
  1,761
  1,886
  2,015
  2,149
  2,289
  2,434
  2,585
  2,743
  2,907
Variable operating expenses, $m
 
  30
  37
  46
  55
  65
  76
  89
  102
  116
  131
  148
  165
  183
  201
  221
  242
  263
  285
  309
  333
  358
  384
  411
  439
  468
  499
  531
  564
  598
  634
Fixed operating expenses, $m
 
  50
  51
  53
  54
  55
  57
  58
  60
  61
  63
  64
  66
  68
  69
  71
  73
  75
  76
  78
  80
  82
  84
  86
  89
  91
  93
  95
  98
  100
  103
Total operating expenses, $m
  72
  80
  88
  99
  109
  120
  133
  147
  162
  177
  194
  212
  231
  251
  270
  292
  315
  338
  361
  387
  413
  440
  468
  497
  528
  559
  592
  626
  662
  698
  737
Operating income, $m
  38
  58
  83
  111
  142
  178
  217
  260
  306
  356
  409
  465
  525
  587
  653
  722
  794
  869
  947
  1,029
  1,113
  1,201
  1,293
  1,388
  1,487
  1,590
  1,697
  1,808
  1,924
  2,045
  2,171
EBITDA, $m
  46
  68
  95
  126
  161
  200
  243
  289
  340
  394
  453
  514
  580
  648
  720
  796
  875
  957
  1,043
  1,132
  1,225
  1,321
  1,421
  1,525
  1,634
  1,746
  1,864
  1,985
  2,112
  2,245
  2,382
Interest expense (income), $m
  14
  0
  -6
  0
  8
  16
  25
  35
  46
  57
  70
  83
  97
  112
  128
  145
  162
  180
  199
  219
  239
  260
  282
  305
  329
  354
  380
  407
  435
  464
  494
Earnings before tax, $m
  24
  58
  89
  110
  135
  162
  192
  225
  260
  298
  339
  382
  427
  475
  525
  577
  632
  689
  748
  810
  874
  941
  1,010
  1,083
  1,158
  1,236
  1,317
  1,401
  1,489
  1,581
  1,677
Tax expense, $m
  5
  16
  24
  30
  36
  44
  52
  61
  70
  81
  91
  103
  115
  128
  142
  156
  171
  186
  202
  219
  236
  254
  273
  292
  313
  334
  356
  378
  402
  427
  453
Net income, $m
  18
  42
  65
  81
  98
  118
  140
  164
  190
  218
  247
  279
  312
  347
  383
  421
  461
  503
  546
  591
  638
  687
  738
  790
  845
  902
  961
  1,023
  1,087
  1,154
  1,224

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  508
  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
  750
  304
  377
  459
  552
  656
  770
  894
  1,028
  1,171
  1,325
  1,488
  1,659
  1,840
  2,030
  2,229
  2,436
  2,652
  2,877
  3,111
  3,355
  3,608
  3,871
  4,144
  4,428
  4,723
  5,030
  5,350
  5,682
  6,028
  6,389
Adjusted assets (=assets-cash), $m
  242
  304
  377
  459
  552
  656
  770
  894
  1,028
  1,171
  1,325
  1,488
  1,659
  1,840
  2,030
  2,229
  2,436
  2,652
  2,877
  3,111
  3,355
  3,608
  3,871
  4,144
  4,428
  4,723
  5,030
  5,350
  5,682
  6,028
  6,389
Revenue / Adjusted assets
  0.455
  0.454
  0.454
  0.455
  0.455
  0.454
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
Average production assets, $m
  97
  122
  151
  184
  222
  263
  309
  359
  412
  470
  532
  597
  666
  739
  815
  894
  978
  1,064
  1,155
  1,249
  1,346
  1,448
  1,553
  1,663
  1,777
  1,895
  2,019
  2,147
  2,280
  2,419
  2,564
Working capital, $m
  322
  -47
  -58
  -70
  -84
  -100
  -118
  -137
  -157
  -179
  -203
  -227
  -254
  -281
  -310
  -341
  -372
  -405
  -440
  -476
  -513
  -552
  -592
  -634
  -677
  -722
  -769
  -818
  -869
  -922
  -977
Total debt, $m
  149
  -61
  4
  79
  162
  255
  358
  469
  590
  719
  857
  1,004
  1,159
  1,321
  1,492
  1,671
  1,858
  2,052
  2,255
  2,465
  2,684
  2,912
  3,149
  3,395
  3,650
  3,916
  4,192
  4,480
  4,779
  5,091
  5,415
Total liabilities, $m
  484
  274
  339
  414
  497
  590
  693
  804
  925
  1,054
  1,192
  1,339
  1,494
  1,656
  1,827
  2,006
  2,193
  2,387
  2,590
  2,800
  3,019
  3,247
  3,484
  3,730
  3,985
  4,251
  4,527
  4,815
  5,114
  5,426
  5,750
Total equity, $m
  266
  30
  38
  46
  55
  66
  77
  89
  103
  117
  132
  149
  166
  184
  203
  223
  244
  265
  288
  311
  335
  361
  387
  414
  443
  472
  503
  535
  568
  603
  639
Total liabilities and equity, $m
  750
  304
  377
  460
  552
  656
  770
  893
  1,028
  1,171
  1,324
  1,488
  1,660
  1,840
  2,030
  2,229
  2,437
  2,652
  2,878
  3,111
  3,354
  3,608
  3,871
  4,144
  4,428
  4,723
  5,030
  5,350
  5,682
  6,029
  6,389
Debt-to-equity ratio
  0.560
  -2.010
  0.110
  1.710
  2.940
  3.890
  4.650
  5.250
  5.740
  6.140
  6.470
  6.750
  6.980
  7.180
  7.350
  7.500
  7.620
  7.740
  7.840
  7.920
  8.000
  8.070
  8.130
  8.190
  8.240
  8.290
  8.330
  8.370
  8.410
  8.440
  8.480
Adjusted equity ratio
  -0.384
  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
  18
  42
  65
  81
  98
  118
  140
  164
  190
  218
  247
  279
  312
  347
  383
  421
  461
  503
  546
  591
  638
  687
  738
  790
  845
  902
  961
  1,023
  1,087
  1,154
  1,224
Depreciation, amort., depletion, $m
  8
  10
  12
  15
  18
  22
  26
  30
  34
  39
  44
  49
  55
  61
  67
  74
  81
  88
  95
  103
  111
  120
  128
  137
  147
  157
  167
  177
  188
  200
  212
Funds from operations, $m
  139
  52
  77
  96
  117
  140
  166
  194
  224
  257
  291
  328
  367
  408
  451
  495
  542
  591
  642
  695
  749
  807
  866
  928
  992
  1,059
  1,128
  1,200
  1,276
  1,354
  1,436
Change in working capital, $m
  47
  -10
  -11
  -13
  -14
  -16
  -17
  -19
  -20
  -22
  -23
  -25
  -26
  -28
  -29
  -30
  -32
  -33
  -34
  -36
  -37
  -39
  -40
  -42
  -43
  -45
  -47
  -49
  -51
  -53
  -55
Cash from operations, $m
  92
  62
  88
  108
  131
  156
  183
  213
  245
  279
  315
  353
  393
  435
  480
  526
  574
  624
  676
  730
  787
  845
  906
  969
  1,035
  1,104
  1,175
  1,249
  1,327
  1,407
  1,491
Maintenance CAPEX, $m
  0
  -8
  -10
  -12
  -15
  -18
  -22
  -26
  -30
  -34
  -39
  -44
  -49
  -55
  -61
  -67
  -74
  -81
  -88
  -95
  -103
  -111
  -120
  -128
  -137
  -147
  -157
  -167
  -177
  -188
  -200
New CAPEX, $m
  -4
  -25
  -29
  -33
  -37
  -41
  -46
  -50
  -54
  -58
  -62
  -65
  -69
  -73
  -76
  -80
  -83
  -87
  -90
  -94
  -98
  -102
  -106
  -110
  -114
  -118
  -123
  -128
  -133
  -139
  -145
Cash from investing activities, $m
  -13
  -33
  -39
  -45
  -52
  -59
  -68
  -76
  -84
  -92
  -101
  -109
  -118
  -128
  -137
  -147
  -157
  -168
  -178
  -189
  -201
  -213
  -226
  -238
  -251
  -265
  -280
  -295
  -310
  -327
  -345
Free cash flow, $m
  79
  29
  49
  63
  78
  96
  116
  138
  161
  187
  214
  244
  275
  308
  342
  379
  417
  456
  498
  541
  586
  632
  681
  731
  784
  838
  895
  954
  1,016
  1,080
  1,146
Issuance/(repayment) of debt, $m
  -9
  -61
  65
  74
  84
  93
  102
  112
  121
  129
  138
  147
  155
  163
  171
  179
  187
  195
  203
  211
  219
  228
  237
  246
  256
  266
  276
  287
  299
  312
  325
Issuance/(repurchase) of shares, $m
  0
  81
  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  
  -9
  20
  65
  74
  84
  93
  102
  112
  121
  129
  138
  147
  155
  163
  171
  179
  187
  195
  203
  211
  219
  228
  237
  246
  256
  266
  276
  287
  299
  312
  325
Total cash flow (excl. dividends), $m
  73
  49
  114
  137
  162
  189
  218
  249
  282
  316
  352
  390
  430
  471
  513
  557
  603
  651
  700
  752
  805
  860
  918
  977
  1,039
  1,104
  1,172
  1,242
  1,315
  1,391
  1,471
Retained Cash Flow (-), $m
  -19
  -123
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -33
  -35
  -36
Prev. year cash balance distribution, $m
 
  359
  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
 
  284
  107
  129
  153
  179
  207
  237
  268
  302
  337
  374
  412
  452
  494
  538
  583
  629
  678
  728
  781
  835
  891
  950
  1,011
  1,075
  1,141
  1,210
  1,282
  1,357
  1,435
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
 
  273
  98
  112
  126
  139
  150
  160
  168
  173
  177
  178
  176
  172
  166
  158
  148
  137
  125
  112
  99
  86
  74
  62
  51
  42
  33
  26
  20
  15
  11
Current shareholders' claim on cash, %
  100
  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  China Cord Blood (CO)

Valuation Ratios
P/E Ratio 42.7
Price to Sales 7
Price to Book 2.9
Price to Tangible Book
Price to Cash Flow 8.3
Price to Free Cash Flow 8.7
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 $110 million for the last fiscal year's total revenue generated by China Cord Blood. The default revenue input number comes from 2017 income statement of China Cord Blood. 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 25.9% 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 CO is calculated based on our internal credit rating of China Cord Blood, 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 Cord Blood.
    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 21.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $49 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 9.7% for China Cord Blood.

Corporate tax rate of 27% is the nominal tax rate for China Cord Blood. 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 88.2%.

Life of production assets of 12.1 years is the average useful life of capital assets used in China Cord Blood 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 -33.6%. 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 - $266 million for China Cord Blood - 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 115.578 million for China Cord Blood 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 Cord Blood at the current share price and the inputted number of shares is $1.2 billion.

RELATED COMPANIES Price Int.Val. Rating

COMPANY NEWS

▶ How A Danish Speaker Startup Raised $3 million   [Dec-19-17 08:44AM  Forbes]
▶ China Cord Blood posts 2Q profit   [Nov-20-17 04:31PM  Associated Press]
▶ European Union continues to crack down on U.S. companies   [Oct-04-17 08:59AM  Yahoo Finance]
▶ Is It Time To Sell China Cord Blood Corporation (CO)?   [Oct-02-17 06:37PM  Simply Wall St.]
▶ China Cord Blood posts 1Q profit   [Aug-23-17 09:26PM  Associated Press]
▶ Here's What a Breakup of Procter & Gamble Would Look Like   [Jul-19-17 03:10PM  TheStreet.com]
▶ China Cord Blood posts 4Q profit   [Jun-21-17 09:39PM  Associated Press]
▶ [$$] Investment is in the blood for stem cell futurists   [May-25-17 12:01AM  Financial Times]
▶ Is Pepsi Kraft Heinz's Next Takeover Target?   [Apr-12-17 12:31PM  Barrons.com]
▶ China Cord Blood Corporation Announces Executive Change   [Mar-31-17 07:00AM  PR Newswire]
▶ China Cord Blood posts 3Q profit   [Feb-24-17 04:22PM  Associated Press]
▶ [$$] The buying spree behind the Beijing crackdown   [Nov-29-16 09:12AM  at Financial Times]
Financial statements of CO
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