Intrinsic value of China XD Plastics - CXDC

Previous Close

$1.90

  Intrinsic Value

$23.90

stock screener

  Rating & Target

str. buy

+999%

Previous close

$1.90

 
Intrinsic value

$23.90

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of CXDC 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 0.1

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  1,316
  1,347
  1,381
  1,420
  1,463
  1,510
  1,562
  1,617
  1,677
  1,742
  1,811
  1,884
  1,962
  2,045
  2,134
  2,227
  2,326
  2,431
  2,541
  2,658
  2,781
  2,911
  3,048
  3,193
  3,345
  3,505
  3,673
  3,850
  4,037
  4,233
Variable operating expenses, $m
  1,132
  1,158
  1,188
  1,221
  1,258
  1,298
  1,342
  1,390
  1,442
  1,497
  1,553
  1,616
  1,683
  1,754
  1,830
  1,910
  1,995
  2,085
  2,179
  2,280
  2,385
  2,497
  2,614
  2,738
  2,868
  3,005
  3,150
  3,302
  3,462
  3,630
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
  1,132
  1,158
  1,188
  1,221
  1,258
  1,298
  1,342
  1,390
  1,442
  1,497
  1,553
  1,616
  1,683
  1,754
  1,830
  1,910
  1,995
  2,085
  2,179
  2,280
  2,385
  2,497
  2,614
  2,738
  2,868
  3,005
  3,150
  3,302
  3,462
  3,630
Operating income, $m
  184
  189
  194
  199
  205
  212
  219
  227
  236
  245
  258
  268
  280
  291
  304
  317
  331
  346
  362
  379
  396
  415
  434
  455
  477
  499
  523
  549
  575
  603
EBITDA, $m
  231
  236
  242
  249
  256
  265
  274
  284
  294
  305
  317
  330
  344
  359
  374
  390
  408
  426
  446
  466
  488
  510
  534
  560
  586
  614
  644
  675
  708
  742
Interest expense (income), $m
  46
  51
  53
  55
  58
  61
  65
  69
  73
  77
  82
  87
  93
  99
  105
  112
  119
  127
  135
  143
  152
  161
  171
  182
  193
  205
  217
  230
  244
  258
  273
Earnings before tax, $m
  134
  136
  138
  141
  144
  147
  151
  155
  159
  163
  171
  176
  181
  186
  192
  198
  205
  212
  219
  227
  235
  243
  252
  262
  272
  282
  293
  305
  317
  330
Tax expense, $m
  36
  37
  37
  38
  39
  40
  41
  42
  43
  44
  46
  47
  49
  50
  52
  54
  55
  57
  59
  61
  63
  66
  68
  71
  73
  76
  79
  82
  86
  89
Net income, $m
  98
  99
  101
  103
  105
  107
  110
  113
  116
  119
  125
  128
  132
  136
  140
  145
  150
  155
  160
  165
  171
  178
  184
  191
  198
  206
  214
  223
  232
  241

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
  2,596
  2,656
  2,724
  2,801
  2,886
  2,979
  3,080
  3,190
  3,308
  3,435
  3,571
  3,716
  3,870
  4,034
  4,209
  4,393
  4,588
  4,795
  5,013
  5,243
  5,486
  5,742
  6,013
  6,297
  6,597
  6,913
  7,245
  7,595
  7,962
  8,349
Adjusted assets (=assets-cash), $m
  2,596
  2,656
  2,724
  2,801
  2,886
  2,979
  3,080
  3,190
  3,308
  3,435
  3,571
  3,716
  3,870
  4,034
  4,209
  4,393
  4,588
  4,795
  5,013
  5,243
  5,486
  5,742
  6,013
  6,297
  6,597
  6,913
  7,245
  7,595
  7,962
  8,349
Revenue / Adjusted assets
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
  0.507
Average production assets, $m
  852
  871
  894
  919
  947
  977
  1,010
  1,046
  1,085
  1,127
  1,171
  1,219
  1,270
  1,323
  1,381
  1,441
  1,505
  1,573
  1,644
  1,720
  1,800
  1,884
  1,972
  2,066
  2,164
  2,268
  2,377
  2,491
  2,612
  2,739
Working capital, $m
  233
  238
  244
  251
  259
  267
  276
  286
  297
  308
  320
  333
  347
  362
  378
  394
  412
  430
  450
  471
  492
  515
  540
  565
  592
  620
  650
  682
  715
  749
Total debt, $m
  928
  971
  1,020
  1,075
  1,136
  1,203
  1,276
  1,355
  1,440
  1,532
  1,630
  1,734
  1,845
  1,963
  2,088
  2,221
  2,362
  2,510
  2,667
  2,833
  3,008
  3,193
  3,387
  3,592
  3,808
  4,035
  4,275
  4,526
  4,791
  5,070
Total liabilities, $m
  1,869
  1,912
  1,961
  2,017
  2,078
  2,145
  2,218
  2,297
  2,382
  2,473
  2,571
  2,676
  2,787
  2,905
  3,030
  3,163
  3,303
  3,452
  3,609
  3,775
  3,950
  4,135
  4,329
  4,534
  4,750
  4,977
  5,216
  5,468
  5,733
  6,011
Total equity, $m
  727
  744
  763
  784
  808
  834
  862
  893
  926
  962
  1,000
  1,041
  1,084
  1,130
  1,178
  1,230
  1,285
  1,342
  1,404
  1,468
  1,536
  1,608
  1,684
  1,763
  1,847
  1,936
  2,029
  2,126
  2,229
  2,338
Total liabilities and equity, $m
  2,596
  2,656
  2,724
  2,801
  2,886
  2,979
  3,080
  3,190
  3,308
  3,435
  3,571
  3,717
  3,871
  4,035
  4,208
  4,393
  4,588
  4,794
  5,013
  5,243
  5,486
  5,743
  6,013
  6,297
  6,597
  6,913
  7,245
  7,594
  7,962
  8,349
Debt-to-equity ratio
  1.280
  1.310
  1.340
  1.370
  1.410
  1.440
  1.480
  1.520
  1.550
  1.590
  1.630
  1.670
  1.700
  1.740
  1.770
  1.810
  1.840
  1.870
  1.900
  1.930
  1.960
  1.990
  2.010
  2.040
  2.060
  2.080
  2.110
  2.130
  2.150
  2.170
Adjusted equity ratio
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  98
  99
  101
  103
  105
  107
  110
  113
  116
  119
  125
  128
  132
  136
  140
  145
  150
  155
  160
  165
  171
  178
  184
  191
  198
  206
  214
  223
  232
  241
Depreciation, amort., depletion, $m
  46
  47
  49
  50
  51
  53
  54
  56
  58
  60
  59
  62
  64
  67
  70
  73
  76
  80
  83
  87
  91
  96
  100
  105
  110
  115
  121
  126
  133
  139
Funds from operations, $m
  144
  147
  149
  153
  156
  160
  165
  169
  174
  179
  184
  190
  196
  203
  210
  218
  226
  234
  243
  253
  263
  273
  284
  296
  308
  321
  335
  349
  364
  380
Change in working capital, $m
  5
  5
  6
  7
  8
  8
  9
  10
  11
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
  31
  33
  35
Cash from operations, $m
  139
  141
  143
  146
  149
  152
  155
  159
  163
  168
  172
  177
  183
  188
  195
  201
  208
  216
  224
  232
  241
  250
  260
  270
  281
  293
  305
  318
  331
  345
Maintenance CAPEX, $m
  -42
  -43
  -44
  -45
  -47
  -48
  -50
  -51
  -53
  -55
  -57
  -59
  -62
  -64
  -67
  -70
  -73
  -76
  -80
  -83
  -87
  -91
  -96
  -100
  -105
  -110
  -115
  -121
  -126
  -133
New CAPEX, $m
  -17
  -20
  -22
  -25
  -28
  -31
  -33
  -36
  -39
  -42
  -45
  -48
  -51
  -54
  -57
  -60
  -64
  -68
  -72
  -76
  -80
  -84
  -89
  -93
  -98
  -104
  -109
  -115
  -121
  -127
Cash from investing activities, $m
  -59
  -63
  -66
  -70
  -75
  -79
  -83
  -87
  -92
  -97
  -102
  -107
  -113
  -118
  -124
  -130
  -137
  -144
  -152
  -159
  -167
  -175
  -185
  -193
  -203
  -214
  -224
  -236
  -247
  -260
Free cash flow, $m
  80
  78
  77
  75
  74
  73
  73
  72
  71
  71
  70
  70
  70
  70
  70
  71
  71
  72
  72
  73
  74
  75
  76
  77
  78
  79
  81
  82
  84
  86
Issuance/(repayment) of debt, $m
  38
  43
  49
  55
  61
  67
  73
  79
  85
  91
  98
  104
  111
  118
  125
  133
  141
  149
  157
  166
  175
  185
  195
  205
  216
  227
  239
  252
  265
  279
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  
  38
  43
  49
  55
  61
  67
  73
  79
  85
  91
  98
  104
  111
  118
  125
  133
  141
  149
  157
  166
  175
  185
  195
  205
  216
  227
  239
  252
  265
  279
Total cash flow (excl. dividends), $m
  118
  121
  126
  131
  135
  140
  146
  151
  157
  163
  168
  174
  181
  188
  196
  204
  212
  220
  229
  239
  249
  259
  270
  282
  294
  307
  320
  334
  349
  364
Retained Cash Flow (-), $m
  -14
  -17
  -19
  -21
  -24
  -26
  -28
  -31
  -33
  -36
  -38
  -41
  -43
  -46
  -49
  -52
  -55
  -58
  -61
  -64
  -68
  -72
  -76
  -80
  -84
  -88
  -93
  -98
  -103
  -108
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
  104
  105
  107
  109
  112
  114
  117
  120
  124
  127
  130
  134
  138
  142
  147
  152
  157
  163
  168
  174
  181
  188
  195
  202
  210
  218
  227
  236
  246
  256
Discount rate, %
  5.00
  5.25
  5.51
  5.79
  6.08
  6.38
  6.70
  7.04
  7.39
  7.76
  8.14
  8.55
  8.98
  9.43
  9.90
  10.39
  10.91
  11.46
  12.03
  12.63
  13.27
  13.93
  14.63
  15.36
  16.13
  16.93
  17.78
  18.67
  19.60
  20.58
PV of cash for distribution, $m
  99
  94
  91
  87
  83
  79
  74
  70
  65
  60
  55
  50
  45
  40
  36
  31
  27
  23
  19
  16
  13
  11
  8
  7
  5
  4
  3
  2
  1
  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

China XD Plastics Company Limited (China XD) is a specialty chemical company. The Company is engaged in the research, development, manufacture and sale of modified plastics for automotive applications in China and to a lesser extent, in Dubai, the United Arab Emirates (UAE). The Company operates in the modified plastics segment. Through its subsidiaries, Heilongjiang Xinda Enterprise Group Company Limited (HLJ Xinda Group) and AL Composites Materials FZE (Dubai Composites), the Company manufactures and sells polymer composite materials (including modified plastics), for automotive applications. The Company's products categories include Modified Polypropylene (PP), Modified Acrylonitrile Butadiene Styrene (ABS), Modified Polyamide 66 (PA66), Modified Polyamide 6 (PA6), Modified Polyoxymethylenes (POM), Modified Polyphenylene Oxide (PPO), Plastic Alloy, Modified Polyphenylene Sulfide (PPS), Modified Polyimide (PI), Modified Polylactic Acid (PLA) and Poly Ether Ether Ketone (PEEK).

FINANCIAL RATIOS  of  China XD Plastics (CXDC)

Valuation Ratios
P/E Ratio 0.9
Price to Sales 0.1
Price to Book 0.1
Price to Tangible Book
Price to Cash Flow 1.1
Price to Free Cash Flow -0.7
Growth Rates
Sales Growth Rate 20.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -24.9%
Cap. Spend. - 3 Yr. Gr. Rate 58.6%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 34%
Total Debt to Equity 94.8%
Interest Coverage 4
Management Effectiveness
Return On Assets 7.3%
Ret/ On Assets - 3 Yr. Avg. 9.2%
Return On Total Capital 7.7%
Ret/ On T. Cap. - 3 Yr. Avg. 9.4%
Return On Equity 14.5%
Return On Equity - 3 Yr. Avg. 16.3%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 20.5%
Gross Margin - 3 Yr. Avg. 19.5%
EBITDA Margin 16.6%
EBITDA Margin - 3 Yr. Avg. 17.1%
Operating Margin 12.4%
Oper. Margin - 3 Yr. Avg. 13.8%
Pre-Tax Margin 9.9%
Pre-Tax Margin - 3 Yr. Avg. 10.9%
Net Profit Margin 8.5%
Net Profit Margin - 3 Yr. Avg. 9.3%
Effective Tax Rate 14.3%
Eff/ Tax Rate - 3 Yr. Avg. 15%
Payout Ratio 0%

CXDC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CXDC stock intrinsic value calculation we used $1290.447748 million for the last fiscal year's total revenue generated by China XD Plastics. The default revenue input number comes from 0001 income statement of China XD Plastics. 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 CXDC stock valuation model: a) initial revenue growth rate of 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 5%, whose default value for CXDC is calculated based on our internal credit rating of China XD Plastics, 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 XD Plastics.
    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 CXDC stock the variable cost ratio is equal to 86%.

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 CXDC 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 5.7% for China XD Plastics.

Corporate tax rate of 27% is the nominal tax rate for China XD Plastics. 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 CXDC 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 CXDC are equal to 64.7%.

Life of production assets of 19.7 years is the average useful life of capital assets used in China XD Plastics 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 CXDC is equal to 17.7%. 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 - $712.778 million for China XD Plastics - 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 50.288 million for China XD Plastics 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 XD Plastics at the current share price and the inputted number of shares is $0.1 billion.

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COMPANY NEWS

▶ China XD: 3Q Earnings Snapshot   [Nov-05-18 09:25AM  Associated Press]
▶ China XD Plastics Co., Ltd. to Host Earnings Call   [Aug-09-18 07:00AM  ACCESSWIRE]
▶ China XD: 2Q Earnings Snapshot   [06:54AM  Associated Press]
▶ China XD: 1Q Earnings Snapshot   [May-10-18 06:49AM  Associated Press]
▶ China XD reports 4Q loss   [09:01AM  Associated Press]
▶ China XD posts 3Q profit   [08:41AM  Associated Press]
▶ China XD posts 2Q profit   [Aug-09-17 11:43PM  Associated Press]
▶ China XD posts 1Q profit   [May-10-17 08:18AM  Associated Press]
▶ China XD posts 4Q profit   [08:46AM  Associated Press]

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