Intrinsic value of Fuwei Films (Holdings) Co., Ltd. - FFHL

Previous Close

$2.28

  Intrinsic Value

$9.47

stock screener

  Rating & Target

str. buy

+315%

Previous close

$2.28

 
Intrinsic value

$9.47

 
Up/down potential

+315%

 
Rating

str. buy

We calculate the intrinsic value of FFHL 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 0.0

 

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, %
  20.20
  18.68
  17.31
  16.08
  14.97
  13.98
  13.08
  12.27
  11.54
  10.89
  10.30
  9.77
  9.29
  8.86
  8.48
  8.13
  7.82
  7.53
  7.28
  7.05
  6.85
  6.66
  6.50
  6.35
  6.21
  6.09
  5.98
  5.88
  5.80
  5.72
Revenue, $m
  53
  63
  74
  85
  98
  112
  127
  142
  159
  176
  194
  213
  233
  253
  275
  297
  320
  345
  370
  396
  423
  451
  480
  511
  543
  576
  610
  646
  683
  722
Variable operating expenses, $m
  45
  52
  60
  69
  78
  88
  99
  110
  122
  135
  143
  157
  171
  187
  202
  219
  236
  254
  272
  292
  312
  332
  354
  376
  400
  424
  449
  476
  503
  532
Fixed operating expenses, $m
  11
  11
  12
  12
  12
  13
  13
  13
  13
  14
  14
  14
  15
  15
  15
  16
  16
  16
  17
  17
  17
  18
  18
  19
  19
  19
  20
  20
  21
  21
Total operating expenses, $m
  56
  63
  72
  81
  90
  101
  112
  123
  135
  149
  157
  171
  186
  202
  217
  235
  252
  270
  289
  309
  329
  350
  372
  395
  419
  443
  469
  496
  524
  553
Operating income, $m
  -3
  -1
  2
  5
  8
  11
  15
  19
  23
  27
  37
  42
  47
  52
  57
  63
  68
  74
  81
  87
  94
  101
  108
  116
  124
  132
  141
  150
  159
  169
EBITDA, $m
  11
  14
  19
  23
  28
  34
  39
  46
  52
  59
  66
  74
  81
  90
  98
  107
  116
  126
  136
  146
  157
  168
  180
  192
  205
  218
  232
  246
  261
  277
Interest expense (income), $m
  1
  1
  2
  3
  3
  4
  5
  6
  7
  8
  9
  10
  12
  13
  14
  16
  17
  19
  21
  22
  24
  26
  28
  30
  32
  34
  36
  39
  41
  43
  46
Earnings before tax, $m
  -4
  -2
  -1
  2
  4
  6
  9
  12
  15
  18
  27
  30
  34
  37
  41
  45
  49
  54
  58
  63
  68
  73
  78
  84
  90
  96
  102
  109
  116
  123
Tax expense, $m
  0
  0
  0
  0
  1
  2
  2
  3
  4
  5
  7
  8
  9
  10
  11
  12
  13
  15
  16
  17
  18
  20
  21
  23
  24
  26
  28
  29
  31
  33
Net income, $m
  -4
  -2
  -1
  1
  3
  5
  7
  9
  11
  13
  19
  22
  25
  27
  30
  33
  36
  39
  43
  46
  50
  53
  57
  61
  66
  70
  75
  79
  84
  90

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
  94
  111
  131
  152
  175
  199
  225
  253
  282
  312
  345
  378
  413
  450
  488
  528
  569
  612
  657
  703
  751
  801
  853
  907
  964
  1,022
  1,083
  1,147
  1,214
  1,283
Adjusted assets (=assets-cash), $m
  94
  111
  131
  152
  175
  199
  225
  253
  282
  312
  345
  378
  413
  450
  488
  528
  569
  612
  657
  703
  751
  801
  853
  907
  964
  1,022
  1,083
  1,147
  1,214
  1,283
Revenue / Adjusted assets
  0.564
  0.568
  0.565
  0.559
  0.560
  0.563
  0.564
  0.561
  0.564
  0.564
  0.562
  0.563
  0.564
  0.562
  0.564
  0.563
  0.562
  0.564
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.564
  0.563
  0.563
  0.563
  0.563
Average production assets, $m
  69
  82
  97
  112
  129
  147
  166
  186
  208
  231
  254
  279
  305
  332
  360
  390
  420
  452
  485
  519
  554
  591
  630
  670
  711
  755
  800
  847
  896
  947
Working capital, $m
  -23
  -27
  -32
  -37
  -42
  -48
  -54
  -61
  -68
  -75
  -83
  -91
  -100
  -108
  -118
  -127
  -137
  -147
  -158
  -169
  -181
  -193
  -206
  -219
  -232
  -246
  -261
  -276
  -292
  -309
Total debt, $m
  27
  37
  48
  60
  73
  87
  102
  118
  134
  152
  170
  190
  210
  231
  253
  275
  299
  324
  349
  376
  403
  432
  462
  493
  525
  559
  594
  630
  668
  708
Total liabilities, $m
  54
  64
  75
  87
  100
  114
  129
  145
  161
  179
  197
  217
  237
  258
  280
  302
  326
  351
  376
  403
  430
  459
  489
  520
  552
  586
  621
  657
  695
  735
Total equity, $m
  40
  48
  56
  65
  75
  85
  96
  108
  120
  133
  147
  162
  177
  192
  208
  225
  243
  261
  280
  300
  321
  342
  364
  387
  411
  437
  463
  490
  518
  548
Total liabilities and equity, $m
  94
  112
  131
  152
  175
  199
  225
  253
  281
  312
  344
  379
  414
  450
  488
  527
  569
  612
  656
  703
  751
  801
  853
  907
  963
  1,023
  1,084
  1,147
  1,213
  1,283
Debt-to-equity ratio
  0.670
  0.780
  0.860
  0.930
  0.980
  1.020
  1.060
  1.090
  1.120
  1.140
  1.160
  1.170
  1.190
  1.200
  1.210
  1.220
  1.230
  1.240
  1.250
  1.250
  1.260
  1.260
  1.270
  1.270
  1.280
  1.280
  1.280
  1.290
  1.290
  1.290
Adjusted equity ratio
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -4
  -2
  -1
  1
  3
  5
  7
  9
  11
  13
  19
  22
  25
  27
  30
  33
  36
  39
  43
  46
  50
  53
  57
  61
  66
  70
  75
  79
  84
  90
Depreciation, amort., depletion, $m
  13
  15
  17
  18
  20
  22
  24
  27
  29
  32
  29
  32
  35
  38
  41
  44
  48
  51
  55
  59
  63
  67
  72
  76
  81
  86
  91
  96
  102
  108
Funds from operations, $m
  9
  13
  16
  19
  23
  27
  31
  35
  40
  45
  48
  54
  59
  65
  71
  77
  84
  91
  98
  105
  113
  121
  129
  137
  146
  156
  166
  176
  186
  197
Change in working capital, $m
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -17
Cash from operations, $m
  13
  17
  21
  25
  29
  33
  37
  42
  47
  52
  56
  62
  68
  74
  80
  87
  94
  101
  108
  116
  124
  133
  141
  151
  160
  170
  180
  191
  202
  214
Maintenance CAPEX, $m
  -7
  -8
  -9
  -11
  -13
  -15
  -17
  -19
  -21
  -24
  -26
  -29
  -32
  -35
  -38
  -41
  -44
  -48
  -51
  -55
  -59
  -63
  -67
  -72
  -76
  -81
  -86
  -91
  -96
  -102
New CAPEX, $m
  -12
  -13
  -14
  -16
  -17
  -18
  -19
  -20
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -34
  -36
  -37
  -38
  -40
  -42
  -43
  -45
  -47
  -49
  -51
Cash from investing activities, $m
  -19
  -21
  -23
  -27
  -30
  -33
  -36
  -39
  -43
  -47
  -50
  -54
  -58
  -62
  -66
  -70
  -74
  -80
  -84
  -89
  -95
  -100
  -105
  -112
  -118
  -124
  -131
  -138
  -145
  -153
Free cash flow, $m
  -5
  -4
  -3
  -2
  -1
  0
  1
  3
  4
  6
  6
  8
  10
  12
  14
  17
  19
  22
  24
  27
  30
  33
  36
  39
  42
  46
  49
  53
  57
  61
Issuance/(repayment) of debt, $m
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  32
  34
  35
  37
  38
  40
Issuance/(repurchase) of shares, $m
  11
  10
  9
  8
  7
  6
  5
  3
  2
  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  
  20
  20
  20
  20
  20
  20
  20
  19
  19
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  32
  34
  35
  37
  38
  40
Total cash flow (excl. dividends), $m
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  30
  33
  36
  39
  43
  46
  50
  53
  57
  61
  66
  70
  75
  79
  84
  90
  95
  101
Retained Cash Flow (-), $m
  -11
  -10
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
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
  4
  6
  8
  9
  9
  9
  10
  10
  10
  11
  11
  13
  15
  17
  20
  22
  25
  28
  31
  34
  37
  40
  43
  47
  51
  54
  58
  62
  67
  71
Discount rate, %
  5.20
  5.46
  5.73
  6.02
  6.32
  6.64
  6.97
  7.32
  7.68
  8.07
  8.47
  8.89
  9.34
  9.81
  10.30
  10.81
  11.35
  11.92
  12.51
  13.14
  13.80
  14.49
  15.21
  15.97
  16.77
  17.61
  18.49
  19.41
  20.38
  21.40
PV of cash for distribution, $m
  4
  5
  7
  7
  7
  6
  6
  6
  5
  5
  4
  5
  5
  5
  5
  4
  4
  4
  3
  3
  2
  2
  2
  1
  1
  1
  1
  0
  0
  0
Current shareholders' claim on cash, %
  68.3
  50.5
  40.0
  33.3
  28.9
  26.0
  24.2
  23.1
  22.5
  22.5
  22.5
  22.5
  22.5
  22.5
  22.5
  22.5
  22.5
  22.5
  22.5
  22.5
  22.5
  22.5
  22.5
  22.5
  22.5
  22.5
  22.5
  22.5
  22.5
  22.5

Fuwei Films (Holdings) Co., Ltd. develops, manufactures and distributes plastic film using biaxially oriented stretch technique, known as biaxially oriented polyethylene terephthalate (BOPET) film. Its products include printing base film used in printing and lamination; stamping foil base film and transfer base films used for packaging of luxury items of cigarettes and alcohol; metallized film or aluminum plating base film used for vacuum aluminum plating for plastic lamination; high-gloss film used for packaging purposes; heat-sealable film used for construction, printing and making heat sealable bags; laser holographic base film used as anti-counterfeit film for food, medicine, cosmetics, cigarettes and alcohol packaging; dry film used in circuit boards production, and for nameplate and crafts etching; heat shrinkable film used for special-shaped packaging for beverage and cosmetics, and chemically treated film.

FINANCIAL RATIOS  of  Fuwei Films (Holdings) Co., Ltd. (FFHL)

Valuation Ratios
P/E Ratio -0.9
Price to Sales 0.2
Price to Book 0.2
Price to Tangible Book
Price to Cash Flow -2.5
Price to Free Cash Flow -1.5
Growth Rates
Sales Growth Rate 2.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate 14.9%
Financial Strength
Quick Ratio 0
Current Ratio 0.2
LT Debt to Equity 2.6%
Total Debt to Equity 113.2%
Interest Coverage -6
Management Effectiveness
Return On Assets -7.9%
Ret/ On Assets - 3 Yr. Avg. -8.5%
Return On Total Capital -9.9%
Ret/ On T. Cap. - 3 Yr. Avg. -10.7%
Return On Equity -19%
Return On Equity - 3 Yr. Avg. -18.3%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 8.1%
Gross Margin - 3 Yr. Avg. 1.1%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. -2.7%
Operating Margin -16.2%
Oper. Margin - 3 Yr. Avg. -21.1%
Pre-Tax Margin -18.9%
Pre-Tax Margin - 3 Yr. Avg. -22.8%
Net Profit Margin -21.6%
Net Profit Margin - 3 Yr. Avg. -24.6%
Effective Tax Rate -14.3%
Eff/ Tax Rate - 3 Yr. Avg. -8.5%
Payout Ratio 0%

FFHL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FFHL stock intrinsic value calculation we used $44 million for the last fiscal year's total revenue generated by Fuwei Films (Holdings) Co., Ltd.. The default revenue input number comes from 0001 income statement of Fuwei Films (Holdings) Co., Ltd.. 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 FFHL stock valuation model: a) initial revenue growth rate of 20.2% 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 5.2%, whose default value for FFHL is calculated based on our internal credit rating of Fuwei Films (Holdings) Co., Ltd., 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 Fuwei Films (Holdings) Co., Ltd..
    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 FFHL stock the variable cost ratio is equal to 86.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $11 million in the base year in the intrinsic value calculation for FFHL 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 6.9% for Fuwei Films (Holdings) Co., Ltd..

Corporate tax rate of 27% is the nominal tax rate for Fuwei Films (Holdings) Co., Ltd.. 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 FFHL 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 FFHL are equal to 131.1%.

Life of production assets of 8.8 years is the average useful life of capital assets used in Fuwei Films (Holdings) Co., Ltd. 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 FFHL is equal to -42.8%. 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 - $33.4082527207 million for Fuwei Films (Holdings) Co., Ltd. - 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 3.267 million for Fuwei Films (Holdings) Co., Ltd. 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 Fuwei Films (Holdings) Co., Ltd. at the current share price and the inputted number of shares is $0.0 billion.

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