Intrinsic value of Fuling Global - FORK

Previous Close

$3.20

  Intrinsic Value

$0.76

stock screener

  Rating & Target

str. sell

-76%

Previous close

$3.20

 
Intrinsic value

$0.76

 
Up/down potential

-76%

 
Rating

str. sell

We calculate the intrinsic value of FORK 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, %
  21.30
  19.67
  18.20
  16.88
  15.69
  14.62
  13.66
  12.80
  12.02
  11.31
  10.68
  10.12
  9.60
  9.14
  8.73
  8.36
  8.02
  7.72
  7.45
  7.20
  6.98
  6.78
  6.61
  6.44
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
Revenue, $m
  154
  185
  218
  255
  295
  338
  385
  434
  486
  541
  599
  659
  723
  789
  858
  929
  1,004
  1,081
  1,162
  1,246
  1,333
  1,423
  1,517
  1,615
  1,716
  1,822
  1,933
  2,048
  2,167
  2,292
Variable operating expenses, $m
  142
  170
  200
  234
  271
  310
  352
  397
  445
  495
  547
  602
  660
  720
  783
  849
  917
  988
  1,061
  1,137
  1,217
  1,299
  1,385
  1,475
  1,567
  1,664
  1,765
  1,870
  1,979
  2,093
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
  142
  170
  200
  234
  271
  310
  352
  397
  445
  495
  547
  602
  660
  720
  783
  849
  917
  988
  1,061
  1,137
  1,217
  1,299
  1,385
  1,475
  1,567
  1,664
  1,765
  1,870
  1,979
  2,093
Operating income, $m
  12
  15
  18
  21
  25
  28
  32
  37
  41
  46
  52
  57
  63
  68
  74
  81
  87
  94
  101
  108
  116
  123
  132
  140
  149
  158
  168
  178
  188
  199
EBITDA, $m
  18
  21
  25
  30
  34
  39
  45
  50
  56
  63
  69
  76
  84
  91
  99
  108
  116
  125
  135
  144
  155
  165
  176
  187
  199
  211
  224
  237
  251
  266
Interest expense (income), $m
  1
  2
  3
  3
  4
  5
  6
  7
  8
  10
  11
  12
  14
  15
  17
  19
  20
  22
  24
  26
  28
  30
  32
  34
  37
  39
  42
  44
  47
  50
  53
Earnings before tax, $m
  10
  12
  15
  17
  19
  22
  25
  28
  32
  35
  40
  43
  47
  52
  56
  60
  65
  70
  75
  80
  86
  91
  97
  103
  110
  116
  123
  131
  138
  146
Tax expense, $m
  3
  3
  4
  5
  5
  6
  7
  8
  9
  9
  11
  12
  13
  14
  15
  16
  18
  19
  20
  22
  23
  25
  26
  28
  30
  31
  33
  35
  37
  39
Net income, $m
  8
  9
  11
  12
  14
  16
  18
  21
  23
  26
  29
  32
  35
  38
  41
  44
  47
  51
  55
  59
  63
  67
  71
  75
  80
  85
  90
  95
  101
  106

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
  142
  170
  201
  235
  271
  311
  354
  399
  447
  497
  550
  606
  664
  725
  788
  854
  923
  994
  1,068
  1,145
  1,225
  1,308
  1,394
  1,484
  1,578
  1,675
  1,776
  1,882
  1,992
  2,107
Adjusted assets (=assets-cash), $m
  142
  170
  201
  235
  271
  311
  354
  399
  447
  497
  550
  606
  664
  725
  788
  854
  923
  994
  1,068
  1,145
  1,225
  1,308
  1,394
  1,484
  1,578
  1,675
  1,776
  1,882
  1,992
  2,107
Revenue / Adjusted assets
  1.085
  1.088
  1.085
  1.085
  1.089
  1.087
  1.088
  1.088
  1.087
  1.089
  1.089
  1.087
  1.089
  1.088
  1.089
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.087
  1.088
  1.088
  1.088
  1.088
  1.088
Average production assets, $m
  56
  67
  79
  92
  107
  123
  139
  157
  176
  196
  217
  239
  262
  286
  310
  336
  363
  391
  421
  451
  482
  515
  549
  585
  621
  660
  700
  741
  785
  830
Working capital, $m
  33
  40
  47
  55
  64
  73
  83
  94
  105
  117
  130
  143
  157
  171
  186
  202
  218
  235
  252
  270
  289
  309
  329
  350
  372
  395
  419
  444
  470
  497
Total debt, $m
  49
  63
  79
  96
  114
  134
  156
  179
  203
  228
  255
  283
  312
  343
  375
  408
  443
  479
  516
  555
  595
  637
  680
  726
  773
  822
  873
  926
  982
  1,040
Total liabilities, $m
  72
  86
  101
  118
  137
  157
  178
  201
  225
  251
  277
  305
  335
  365
  397
  431
  465
  501
  538
  577
  617
  659
  703
  748
  795
  844
  895
  948
  1,004
  1,062
Total equity, $m
  70
  84
  100
  116
  135
  154
  175
  198
  222
  247
  273
  301
  329
  360
  391
  424
  458
  493
  530
  568
  607
  649
  692
  736
  782
  831
  881
  933
  988
  1,045
Total liabilities and equity, $m
  142
  170
  201
  234
  272
  311
  353
  399
  447
  498
  550
  606
  664
  725
  788
  855
  923
  994
  1,068
  1,145
  1,224
  1,308
  1,395
  1,484
  1,577
  1,675
  1,776
  1,881
  1,992
  2,107
Debt-to-equity ratio
  0.700
  0.750
  0.790
  0.820
  0.850
  0.870
  0.890
  0.900
  0.920
  0.930
  0.930
  0.940
  0.950
  0.950
  0.960
  0.960
  0.970
  0.970
  0.970
  0.980
  0.980
  0.980
  0.980
  0.990
  0.990
  0.990
  0.990
  0.990
  0.990
  0.990
Adjusted equity ratio
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  8
  9
  11
  12
  14
  16
  18
  21
  23
  26
  29
  32
  35
  38
  41
  44
  47
  51
  55
  59
  63
  67
  71
  75
  80
  85
  90
  95
  101
  106
Depreciation, amort., depletion, $m
  5
  6
  7
  8
  10
  11
  12
  14
  15
  17
  17
  19
  21
  23
  25
  27
  29
  32
  34
  36
  39
  42
  44
  47
  50
  53
  56
  60
  63
  67
Funds from operations, $m
  13
  15
  18
  21
  24
  27
  31
  34
  38
  42
  46
  51
  56
  61
  66
  71
  77
  83
  89
  95
  101
  108
  115
  123
  130
  138
  146
  155
  164
  173
Change in working capital, $m
  6
  7
  7
  8
  9
  9
  10
  11
  11
  12
  13
  13
  14
  14
  15
  16
  16
  17
  17
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
Cash from operations, $m
  7
  9
  11
  13
  15
  18
  21
  24
  27
  30
  34
  38
  42
  46
  51
  56
  61
  66
  71
  77
  83
  89
  95
  101
  108
  115
  122
  130
  138
  146
Maintenance CAPEX, $m
  -4
  -5
  -5
  -6
  -7
  -9
  -10
  -11
  -13
  -14
  -16
  -17
  -19
  -21
  -23
  -25
  -27
  -29
  -32
  -34
  -36
  -39
  -42
  -44
  -47
  -50
  -53
  -56
  -60
  -63
New CAPEX, $m
  -10
  -11
  -12
  -13
  -14
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -33
  -34
  -35
  -37
  -38
  -40
  -42
  -43
  -45
Cash from investing activities, $m
  -14
  -16
  -17
  -19
  -21
  -25
  -27
  -29
  -32
  -34
  -37
  -39
  -42
  -45
  -48
  -51
  -54
  -57
  -61
  -64
  -67
  -72
  -76
  -79
  -84
  -88
  -93
  -98
  -103
  -108
Free cash flow, $m
  -6
  -7
  -7
  -7
  -7
  -7
  -6
  -5
  -5
  -4
  -3
  -2
  0
  1
  3
  5
  7
  8
  10
  13
  15
  17
  19
  22
  24
  27
  29
  32
  35
  38
Issuance/(repayment) of debt, $m
  13
  14
  16
  17
  19
  20
  21
  23
  24
  25
  27
  28
  29
  31
  32
  33
  35
  36
  37
  39
  40
  42
  44
  45
  47
  49
  51
  53
  56
  58
Issuance/(repurchase) of shares, $m
  5
  5
  5
  4
  4
  3
  3
  2
  1
  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  
  18
  19
  21
  21
  23
  23
  24
  25
  25
  25
  27
  28
  29
  31
  32
  33
  35
  36
  37
  39
  40
  42
  44
  45
  47
  49
  51
  53
  56
  58
Total cash flow (excl. dividends), $m
  11
  12
  13
  15
  16
  17
  18
  19
  20
  22
  24
  26
  29
  32
  35
  38
  41
  44
  48
  51
  55
  59
  63
  67
  71
  76
  80
  85
  90
  96
Retained Cash Flow (-), $m
  -13
  -14
  -15
  -17
  -18
  -20
  -21
  -22
  -24
  -25
  -26
  -28
  -29
  -30
  -31
  -33
  -34
  -35
  -37
  -38
  -40
  -41
  -43
  -45
  -46
  -48
  -50
  -52
  -55
  -57
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
  -1
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -3
  -2
  -1
  0
  2
  3
  5
  7
  9
  11
  13
  15
  18
  20
  22
  25
  28
  30
  33
  36
  39
Discount rate, %
  7.00
  7.35
  7.72
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.86
  11.40
  11.97
  12.57
  13.20
  13.86
  14.55
  15.28
  16.04
  16.85
  17.69
  18.57
  19.50
  20.48
  21.50
  22.58
  23.70
  24.89
  26.13
  27.44
  28.81
PV of cash for distribution, $m
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -1
  -1
  -1
  0
  0
  0
  0
  1
  1
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  91.1
  84.5
  79.4
  75.6
  72.7
  70.6
  69.2
  68.3
  68.0
  68.0
  68.0
  68.0
  68.0
  68.0
  68.0
  68.0
  68.0
  68.0
  68.0
  68.0
  68.0
  68.0
  68.0
  68.0
  68.0
  68.0
  68.0
  68.0
  68.0
  68.0

Fuling Global Inc. is a holding company, which operates through its subsidiaries in the People's Republic of China and the United States. The Company is a specialized production and distribution company for environmentally friendly plastic serviceware with customers from the United States and European countries. It conducts its operations in China and the United States through its subsidiary, Taizhou Fuling Plastics Co., Ltd., and its subsidiaries. Its products are exported to the United States and Europe, and are sold to fast food chains and wholesalers. Its customers are dealers, quick service restaurants, manufacturers and retailers. Its products consist of serviceware, which includes cutlery, drinking straws, cups and plates. It focuses on various biodegradable materials, including polybutylene succinate, polylactic acid and cellulose. Its primary product category is disposable cutlery, which includes forks, knives, spoons, general, and specialized and multipurpose utensils.

FINANCIAL RATIOS  of  Fuling Global (FORK)

Valuation Ratios
P/E Ratio 6.3
Price to Sales 0.5
Price to Book 1
Price to Tangible Book
Price to Cash Flow 10.1
Price to Free Cash Flow -50.4
Growth Rates
Sales Growth Rate 15.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -14.3%
Cap. Spend. - 3 Yr. Gr. Rate -7.8%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 2%
Total Debt to Equity 42.9%
Interest Coverage 11
Management Effectiveness
Return On Assets 10.4%
Ret/ On Assets - 3 Yr. Avg. 12.8%
Return On Total Capital 12.2%
Ret/ On T. Cap. - 3 Yr. Avg. 15.4%
Return On Equity 17.4%
Return On Equity - 3 Yr. Avg. 30.2%
Asset Turnover 1.2
Profitability Ratios
Gross Margin 23.8%
Gross Margin - 3 Yr. Avg. 25.6%
EBITDA Margin 13.3%
EBITDA Margin - 3 Yr. Avg. 14%
Operating Margin 8.6%
Oper. Margin - 3 Yr. Avg. 9.8%
Pre-Tax Margin 9.5%
Pre-Tax Margin - 3 Yr. Avg. 10.1%
Net Profit Margin 7.6%
Net Profit Margin - 3 Yr. Avg. 8.3%
Effective Tax Rate 20%
Eff/ Tax Rate - 3 Yr. Avg. 14.1%
Payout Ratio 0%

FORK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FORK stock intrinsic value calculation we used $127.250022 million for the last fiscal year's total revenue generated by Fuling Global. The default revenue input number comes from 0001 income statement of Fuling Global. 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 FORK stock valuation model: a) initial revenue growth rate of 21.3% 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 7%, whose default value for FORK is calculated based on our internal credit rating of Fuling Global, 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 Fuling Global.
    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 FORK stock the variable cost ratio is equal to 92.1%.

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 FORK 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 Fuling Global.

Corporate tax rate of 27% is the nominal tax rate for Fuling Global. 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 FORK 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 FORK are equal to 36.2%.

Life of production assets of 12.4 years is the average useful life of capital assets used in Fuling Global 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 FORK is equal to 21.7%. 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 - $57.84355 million for Fuling Global - 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 15.78 million for Fuling Global 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 Fuling Global at the current share price and the inputted number of shares is $0.1 billion.

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COMPANY NEWS

▶ Are Fuling Global Incs (NASDAQ:FORK) Interest Costs Too High?   [Jun-27-18 10:10AM  Simply Wall St.]
▶ Why Fuling Global Incs (NASDAQ:FORK) CEO Salary Matters To You   [Mar-01-18 03:47PM  Simply Wall St.]

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