Intrinsic value of Fuling Global Inc. - FORK

Previous Close

$2.38

  Intrinsic Value

$2.64

stock screener

  Rating & Target

hold

+11%

Previous close

$2.38

 
Intrinsic value

$2.64

 
Up/down potential

+11%

 
Rating

hold

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 0.0

 

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, %
  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
  184
  218
  255
  295
  338
  384
  433
  485
  540
  598
  658
  721
  787
  856
  928
  1,002
  1,079
  1,160
  1,243
  1,330
  1,420
  1,514
  1,611
  1,713
  1,819
  1,929
  2,044
  2,163
  2,288
Variable operating expenses, $m
  141
  168
  197
  230
  265
  303
  344
  387
  433
  482
  528
  581
  637
  695
  756
  819
  885
  953
  1,024
  1,098
  1,175
  1,254
  1,337
  1,423
  1,513
  1,606
  1,704
  1,805
  1,910
  2,021
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
  141
  168
  197
  230
  265
  303
  344
  387
  433
  482
  528
  581
  637
  695
  756
  819
  885
  953
  1,024
  1,098
  1,175
  1,254
  1,337
  1,423
  1,513
  1,606
  1,704
  1,805
  1,910
  2,021
Operating income, $m
  13
  17
  21
  25
  30
  35
  40
  46
  52
  58
  70
  77
  84
  92
  100
  108
  117
  126
  135
  145
  155
  166
  177
  188
  200
  212
  225
  239
  253
  267
EBITDA, $m
  22
  27
  32
  37
  43
  49
  56
  63
  71
  79
  87
  96
  105
  115
  125
  135
  146
  158
  169
  181
  194
  207
  221
  235
  250
  266
  282
  298
  316
  334
Interest expense (income), $m
  1
  2
  3
  3
  4
  5
  6
  7
  8
  10
  11
  12
  14
  15
  17
  18
  20
  22
  24
  26
  28
  30
  32
  34
  37
  39
  42
  44
  47
  50
  53
Earnings before tax, $m
  11
  14
  17
  21
  24
  28
  33
  37
  42
  47
  58
  63
  69
  75
  81
  88
  95
  102
  110
  117
  125
  134
  143
  152
  161
  171
  181
  192
  203
  214
Tax expense, $m
  3
  4
  5
  6
  7
  8
  9
  10
  11
  13
  16
  17
  19
  20
  22
  24
  26
  28
  30
  32
  34
  36
  38
  41
  43
  46
  49
  52
  55
  58
Net income, $m
  8
  10
  13
  15
  18
  21
  24
  27
  31
  35
  42
  46
  50
  55
  59
  64
  69
  75
  80
  86
  92
  98
  104
  111
  118
  125
  132
  140
  148
  156

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
  169
  200
  234
  271
  310
  353
  398
  446
  496
  549
  605
  663
  724
  787
  852
  921
  992
  1,066
  1,143
  1,222
  1,305
  1,391
  1,481
  1,574
  1,672
  1,773
  1,878
  1,988
  2,103
Adjusted assets (=assets-cash), $m
  142
  169
  200
  234
  271
  310
  353
  398
  446
  496
  549
  605
  663
  724
  787
  852
  921
  992
  1,066
  1,143
  1,222
  1,305
  1,391
  1,481
  1,574
  1,672
  1,773
  1,878
  1,988
  2,103
Revenue / Adjusted assets
  1.085
  1.089
  1.090
  1.090
  1.089
  1.090
  1.088
  1.088
  1.087
  1.089
  1.089
  1.088
  1.087
  1.087
  1.088
  1.089
  1.088
  1.088
  1.088
  1.087
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
Average production assets, $m
  56
  67
  79
  92
  107
  122
  139
  157
  176
  195
  216
  238
  261
  285
  310
  336
  363
  391
  420
  450
  481
  514
  548
  583
  620
  658
  698
  740
  783
  828
Working capital, $m
  33
  40
  47
  55
  64
  73
  83
  94
  105
  117
  130
  143
  157
  171
  186
  201
  217
  234
  252
  270
  289
  308
  329
  350
  372
  395
  419
  443
  469
  496
Total debt, $m
  49
  63
  79
  96
  114
  134
  155
  178
  202
  228
  255
  283
  312
  342
  374
  407
  442
  478
  515
  553
  594
  635
  679
  724
  771
  820
  871
  924
  980
  1,037
Total liabilities, $m
  71
  85
  101
  118
  137
  156
  178
  201
  225
  250
  277
  305
  334
  365
  397
  430
  464
  500
  537
  576
  616
  658
  701
  746
  794
  842
  893
  947
  1,002
  1,060
Total equity, $m
  70
  84
  99
  116
  134
  154
  175
  197
  221
  246
  272
  300
  329
  359
  390
  423
  457
  492
  529
  567
  606
  647
  690
  735
  781
  829
  879
  932
  986
  1,043
Total liabilities and equity, $m
  141
  169
  200
  234
  271
  310
  353
  398
  446
  496
  549
  605
  663
  724
  787
  853
  921
  992
  1,066
  1,143
  1,222
  1,305
  1,391
  1,481
  1,575
  1,671
  1,772
  1,879
  1,988
  2,103
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
  10
  13
  15
  18
  21
  24
  27
  31
  35
  42
  46
  50
  55
  59
  64
  69
  75
  80
  86
  92
  98
  104
  111
  118
  125
  132
  140
  148
  156
Depreciation, amort., depletion, $m
  9
  10
  11
  12
  13
  15
  16
  17
  19
  21
  17
  19
  21
  23
  25
  27
  29
  32
  34
  36
  39
  41
  44
  47
  50
  53
  56
  60
  63
  67
Funds from operations, $m
  17
  20
  24
  27
  31
  35
  40
  45
  50
  55
  59
  65
  71
  78
  84
  91
  99
  106
  114
  122
  130
  139
  148
  158
  168
  178
  188
  200
  211
  223
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
  12
  14
  16
  19
  23
  26
  30
  34
  38
  43
  47
  52
  58
  64
  70
  76
  82
  89
  96
  104
  112
  120
  128
  137
  145
  155
  165
  175
  185
  196
Maintenance CAPEX, $m
  -4
  -4
  -5
  -6
  -7
  -9
  -10
  -11
  -13
  -14
  -16
  -17
  -19
  -21
  -23
  -25
  -27
  -29
  -32
  -34
  -36
  -39
  -41
  -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
  -15
  -17
  -19
  -21
  -25
  -27
  -29
  -32
  -34
  -37
  -39
  -42
  -45
  -48
  -51
  -54
  -57
  -61
  -64
  -67
  -72
  -75
  -79
  -84
  -88
  -93
  -98
  -103
  -108
Free cash flow, $m
  -2
  -2
  -1
  0
  1
  2
  3
  5
  7
  9
  10
  13
  16
  19
  22
  25
  28
  32
  36
  40
  44
  48
  52
  57
  62
  67
  72
  77
  82
  88
Issuance/(repayment) of debt, $m
  12
  14
  16
  17
  19
  20
  21
  23
  24
  25
  27
  28
  29
  31
  32
  33
  34
  36
  37
  39
  40
  42
  43
  45
  47
  49
  51
  53
  55
  58
Issuance/(repurchase) of shares, $m
  4
  4
  3
  2
  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  
  16
  18
  19
  19
  19
  20
  21
  23
  24
  25
  27
  28
  29
  31
  32
  33
  34
  36
  37
  39
  40
  42
  43
  45
  47
  49
  51
  53
  55
  58
Total cash flow (excl. dividends), $m
  15
  16
  17
  18
  20
  22
  25
  28
  31
  35
  37
  41
  45
  49
  54
  58
  63
  68
  73
  78
  84
  90
  96
  102
  109
  116
  123
  130
  138
  146
Retained Cash Flow (-), $m
  -12
  -14
  -15
  -17
  -18
  -20
  -21
  -22
  -24
  -25
  -26
  -28
  -29
  -30
  -31
  -33
  -34
  -35
  -37
  -38
  -40
  -41
  -43
  -44
  -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
  2
  2
  2
  2
  1
  2
  4
  5
  7
  10
  11
  13
  16
  19
  22
  26
  29
  33
  36
  40
  44
  49
  53
  58
  62
  67
  72
  78
  83
  89
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
  2
  2
  2
  1
  1
  1
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  2
  2
  2
  1
  1
  1
  1
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  90.6
  84.5
  80.8
  78.9
  78.6
  78.6
  78.6
  78.6
  78.6
  78.6
  78.6
  78.6
  78.6
  78.6
  78.6
  78.6
  78.6
  78.6
  78.6
  78.6
  78.6
  78.6
  78.6
  78.6
  78.6
  78.6
  78.6
  78.6
  78.6
  78.6

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 Inc. (FORK)

Valuation Ratios
P/E Ratio 4.7
Price to Sales 0.4
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 7.5
Price to Free Cash Flow -37.5
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 million for the last fiscal year's total revenue generated by Fuling Global Inc.. The default revenue input number comes from 0001 income statement of Fuling Global Inc.. 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 Inc., 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 Inc..
    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 Inc..

Corporate tax rate of 27% is the nominal tax rate for Fuling Global Inc.. 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 Inc. 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 Inc. - 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 15.781 million for Fuling Global Inc. 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 Inc. at the current share price and the inputted number of shares is $0.0 billion.

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