Intrinsic value of GDS Holdings ADR - GDS

Previous Close

$29.17

  Intrinsic Value

$27.07

stock screener

  Rating & Target

hold

-7%

Previous close

$29.17

 
Intrinsic value

$27.07

 
Up/down potential

-7%

 
Rating

hold

We calculate the intrinsic value of GDS 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 3.4

 

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, %
  53.10
  48.29
  43.96
  40.06
  36.56
  33.40
  30.56
  28.01
  25.71
  23.63
  21.77
  20.09
  18.58
  17.23
  16.00
  14.90
  13.91
  13.02
  12.22
  11.50
  10.85
  10.26
  9.74
  9.26
  8.84
  8.45
  8.11
  7.80
  7.52
  7.27
Revenue, $m
  2,474
  3,669
  5,282
  7,399
  10,103
  13,478
  17,597
  22,526
  28,316
  35,009
  42,630
  51,197
  60,711
  71,170
  82,560
  94,864
  108,062
  122,134
  137,058
  152,816
  169,394
  186,779
  204,965
  223,951
  243,741
  264,345
  285,777
  308,059
  331,217
  355,282
Variable operating expenses, $m
  1,823
  2,611
  3,674
  5,069
  6,853
  9,077
  11,793
  15,042
  18,859
  23,271
  28,104
  33,751
  40,024
  46,919
  54,427
  62,539
  71,240
  80,517
  90,355
  100,744
  111,673
  123,134
  135,123
  147,639
  160,686
  174,269
  188,398
  203,087
  218,354
  234,219
Fixed operating expenses, $m
  289
  296
  302
  309
  316
  322
  330
  337
  344
  352
  360
  367
  376
  384
  392
  401
  410
  419
  428
  437
  447
  457
  467
  477
  488
  498
  509
  520
  532
  544
Total operating expenses, $m
  2,112
  2,907
  3,976
  5,378
  7,169
  9,399
  12,123
  15,379
  19,203
  23,623
  28,464
  34,118
  40,400
  47,303
  54,819
  62,940
  71,650
  80,936
  90,783
  101,181
  112,120
  123,591
  135,590
  148,116
  161,174
  174,767
  188,907
  203,607
  218,886
  234,763
Operating income, $m
  362
  763
  1,306
  2,020
  2,935
  4,078
  5,475
  7,147
  9,113
  11,385
  14,167
  17,078
  20,312
  23,867
  27,740
  31,924
  36,413
  41,199
  46,275
  51,635
  57,274
  63,188
  69,375
  75,834
  82,567
  89,577
  96,870
  104,451
  112,331
  120,519
EBITDA, $m
  1,073
  1,724
  2,606
  3,764
  5,246
  7,097
  9,357
  12,063
  15,243
  18,919
  23,107
  27,814
  33,044
  38,793
  45,054
  51,818
  59,075
  66,812
  75,018
  83,683
  92,798
  102,358
  112,359
  122,800
  133,683
  145,014
  156,801
  169,055
  181,791
  195,026
Interest expense (income), $m
  33
  499
  827
  1,284
  1,901
  2,711
  3,746
  5,037
  6,614
  8,500
  10,716
  13,277
  16,193
  19,471
  23,113
  27,115
  31,473
  36,182
  41,233
  46,617
  52,329
  58,359
  64,703
  71,356
  78,315
  85,581
  93,154
  101,038
  109,240
  117,767
  126,629
Earnings before tax, $m
  -137
  -64
  22
  119
  224
  332
  437
  533
  613
  670
  890
  885
  841
  755
  625
  451
  231
  -34
  -343
  -694
  -1,085
  -1,514
  -1,980
  -2,481
  -3,013
  -3,576
  -4,169
  -4,789
  -5,436
  -6,110
Tax expense, $m
  0
  0
  6
  32
  61
  90
  118
  144
  165
  181
  240
  239
  227
  204
  169
  122
  62
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -137
  -64
  16
  87
  164
  243
  319
  389
  447
  489
  650
  646
  614
  551
  457
  329
  169
  -34
  -343
  -694
  -1,085
  -1,514
  -1,980
  -2,481
  -3,013
  -3,576
  -4,169
  -4,789
  -5,436
  -6,110

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
  19,483
  28,891
  41,592
  58,256
  79,554
  106,127
  138,562
  177,368
  222,961
  275,658
  335,672
  403,123
  478,043
  560,392
  650,076
  746,959
  850,884
  961,684
  1,079,197
  1,203,279
  1,333,809
  1,470,698
  1,613,896
  1,763,393
  1,919,220
  2,081,453
  2,250,213
  2,425,662
  2,608,006
  2,797,493
Adjusted assets (=assets-cash), $m
  19,483
  28,891
  41,592
  58,256
  79,554
  106,127
  138,562
  177,368
  222,961
  275,658
  335,672
  403,123
  478,043
  560,392
  650,076
  746,959
  850,884
  961,684
  1,079,197
  1,203,279
  1,333,809
  1,470,698
  1,613,896
  1,763,393
  1,919,220
  2,081,453
  2,250,213
  2,425,662
  2,608,006
  2,797,493
Revenue / Adjusted assets
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
Average production assets, $m
  10,845
  16,082
  23,152
  32,428
  44,283
  59,075
  77,129
  98,730
  124,109
  153,442
  186,849
  224,395
  266,098
  311,937
  361,859
  415,788
  473,637
  535,313
  600,725
  669,794
  742,453
  818,651
  898,361
  981,577
  1,068,316
  1,158,622
  1,252,561
  1,350,223
  1,451,723
  1,557,199
Working capital, $m
  -1,574
  -2,334
  -3,360
  -4,705
  -6,426
  -8,572
  -11,192
  -14,326
  -18,009
  -22,265
  -27,113
  -32,561
  -38,612
  -45,264
  -52,508
  -60,333
  -68,728
  -77,677
  -87,169
  -97,191
  -107,734
  -118,791
  -130,358
  -142,433
  -155,019
  -168,123
  -181,754
  -195,926
  -210,654
  -225,959
Total debt, $m
  11,020
  17,117
  25,347
  36,145
  49,946
  67,165
  88,183
  113,329
  142,874
  177,021
  215,911
  259,619
  308,167
  361,529
  419,644
  482,425
  549,768
  621,566
  697,715
  778,120
  862,703
  951,408
  1,044,200
  1,141,074
  1,242,050
  1,347,177
  1,456,533
  1,570,224
  1,688,383
  1,811,170
Total liabilities, $m
  12,625
  18,722
  26,952
  37,750
  51,551
  68,770
  89,788
  114,934
  144,479
  178,626
  217,516
  261,224
  309,772
  363,134
  421,249
  484,030
  551,373
  623,171
  699,320
  779,725
  864,308
  953,012
  1,045,805
  1,142,679
  1,243,654
  1,348,782
  1,458,138
  1,571,829
  1,689,988
  1,812,775
Total equity, $m
  6,858
  10,170
  14,641
  20,506
  28,003
  37,357
  48,774
  62,433
  78,482
  97,031
  118,157
  141,899
  168,271
  197,258
  228,827
  262,930
  299,511
  338,513
  379,877
  423,554
  469,501
  517,686
  568,092
  620,714
  675,565
  732,672
  792,075
  853,833
  918,018
  984,717
Total liabilities and equity, $m
  19,483
  28,892
  41,593
  58,256
  79,554
  106,127
  138,562
  177,367
  222,961
  275,657
  335,673
  403,123
  478,043
  560,392
  650,076
  746,960
  850,884
  961,684
  1,079,197
  1,203,279
  1,333,809
  1,470,698
  1,613,897
  1,763,393
  1,919,219
  2,081,454
  2,250,213
  2,425,662
  2,608,006
  2,797,492
Debt-to-equity ratio
  1.610
  1.680
  1.730
  1.760
  1.780
  1.800
  1.810
  1.820
  1.820
  1.820
  1.830
  1.830
  1.830
  1.830
  1.830
  1.830
  1.840
  1.840
  1.840
  1.840
  1.840
  1.840
  1.840
  1.840
  1.840
  1.840
  1.840
  1.840
  1.840
  1.840
Adjusted equity ratio
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -137
  -64
  16
  87
  164
  243
  319
  389
  447
  489
  650
  646
  614
  551
  457
  329
  169
  -34
  -343
  -694
  -1,085
  -1,514
  -1,980
  -2,481
  -3,013
  -3,576
  -4,169
  -4,789
  -5,436
  -6,110
Depreciation, amort., depletion, $m
  711
  961
  1,300
  1,743
  2,311
  3,018
  3,882
  4,916
  6,130
  7,534
  8,940
  10,737
  12,732
  14,925
  17,314
  19,894
  22,662
  25,613
  28,743
  32,048
  35,524
  39,170
  42,984
  46,965
  51,116
  55,436
  59,931
  64,604
  69,460
  74,507
Funds from operations, $m
  574
  898
  1,316
  1,831
  2,475
  3,261
  4,202
  5,305
  6,578
  8,023
  9,590
  11,382
  13,346
  15,476
  17,770
  20,223
  22,831
  25,579
  28,400
  31,354
  34,439
  37,655
  41,003
  44,485
  48,103
  51,860
  55,763
  59,815
  64,024
  68,397
Change in working capital, $m
  -546
  -760
  -1,026
  -1,346
  -1,720
  -2,146
  -2,620
  -3,134
  -3,683
  -4,256
  -4,847
  -5,448
  -6,051
  -6,652
  -7,244
  -7,825
  -8,394
  -8,950
  -9,492
  -10,022
  -10,543
  -11,057
  -11,566
  -12,075
  -12,586
  -13,104
  -13,631
  -14,171
  -14,728
  -15,305
Cash from operations, $m
  1,120
  1,658
  2,342
  3,177
  4,195
  5,407
  6,821
  8,439
  10,260
  12,279
  14,438
  16,830
  19,397
  22,128
  25,014
  28,049
  31,225
  34,529
  37,892
  41,376
  44,982
  48,712
  52,570
  56,560
  60,689
  64,964
  69,394
  73,986
  78,753
  83,703
Maintenance CAPEX, $m
  -339
  -519
  -769
  -1,108
  -1,552
  -2,119
  -2,827
  -3,690
  -4,724
  -5,938
  -7,342
  -8,940
  -10,737
  -12,732
  -14,925
  -17,314
  -19,894
  -22,662
  -25,613
  -28,743
  -32,048
  -35,524
  -39,170
  -42,984
  -46,965
  -51,116
  -55,436
  -59,931
  -64,604
  -69,460
New CAPEX, $m
  -3,763
  -5,237
  -7,070
  -9,276
  -11,855
  -14,792
  -18,055
  -21,601
  -25,379
  -29,333
  -33,407
  -37,546
  -41,703
  -45,839
  -49,922
  -53,929
  -57,849
  -61,676
  -65,413
  -69,069
  -72,658
  -76,198
  -79,710
  -83,216
  -86,740
  -90,306
  -93,939
  -97,662
  -101,500
  -105,476
Cash from investing activities, $m
  -4,102
  -5,756
  -7,839
  -10,384
  -13,407
  -16,911
  -20,882
  -25,291
  -30,103
  -35,271
  -40,749
  -46,486
  -52,440
  -58,571
  -64,847
  -71,243
  -77,743
  -84,338
  -91,026
  -97,812
  -104,706
  -111,722
  -118,880
  -126,200
  -133,705
  -141,422
  -149,375
  -157,593
  -166,104
  -174,936
Free cash flow, $m
  -2,982
  -4,098
  -5,498
  -7,207
  -9,212
  -11,503
  -14,060
  -16,852
  -19,843
  -22,992
  -26,311
  -29,656
  -33,043
  -36,443
  -39,833
  -43,194
  -46,518
  -49,809
  -53,134
  -56,435
  -59,723
  -63,010
  -66,310
  -69,640
  -73,016
  -76,457
  -79,981
  -83,607
  -87,352
  -91,234
Issuance/(repayment) of debt, $m
  4,369
  6,097
  8,230
  10,798
  13,801
  17,219
  21,018
  25,146
  29,544
  34,147
  38,889
  43,708
  48,548
  53,362
  58,115
  62,780
  67,343
  71,798
  76,149
  80,405
  84,583
  88,704
  92,792
  96,874
  100,976
  105,127
  109,356
  113,691
  118,159
  122,787
Issuance/(repurchase) of shares, $m
  2,519
  3,375
  4,455
  5,779
  7,333
  9,111
  11,098
  13,270
  15,601
  18,060
  20,475
  23,097
  25,758
  28,436
  31,112
  33,774
  36,413
  39,036
  41,707
  44,370
  47,031
  49,700
  52,386
  55,103
  57,864
  60,682
  63,572
  66,547
  69,621
  72,809
Cash from financing (excl. dividends), $m  
  6,888
  9,472
  12,685
  16,577
  21,134
  26,330
  32,116
  38,416
  45,145
  52,207
  59,364
  66,805
  74,306
  81,798
  89,227
  96,554
  103,756
  110,834
  117,856
  124,775
  131,614
  138,404
  145,178
  151,977
  158,840
  165,809
  172,928
  180,238
  187,780
  195,596
Total cash flow (excl. dividends), $m
  3,907
  5,374
  7,187
  9,370
  11,922
  14,827
  18,056
  21,565
  25,303
  29,215
  33,054
  37,150
  41,263
  45,355
  49,395
  53,360
  57,238
  61,025
  64,722
  68,340
  71,891
  75,394
  78,868
  82,337
  85,824
  89,352
  92,947
  96,631
  100,429
  104,362
Retained Cash Flow (-), $m
  -2,519
  -3,375
  -4,471
  -5,866
  -7,497
  -9,354
  -11,417
  -13,660
  -16,049
  -18,549
  -21,125
  -23,743
  -26,372
  -28,987
  -31,569
  -34,103
  -36,581
  -39,036
  -41,707
  -44,370
  -47,031
  -49,700
  -52,386
  -55,103
  -57,864
  -60,682
  -63,572
  -66,547
  -69,621
  -72,809
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
  1,387
  1,998
  2,716
  3,504
  4,425
  5,474
  6,639
  7,905
  9,254
  10,666
  11,929
  13,407
  14,891
  16,368
  17,826
  19,257
  20,657
  21,989
  23,015
  23,970
  24,860
  25,694
  26,482
  27,234
  27,960
  28,670
  29,375
  30,084
  30,807
  31,554
Discount rate, %
  8.80
  9.24
  9.70
  10.19
  10.70
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
  21.18
  22.24
  23.35
  24.52
  25.74
  27.03
  28.38
  29.80
  31.29
  32.85
  34.50
  36.22
PV of cash for distribution, $m
  1,275
  1,674
  2,058
  2,377
  2,662
  2,890
  3,042
  3,107
  3,080
  2,967
  2,733
  2,493
  2,211
  1,908
  1,602
  1,310
  1,042
  805
  598
  432
  303
  206
  136
  87
  54
  33
  19
  11
  6
  3
Current shareholders' claim on cash, %
  57.6
  35.1
  22.3
  14.7
  10.0
  7.0
  5.1
  3.7
  2.8
  2.2
  1.7
  1.4
  1.1
  0.9
  0.7
  0.6
  0.5
  0.5
  0.4
  0.3
  0.3
  0.3
  0.2
  0.2
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1

GDS Holdings Ltd is a developer and operator of data centers in China. The Company is engaged in design, build-out and operation of data centers. It operates as a carrier and cloud neutral, which enables its customers to connect to all the People's Republic of China telecommunications carriers, and to access a number of the People's Republic of China cloud service providers, whom it hosts in its facilities. The Company's base of approximately 370 customers consists of Internet companies, financial institutions, telecommunications and information technology (IT) service providers, and domestic private sector and multinational corporations. It serves a community of approximately 160 People's Republic of China and foreign financial institutions across the banking, insurance, asset management, brokerage, digital payment and financial information verticals. The Company operates its data centers in Shanghai, Beijing, Shenzhen, Guangzhou and Chengdu.

FINANCIAL RATIOS  of  GDS Holdings ADR (GDS)

Valuation Ratios
P/E Ratio -554.2
Price to Sales 144.9
Price to Book 51.3
Price to Tangible Book
Price to Cash Flow -1007.7
Price to Free Cash Flow -134.4
Growth Rates
Sales Growth Rate 50%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 34.9%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 3
Current Ratio 0.1
LT Debt to Equity 119.7%
Total Debt to Equity 143.8%
Interest Coverage 0
Management Effectiveness
Return On Assets -0.8%
Ret/ On Assets - 3 Yr. Avg. -1.8%
Return On Total Capital -4.6%
Ret/ On T. Cap. - 3 Yr. Avg. -4.9%
Return On Equity -11%
Return On Equity - 3 Yr. Avg. -9.3%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 24.8%
Gross Margin - 3 Yr. Avg. 23%
EBITDA Margin 16.3%
EBITDA Margin - 3 Yr. Avg. 11.5%
Operating Margin -3.9%
Oper. Margin - 3 Yr. Avg. -6.7%
Pre-Tax Margin -26.8%
Pre-Tax Margin - 3 Yr. Avg. -23.5%
Net Profit Margin -26.1%
Net Profit Margin - 3 Yr. Avg. -22.6%
Effective Tax Rate 2.4%
Eff/ Tax Rate - 3 Yr. Avg. 5%
Payout Ratio -27.5%

GDS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GDS stock intrinsic value calculation we used $1616.166 million for the last fiscal year's total revenue generated by GDS Holdings ADR. The default revenue input number comes from 0001 income statement of GDS Holdings ADR. 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 GDS stock valuation model: a) initial revenue growth rate of 53.1% 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 8.8%, whose default value for GDS is calculated based on our internal credit rating of GDS Holdings ADR, 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 GDS Holdings ADR.
    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 GDS stock the variable cost ratio is equal to 77.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $283 million in the base year in the intrinsic value calculation for GDS 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 7.5% for GDS Holdings ADR.

Corporate tax rate of 27% is the nominal tax rate for GDS Holdings ADR. 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 GDS 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 GDS are equal to 438.3%.

Life of production assets of 20.9 years is the average useful life of capital assets used in GDS Holdings ADR 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 GDS is equal to -63.6%. 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 - $4475.512 million for GDS Holdings ADR - 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 117.435 million for GDS Holdings ADR 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 GDS Holdings ADR at the current share price and the inputted number of shares is $3.4 billion.

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COMPANY NEWS

▶ Why Shares of GDS Holdings Popped Today   [Nov-13-18 03:44PM  Motley Fool]

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