Intrinsic value of Gridsum Holding ADR - GSUM

Previous Close

$4.30

  Intrinsic Value

$2.19

stock screener

  Rating & Target

sell

-49%

Previous close

$4.30

 
Intrinsic value

$2.19

 
Up/down potential

-49%

 
Rating

sell

We calculate the intrinsic value of GSUM 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, %
  59.30
  53.87
  48.98
  44.58
  40.63
  37.06
  33.86
  30.97
  28.37
  26.04
  23.93
  22.04
  20.34
  18.80
  17.42
  16.18
  15.06
  14.06
  13.15
  12.34
  11.60
  10.94
  10.35
  9.81
  9.33
  8.90
  8.51
  8.16
  7.84
  7.56
Revenue, $m
  92
  141
  210
  304
  428
  587
  785
  1,028
  1,320
  1,664
  2,062
  2,516
  3,028
  3,597
  4,224
  4,908
  5,647
  6,441
  7,287
  8,186
  9,136
  10,136
  11,185
  12,282
  13,428
  14,623
  15,867
  17,161
  18,507
  19,906
Variable operating expenses, $m
  82
  127
  189
  273
  384
  526
  704
  922
  1,184
  1,492
  1,850
  2,257
  2,716
  3,227
  3,789
  4,402
  5,065
  5,777
  6,537
  7,343
  8,195
  9,092
  10,033
  11,017
  12,045
  13,117
  14,233
  15,394
  16,601
  17,856
Fixed operating expenses, $m
  10
  10
  11
  11
  11
  11
  12
  12
  12
  12
  13
  13
  13
  14
  14
  14
  14
  15
  15
  15
  16
  16
  16
  17
  17
  18
  18
  18
  19
  19
Total operating expenses, $m
  92
  137
  200
  284
  395
  537
  716
  934
  1,196
  1,504
  1,863
  2,270
  2,729
  3,241
  3,803
  4,416
  5,079
  5,792
  6,552
  7,358
  8,211
  9,108
  10,049
  11,034
  12,062
  13,135
  14,251
  15,412
  16,620
  17,875
Operating income, $m
  -1
  4
  11
  20
  33
  49
  69
  94
  124
  159
  200
  246
  299
  357
  421
  491
  567
  649
  735
  828
  925
  1,028
  1,136
  1,248
  1,366
  1,489
  1,616
  1,749
  1,887
  2,031
EBITDA, $m
  1
  7
  16
  28
  43
  63
  88
  118
  155
  198
  248
  306
  370
  442
  521
  607
  700
  801
  907
  1,021
  1,141
  1,267
  1,399
  1,538
  1,683
  1,834
  1,991
  2,154
  2,324
  2,501
Interest expense (income), $m
  0
  1
  2
  4
  8
  12
  18
  25
  35
  46
  60
  76
  94
  115
  139
  166
  195
  227
  262
  299
  339
  381
  425
  472
  521
  572
  626
  682
  740
  800
  863
Earnings before tax, $m
  -1
  2
  7
  13
  21
  31
  44
  59
  78
  99
  124
  152
  183
  218
  255
  296
  340
  387
  436
  489
  545
  603
  664
  727
  794
  863
  935
  1,009
  1,087
  1,168
Tax expense, $m
  0
  1
  2
  3
  6
  8
  12
  16
  21
  27
  33
  41
  49
  59
  69
  80
  92
  104
  118
  132
  147
  163
  179
  196
  214
  233
  252
  273
  293
  315
Net income, $m
  -1
  1
  5
  9
  15
  23
  32
  43
  57
  73
  91
  111
  134
  159
  186
  216
  248
  282
  319
  357
  398
  440
  484
  531
  579
  630
  682
  737
  793
  852

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
  223
  344
  512
  740
  1,041
  1,427
  1,910
  2,502
  3,212
  4,048
  5,017
  6,123
  7,368
  8,753
  10,278
  11,941
  13,739
  15,670
  17,731
  19,918
  22,229
  24,661
  27,213
  29,883
  32,672
  35,579
  38,606
  41,755
  45,030
  48,433
Adjusted assets (=assets-cash), $m
  223
  344
  512
  740
  1,041
  1,427
  1,910
  2,502
  3,212
  4,048
  5,017
  6,123
  7,368
  8,753
  10,278
  11,941
  13,739
  15,670
  17,731
  19,918
  22,229
  24,661
  27,213
  29,883
  32,672
  35,579
  38,606
  41,755
  45,030
  48,433
Revenue / Adjusted assets
  0.413
  0.410
  0.410
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
Average production assets, $m
  11
  17
  25
  36
  50
  69
  93
  121
  156
  196
  243
  297
  357
  424
  498
  579
  666
  760
  860
  966
  1,078
  1,196
  1,320
  1,449
  1,585
  1,726
  1,872
  2,025
  2,184
  2,349
Working capital, $m
  46
  71
  105
  152
  214
  293
  393
  514
  660
  832
  1,031
  1,258
  1,514
  1,799
  2,112
  2,454
  2,823
  3,220
  3,644
  4,093
  4,568
  5,068
  5,592
  6,141
  6,714
  7,311
  7,934
  8,581
  9,254
  9,953
Total debt, $m
  39
  81
  141
  223
  330
  467
  639
  850
  1,103
  1,400
  1,745
  2,139
  2,582
  3,075
  3,618
  4,210
  4,850
  5,538
  6,271
  7,050
  7,873
  8,738
  9,647
  10,598
  11,590
  12,625
  13,703
  14,824
  15,990
  17,201
Total liabilities, $m
  80
  122
  182
  264
  371
  508
  680
  891
  1,143
  1,441
  1,786
  2,180
  2,623
  3,116
  3,659
  4,251
  4,891
  5,579
  6,312
  7,091
  7,914
  8,779
  9,688
  10,638
  11,631
  12,666
  13,744
  14,865
  16,031
  17,242
Total equity, $m
  144
  221
  330
  477
  671
  919
  1,230
  1,611
  2,068
  2,607
  3,231
  3,943
  4,745
  5,637
  6,619
  7,690
  8,848
  10,092
  11,419
  12,827
  14,315
  15,882
  17,525
  19,245
  21,041
  22,913
  24,862
  26,890
  28,999
  31,191
Total liabilities and equity, $m
  224
  343
  512
  741
  1,042
  1,427
  1,910
  2,502
  3,211
  4,048
  5,017
  6,123
  7,368
  8,753
  10,278
  11,941
  13,739
  15,671
  17,731
  19,918
  22,229
  24,661
  27,213
  29,883
  32,672
  35,579
  38,606
  41,755
  45,030
  48,433
Debt-to-equity ratio
  0.270
  0.370
  0.430
  0.470
  0.490
  0.510
  0.520
  0.530
  0.530
  0.540
  0.540
  0.540
  0.540
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
Adjusted equity ratio
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1
  1
  5
  9
  15
  23
  32
  43
  57
  73
  91
  111
  134
  159
  186
  216
  248
  282
  319
  357
  398
  440
  484
  531
  579
  630
  682
  737
  793
  852
Depreciation, amort., depletion, $m
  2
  3
  5
  7
  10
  14
  19
  24
  31
  39
  49
  59
  71
  85
  100
  116
  133
  152
  172
  193
  216
  239
  264
  290
  317
  345
  374
  405
  437
  470
Funds from operations, $m
  1
  5
  10
  17
  25
  37
  51
  68
  88
  112
  139
  170
  205
  244
  286
  332
  381
  434
  491
  550
  613
  679
  748
  821
  896
  975
  1,057
  1,142
  1,230
  1,322
Change in working capital, $m
  17
  25
  35
  47
  62
  79
  99
  122
  146
  172
  199
  227
  256
  285
  313
  342
  370
  397
  423
  449
  475
  500
  524
  549
  573
  597
  622
  647
  673
  699
Cash from operations, $m
  -16
  -20
  -25
  -30
  -36
  -43
  -49
  -54
  -58
  -60
  -60
  -57
  -51
  -41
  -27
  -10
  12
  37
  67
  101
  138
  179
  224
  272
  323
  377
  435
  495
  557
  623
Maintenance CAPEX, $m
  -1
  -2
  -3
  -5
  -7
  -10
  -14
  -19
  -24
  -31
  -39
  -49
  -59
  -71
  -85
  -100
  -116
  -133
  -152
  -172
  -193
  -216
  -239
  -264
  -290
  -317
  -345
  -374
  -405
  -437
New CAPEX, $m
  -4
  -6
  -8
  -11
  -15
  -19
  -23
  -29
  -34
  -41
  -47
  -54
  -60
  -67
  -74
  -81
  -87
  -94
  -100
  -106
  -112
  -118
  -124
  -130
  -135
  -141
  -147
  -153
  -159
  -165
Cash from investing activities, $m
  -5
  -8
  -11
  -16
  -22
  -29
  -37
  -48
  -58
  -72
  -86
  -103
  -119
  -138
  -159
  -181
  -203
  -227
  -252
  -278
  -305
  -334
  -363
  -394
  -425
  -458
  -492
  -527
  -564
  -602
Free cash flow, $m
  -22
  -28
  -36
  -46
  -58
  -71
  -86
  -101
  -117
  -132
  -146
  -159
  -170
  -180
  -186
  -190
  -191
  -190
  -185
  -177
  -167
  -154
  -139
  -121
  -102
  -80
  -57
  -33
  -6
  21
Issuance/(repayment) of debt, $m
  29
  43
  60
  81
  107
  137
  172
  211
  253
  298
  345
  394
  443
  493
  543
  592
  640
  687
  734
  779
  823
  866
  908
  951
  993
  1,035
  1,078
  1,121
  1,166
  1,212
Issuance/(repurchase) of shares, $m
  54
  76
  104
  138
  178
  226
  279
  338
  400
  466
  533
  601
  668
  733
  796
  855
  910
  961
  1,008
  1,051
  1,091
  1,126
  1,159
  1,189
  1,216
  1,242
  1,267
  1,291
  1,315
  1,339
Cash from financing (excl. dividends), $m  
  83
  119
  164
  219
  285
  363
  451
  549
  653
  764
  878
  995
  1,111
  1,226
  1,339
  1,447
  1,550
  1,648
  1,742
  1,830
  1,914
  1,992
  2,067
  2,140
  2,209
  2,277
  2,345
  2,412
  2,481
  2,551
Total cash flow (excl. dividends), $m
  62
  91
  127
  173
  227
  292
  365
  447
  536
  632
  732
  836
  941
  1,047
  1,152
  1,257
  1,359
  1,459
  1,557
  1,653
  1,746
  1,838
  1,928
  2,018
  2,107
  2,197
  2,288
  2,380
  2,474
  2,572
Retained Cash Flow (-), $m
  -54
  -77
  -108
  -147
  -194
  -249
  -311
  -381
  -457
  -539
  -624
  -712
  -802
  -892
  -982
  -1,071
  -1,158
  -1,244
  -1,327
  -1,409
  -1,488
  -1,566
  -1,643
  -1,720
  -1,796
  -1,872
  -1,950
  -2,028
  -2,109
  -2,192
Prev. year cash balance distribution, $m
  26
  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
  34
  13
  19
  26
  34
  43
  54
  66
  79
  93
  108
  124
  139
  155
  170
  186
  201
  216
  230
  244
  258
  272
  285
  298
  311
  325
  338
  352
  366
  380
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  32
  12
  16
  21
  26
  31
  36
  41
  46
  49
  51
  53
  53
  52
  50
  47
  44
  40
  35
  31
  27
  23
  19
  15
  12
  9
  7
  5
  4
  3
Current shareholders' claim on cash, %
  60.9
  38.8
  25.8
  17.8
  12.6
  9.3
  7.0
  5.4
  4.2
  3.4
  2.8
  2.3
  2.0
  1.7
  1.5
  1.3
  1.1
  1.0
  0.9
  0.8
  0.8
  0.7
  0.7
  0.6
  0.6
  0.5
  0.5
  0.5
  0.5
  0.4

Gridsum Holding Inc. is a holding company. The Company provides data analysis software for multinational and domestic enterprises, and government agencies in China. The Company's technology, the Gridsum Big Data Platform performs multi-dimensional correlation analysis and analyzes real-time events. The Company offers various types of solutions and technologies. The Company's software products are designed for a range of commercial and governmental applications. The Company's products focus on digital marketing analytics and automation solutions. The Company offers Web analytics solutions based on data warehouse technology to build solutions on a distributed data warehouse architecture, using the open-source Hadoop framework. The Company delivers its solutions as cloud-based software-as-a-service (SaaS) offerings that manage information technology (IT) support costs by outsourcing hardware and software maintenance and support.

FINANCIAL RATIOS  of  Gridsum Holding ADR (GSUM)

Valuation Ratios
P/E Ratio -12.8
Price to Sales 2.2
Price to Book 1.1
Price to Tangible Book
Price to Cash Flow -3.7
Price to Free Cash Flow -3.1
Growth Rates
Sales Growth Rate 70.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 100%
Cap. Spend. - 3 Yr. Gr. Rate 43.1%
Financial Strength
Quick Ratio 8
Current Ratio 0.4
LT Debt to Equity 0%
Total Debt to Equity 7.6%
Interest Coverage 0
Management Effectiveness
Return On Assets -7.5%
Ret/ On Assets - 3 Yr. Avg. -11.6%
Return On Total Capital -12.1%
Ret/ On T. Cap. - 3 Yr. Avg. -31.7%
Return On Equity -12.8%
Return On Equity - 3 Yr. Avg. -33.2%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 86.2%
Gross Margin - 3 Yr. Avg. 84.9%
EBITDA Margin -3.4%
EBITDA Margin - 3 Yr. Avg. -12.5%
Operating Margin -8.6%
Oper. Margin - 3 Yr. Avg. -19%
Pre-Tax Margin -10.3%
Pre-Tax Margin - 3 Yr. Avg. -18.6%
Net Profit Margin -17.2%
Net Profit Margin - 3 Yr. Avg. -21.9%
Effective Tax Rate -66.7%
Eff/ Tax Rate - 3 Yr. Avg. -27.8%
Payout Ratio 0%

GSUM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GSUM stock intrinsic value calculation we used $57.6326853852 million for the last fiscal year's total revenue generated by Gridsum Holding ADR. The default revenue input number comes from 0001 income statement of Gridsum Holding 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 GSUM stock valuation model: a) initial revenue growth rate of 59.3% 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 4.3%, whose default value for GSUM is calculated based on our internal credit rating of Gridsum Holding 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 Gridsum Holding 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 GSUM stock the variable cost ratio is equal to 89.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $10 million in the base year in the intrinsic value calculation for GSUM 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 Gridsum Holding ADR.

Corporate tax rate of 27% is the nominal tax rate for Gridsum Holding 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 GSUM 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 GSUM are equal to 11.8%.

Life of production assets of 1.9 years is the average useful life of capital assets used in Gridsum Holding 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 GSUM is equal to 50%. 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 - $116.951907847 million for Gridsum Holding 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 25.192 million for Gridsum Holding 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 Gridsum Holding ADR at the current share price and the inputted number of shares is $0.1 billion.

RELATED COMPANIES Price Int.Val. Rating
JD JD.com ADR 22.39 204.26  str.buy
SHOP Shopify Cl A 138.78 2.77  str.sell
ORCL Oracle 49.51 34.20  sell

COMPANY NEWS

▶ Gridsum Announces Nasdaq Hearing Date   [Nov-13-18 06:00AM  PR Newswire]
▶ Gridsum Ranked Among 2018 AI Future Enterprises   [Oct-09-18 07:00AM  PR Newswire]
▶ The Fourth Gridsum Hackathon Held Successfully   [Sep-26-18 07:00AM  PR Newswire]
▶ Gridsum Granted Extension by Nasdaq to Regain Compliance   [Aug-29-18 06:00AM  PR Newswire]
▶ /DISREGARD RELEASE: Gridsum Holding Inc./   [Jul-30-18 11:30AM  PR Newswire]
▶ Gridsum Renews and Expands Client Relationship with Olay   [Jul-16-18 08:35AM  PR Newswire]
▶ Gridsum Renews Contract with SAIC Volkswagen   [Jul-11-18 07:50AM  PR Newswire]
▶ Gridsum Signs Lianjia as New Client   [Jun-26-18 07:30AM  PR Newswire]
▶ Gridsum Signs SFbest.com as New Client   [06:30AM  PR Newswire]

CONTACT US       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.