Intrinsic value of Himax Technologies, Inc. - HIMX

Previous Close

$3.58

  Intrinsic Value

$0.84

stock screener

  Rating & Target

str. sell

-77%

Previous close

$3.58

 
Intrinsic value

$0.84

 
Up/down potential

-77%

 
Rating

str. sell

We calculate the intrinsic value of HIMX 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 0.6

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  699
  715
  733
  754
  777
  802
  829
  859
  890
  925
  961
  1,000
  1,042
  1,086
  1,133
  1,182
  1,235
  1,290
  1,349
  1,411
  1,476
  1,545
  1,618
  1,695
  1,775
  1,860
  1,950
  2,044
  2,143
  2,247
Variable operating expenses, $m
  395
  403
  414
  425
  438
  451
  467
  483
  500
  519
  531
  552
  575
  600
  626
  653
  682
  713
  745
  779
  815
  854
  894
  936
  981
  1,027
  1,077
  1,129
  1,184
  1,241
Fixed operating expenses, $m
  303
  309
  316
  323
  330
  337
  345
  352
  360
  368
  376
  384
  393
  401
  410
  419
  429
  438
  448
  457
  467
  478
  488
  499
  510
  521
  533
  544
  556
  569
Total operating expenses, $m
  698
  712
  730
  748
  768
  788
  812
  835
  860
  887
  907
  936
  968
  1,001
  1,036
  1,072
  1,111
  1,151
  1,193
  1,236
  1,282
  1,332
  1,382
  1,435
  1,491
  1,548
  1,610
  1,673
  1,740
  1,810
Operating income, $m
  2
  2
  4
  6
  9
  13
  18
  23
  30
  37
  54
  63
  74
  85
  97
  110
  124
  140
  156
  174
  194
  214
  236
  260
  285
  312
  340
  371
  403
  437
EBITDA, $m
  25
  25
  27
  30
  34
  38
  43
  50
  57
  65
  74
  84
  95
  107
  120
  134
  150
  166
  184
  203
  224
  246
  269
  294
  321
  350
  380
  413
  447
  483
Interest expense (income), $m
  1
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  22
  23
  24
  26
  27
  29
  30
  32
  34
  35
Earnings before tax, $m
  -6
  -6
  -5
  -3
  0
  3
  8
  13
  19
  25
  42
  50
  60
  70
  81
  94
  107
  121
  137
  154
  172
  191
  212
  234
  258
  283
  310
  339
  369
  402
Tax expense, $m
  0
  0
  0
  0
  0
  1
  2
  3
  5
  7
  11
  14
  16
  19
  22
  25
  29
  33
  37
  42
  46
  52
  57
  63
  70
  76
  84
  91
  100
  109
Net income, $m
  -6
  -6
  -5
  -3
  0
  2
  6
  9
  14
  19
  31
  37
  44
  51
  59
  68
  78
  89
  100
  112
  125
  140
  155
  171
  188
  207
  226
  247
  270
  293

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
  710
  726
  745
  766
  789
  815
  842
  873
  905
  940
  977
  1,016
  1,059
  1,103
  1,151
  1,201
  1,255
  1,311
  1,371
  1,434
  1,500
  1,571
  1,644
  1,722
  1,804
  1,891
  1,982
  2,077
  2,178
  2,284
Adjusted assets (=assets-cash), $m
  710
  726
  745
  766
  789
  815
  842
  873
  905
  940
  977
  1,016
  1,059
  1,103
  1,151
  1,201
  1,255
  1,311
  1,371
  1,434
  1,500
  1,571
  1,644
  1,722
  1,804
  1,891
  1,982
  2,077
  2,178
  2,284
Revenue / Adjusted assets
  0.985
  0.985
  0.984
  0.984
  0.985
  0.984
  0.985
  0.984
  0.983
  0.984
  0.984
  0.984
  0.984
  0.985
  0.984
  0.984
  0.984
  0.984
  0.984
  0.984
  0.984
  0.983
  0.984
  0.984
  0.984
  0.984
  0.984
  0.984
  0.984
  0.984
Average production assets, $m
  85
  86
  89
  91
  94
  97
  100
  104
  108
  112
  116
  121
  126
  131
  137
  143
  149
  156
  163
  171
  179
  187
  196
  205
  215
  225
  236
  247
  259
  272
Working capital, $m
  179
  183
  188
  193
  199
  205
  212
  220
  228
  237
  246
  256
  267
  278
  290
  303
  316
  330
  345
  361
  378
  396
  414
  434
  455
  476
  499
  523
  549
  575
Total debt, $m
  152
  157
  164
  171
  179
  188
  197
  207
  219
  231
  243
  257
  271
  287
  303
  321
  339
  358
  379
  401
  423
  448
  473
  500
  528
  558
  589
  622
  656
  693
Total liabilities, $m
  244
  250
  256
  264
  271
  280
  290
  300
  311
  323
  336
  350
  364
  380
  396
  413
  432
  451
  472
  493
  516
  540
  566
  592
  621
  650
  682
  715
  749
  786
Total equity, $m
  466
  477
  489
  503
  518
  534
  553
  572
  594
  616
  641
  667
  694
  724
  755
  788
  823
  860
  899
  941
  984
  1,030
  1,079
  1,130
  1,184
  1,240
  1,300
  1,363
  1,429
  1,498
Total liabilities and equity, $m
  710
  727
  745
  767
  789
  814
  843
  872
  905
  939
  977
  1,017
  1,058
  1,104
  1,151
  1,201
  1,255
  1,311
  1,371
  1,434
  1,500
  1,570
  1,645
  1,722
  1,805
  1,890
  1,982
  2,078
  2,178
  2,284
Debt-to-equity ratio
  0.330
  0.330
  0.330
  0.340
  0.350
  0.350
  0.360
  0.360
  0.370
  0.370
  0.380
  0.390
  0.390
  0.400
  0.400
  0.410
  0.410
  0.420
  0.420
  0.430
  0.430
  0.430
  0.440
  0.440
  0.450
  0.450
  0.450
  0.460
  0.460
  0.460
Adjusted equity ratio
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656
  0.656

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -6
  -6
  -5
  -3
  0
  2
  6
  9
  14
  19
  31
  37
  44
  51
  59
  68
  78
  89
  100
  112
  125
  140
  155
  171
  188
  207
  226
  247
  270
  293
Depreciation, amort., depletion, $m
  23
  23
  24
  24
  25
  25
  26
  26
  27
  28
  20
  21
  21
  22
  23
  24
  25
  26
  28
  29
  30
  32
  33
  35
  36
  38
  40
  42
  44
  46
Funds from operations, $m
  17
  17
  19
  21
  24
  28
  31
  36
  41
  46
  50
  57
  65
  73
  83
  93
  103
  115
  128
  141
  156
  171
  188
  206
  225
  245
  266
  289
  314
  339
Change in working capital, $m
  4
  4
  5
  5
  6
  6
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
Cash from operations, $m
  13
  13
  14
  16
  19
  21
  24
  28
  32
  38
  41
  47
  54
  62
  71
  80
  90
  101
  113
  125
  139
  154
  169
  186
  204
  223
  243
  265
  288
  313
Maintenance CAPEX, $m
  -14
  -14
  -15
  -15
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -42
  -44
New CAPEX, $m
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
Cash from investing activities, $m
  -16
  -16
  -17
  -17
  -18
  -19
  -19
  -21
  -22
  -22
  -23
  -25
  -26
  -26
  -28
  -29
  -30
  -32
  -33
  -36
  -37
  -38
  -41
  -42
  -45
  -46
  -49
  -51
  -54
  -57
Free cash flow, $m
  -3
  -3
  -3
  -2
  0
  2
  5
  7
  11
  15
  17
  23
  29
  35
  43
  51
  59
  69
  79
  90
  102
  115
  129
  144
  159
  176
  195
  214
  234
  256
Issuance/(repayment) of debt, $m
  5
  6
  6
  7
  8
  9
  10
  10
  11
  12
  13
  14
  15
  15
  16
  17
  18
  19
  21
  22
  23
  24
  25
  27
  28
  30
  31
  33
  35
  36
Issuance/(repurchase) of shares, $m
  15
  17
  17
  17
  15
  14
  13
  10
  8
  4
  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
  23
  23
  24
  23
  23
  23
  20
  19
  16
  13
  14
  15
  15
  16
  17
  18
  19
  21
  22
  23
  24
  25
  27
  28
  30
  31
  33
  35
  36
Total cash flow (excl. dividends), $m
  17
  19
  21
  22
  24
  25
  27
  28
  30
  31
  30
  36
  43
  51
  59
  68
  78
  88
  100
  112
  125
  139
  154
  170
  188
  206
  226
  247
  269
  293
Retained Cash Flow (-), $m
  -15
  -17
  -17
  -17
  -15
  -17
  -18
  -20
  -21
  -23
  -24
  -26
  -28
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -44
  -46
  -48
  -51
  -54
  -57
  -60
  -63
  -66
  -69
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
  3
  4
  6
  8
  9
  9
  8
  8
  8
  6
  10
  16
  21
  28
  35
  43
  51
  61
  71
  81
  93
  106
  119
  134
  149
  166
  184
  203
  223
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
  2
  2
  3
  5
  6
  6
  6
  5
  5
  4
  3
  4
  6
  7
  8
  9
  9
  9
  9
  9
  8
  8
  7
  6
  5
  4
  4
  3
  2
  2
Current shareholders' claim on cash, %
  97.5
  95.0
  92.5
  90.2
  88.2
  86.5
  85.0
  83.8
  83.0
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6

Himax Technologies, Inc. is a fabless semiconductor solution provider. The Company is engaged in display driver integrated circuits (IC) and timing controllers used in televisions, laptops, monitors, mobile phones, tablets, digital cameras, car navigation and other consumer electronics devices. The Company operates through two segments: Driver IC and Non-driver products. In addition, the Company designs and provides controllers for touch sensor displays, liquid crystal on silicon micro-displays used in palm-size projectors and head-mounted displays, light-emitting diode driver ICs, power management ICs, scaler products for monitors and projectors, video processing IC solutions and silicon IPs. It also offers digital camera solutions, including complementary metal-oxide-semiconductor image sensors and wafer level optics, which are used in a range of applications, such as mobile phone, tablet, laptop, televisions, personal computer camera, automobile, security and medical devices.

FINANCIAL RATIOS  of  Himax Technologies, Inc. (HIMX)

Valuation Ratios
P/E Ratio 24.1
Price to Sales 1.5
Price to Book 2.6
Price to Tangible Book
Price to Cash Flow 14.5
Price to Free Cash Flow 16
Growth Rates
Sales Growth Rate 16%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -20%
Cap. Spend. - 3 Yr. Gr. Rate -15%
Financial Strength
Quick Ratio 1
Current Ratio 0.4
LT Debt to Equity 0%
Total Debt to Equity 29.5%
Interest Coverage 60
Management Effectiveness
Return On Assets 6.5%
Ret/ On Assets - 3 Yr. Avg. 6%
Return On Total Capital 8.3%
Ret/ On T. Cap. - 3 Yr. Avg. 8%
Return On Equity 11.2%
Return On Equity - 3 Yr. Avg. 10.4%
Asset Turnover 1
Profitability Ratios
Gross Margin 24.2%
Gross Margin - 3 Yr. Avg. 24.1%
EBITDA Margin 9.2%
EBITDA Margin - 3 Yr. Avg. 9.4%
Operating Margin 7.3%
Oper. Margin - 3 Yr. Avg. 6.8%
Pre-Tax Margin 7.3%
Pre-Tax Margin - 3 Yr. Avg. 7.4%
Net Profit Margin 6.4%
Net Profit Margin - 3 Yr. Avg. 6%
Effective Tax Rate 16.9%
Eff/ Tax Rate - 3 Yr. Avg. 26%
Payout Ratio 43.1%

HIMX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HIMX stock intrinsic value calculation we used $685 million for the last fiscal year's total revenue generated by Himax Technologies, Inc.. The default revenue input number comes from 0001 income statement of Himax Technologies, 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 HIMX stock valuation model: a) initial revenue growth rate of 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 4.3%, whose default value for HIMX is calculated based on our internal credit rating of Himax Technologies, 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 Himax Technologies, 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 HIMX stock the variable cost ratio is equal to 56.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $296 million in the base year in the intrinsic value calculation for HIMX 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 Himax Technologies, Inc..

Corporate tax rate of 27% is the nominal tax rate for Himax Technologies, 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 HIMX 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 HIMX are equal to 12.1%.

Life of production assets of 5.9 years is the average useful life of capital assets used in Himax Technologies, 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 HIMX is equal to 25.6%. 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 - $456.648 million for Himax Technologies, 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 172.103 million for Himax Technologies, 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 Himax Technologies, Inc. at the current share price and the inputted number of shares is $0.6 billion.

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