Intrinsic value of Hexindai Inc. - HX

Previous Close

$2.67

  Intrinsic Value

$342.78

stock screener

  Rating & Target

str. buy

+999%

Previous close

$2.67

 
Intrinsic value

$342.78

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of HX 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, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  171
  265
  396
  574
  810
  1,113
  1,494
  1,962
  2,525
  3,189
  3,960
  4,841
  5,835
  6,943
  8,164
  9,496
  10,939
  12,490
  14,145
  15,903
  17,762
  19,719
  21,773
  23,923
  26,168
  28,510
  30,949
  33,486
  36,124
  38,866
Variable operating expenses, $m
  37
  57
  85
  123
  173
  238
  320
  420
  541
  683
  848
  1,036
  1,249
  1,486
  1,748
  2,033
  2,342
  2,674
  3,028
  3,404
  3,802
  4,221
  4,661
  5,121
  5,602
  6,103
  6,625
  7,168
  7,733
  8,320
Fixed operating expenses, $m
  8
  8
  9
  9
  9
  9
  9
  10
  10
  10
  10
  10
  11
  11
  11
  11
  12
  12
  12
  12
  13
  13
  13
  13
  14
  14
  14
  15
  15
  15
Total operating expenses, $m
  45
  65
  94
  132
  182
  247
  329
  430
  551
  693
  858
  1,046
  1,260
  1,497
  1,759
  2,044
  2,354
  2,686
  3,040
  3,416
  3,815
  4,234
  4,674
  5,134
  5,616
  6,117
  6,639
  7,183
  7,748
  8,335
Operating income, $m
  126
  199
  302
  442
  627
  866
  1,165
  1,532
  1,974
  2,496
  3,102
  3,795
  4,576
  5,446
  6,405
  7,452
  8,586
  9,804
  11,105
  12,487
  13,947
  15,485
  17,099
  18,788
  20,553
  22,393
  24,309
  26,303
  28,376
  30,531
EBITDA, $m
  127
  200
  303
  443
  628
  867
  1,167
  1,535
  1,978
  2,500
  3,107
  3,800
  4,583
  5,454
  6,415
  7,464
  8,599
  9,819
  11,122
  12,506
  13,968
  15,508
  17,125
  18,817
  20,584
  22,427
  24,346
  26,343
  28,419
  30,577
Interest expense (income), $m
  0
  0
  1
  2
  3
  6
  8
  12
  17
  22
  29
  37
  46
  57
  69
  82
  97
  113
  130
  148
  168
  189
  212
  235
  260
  286
  313
  341
  370
  400
  432
Earnings before tax, $m
  126
  199
  300
  439
  622
  857
  1,153
  1,516
  1,952
  2,467
  3,065
  3,748
  4,519
  5,377
  6,323
  7,356
  8,473
  9,674
  10,956
  12,318
  13,758
  15,273
  16,864
  18,528
  20,267
  22,080
  23,969
  25,933
  27,976
  30,099
Tax expense, $m
  34
  54
  81
  118
  168
  231
  311
  409
  527
  666
  828
  1,012
  1,220
  1,452
  1,707
  1,986
  2,288
  2,612
  2,958
  3,326
  3,715
  4,124
  4,553
  5,003
  5,472
  5,962
  6,472
  7,002
  7,553
  8,127
Net income, $m
  92
  145
  219
  320
  454
  626
  842
  1,107
  1,425
  1,801
  2,238
  2,736
  3,299
  3,925
  4,616
  5,370
  6,186
  7,062
  7,998
  8,992
  10,043
  11,149
  12,310
  13,526
  14,795
  16,119
  17,497
  18,931
  20,422
  21,972

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
  239
  369
  552
  802
  1,131
  1,555
  2,087
  2,740
  3,526
  4,454
  5,531
  6,762
  8,150
  9,697
  11,402
  13,263
  15,278
  17,443
  19,756
  22,211
  24,807
  27,540
  30,409
  33,412
  36,548
  39,818
  43,224
  46,768
  50,453
  54,282
Adjusted assets (=assets-cash), $m
  239
  369
  552
  802
  1,131
  1,555
  2,087
  2,740
  3,526
  4,454
  5,531
  6,762
  8,150
  9,697
  11,402
  13,263
  15,278
  17,443
  19,756
  22,211
  24,807
  27,540
  30,409
  33,412
  36,548
  39,818
  43,224
  46,768
  50,453
  54,282
Revenue / Adjusted assets
  0.715
  0.718
  0.717
  0.716
  0.716
  0.716
  0.716
  0.716
  0.716
  0.716
  0.716
  0.716
  0.716
  0.716
  0.716
  0.716
  0.716
  0.716
  0.716
  0.716
  0.716
  0.716
  0.716
  0.716
  0.716
  0.716
  0.716
  0.716
  0.716
  0.716
Average production assets, $m
  1
  2
  2
  3
  5
  7
  9
  12
  15
  19
  24
  29
  35
  42
  49
  57
  66
  75
  85
  95
  107
  118
  131
  144
  157
  171
  186
  201
  217
  233
Working capital, $m
  5
  8
  13
  18
  26
  36
  48
  63
  81
  102
  127
  155
  187
  222
  261
  304
  350
  400
  453
  509
  568
  631
  697
  766
  837
  912
  990
  1,072
  1,156
  1,244
Total debt, $m
  14
  35
  64
  104
  156
  223
  308
  412
  537
  684
  856
  1,051
  1,272
  1,518
  1,789
  2,085
  2,405
  2,750
  3,117
  3,508
  3,920
  4,355
  4,811
  5,289
  5,787
  6,307
  6,849
  7,412
  7,998
  8,607
Total liabilities, $m
  38
  59
  88
  127
  180
  247
  332
  436
  561
  708
  879
  1,075
  1,296
  1,542
  1,813
  2,109
  2,429
  2,774
  3,141
  3,532
  3,944
  4,379
  4,835
  5,312
  5,811
  6,331
  6,873
  7,436
  8,022
  8,631
Total equity, $m
  201
  311
  465
  674
  951
  1,308
  1,755
  2,305
  2,965
  3,746
  4,651
  5,687
  6,854
  8,155
  9,589
  11,154
  12,849
  14,670
  16,614
  18,680
  20,863
  23,161
  25,574
  28,099
  30,737
  33,487
  36,352
  39,332
  42,431
  45,651
Total liabilities and equity, $m
  239
  370
  553
  801
  1,131
  1,555
  2,087
  2,741
  3,526
  4,454
  5,530
  6,762
  8,150
  9,697
  11,402
  13,263
  15,278
  17,444
  19,755
  22,212
  24,807
  27,540
  30,409
  33,411
  36,548
  39,818
  43,225
  46,768
  50,453
  54,282
Debt-to-equity ratio
  0.070
  0.110
  0.140
  0.150
  0.160
  0.170
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
Adjusted equity ratio
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  92
  145
  219
  320
  454
  626
  842
  1,107
  1,425
  1,801
  2,238
  2,736
  3,299
  3,925
  4,616
  5,370
  6,186
  7,062
  7,998
  8,992
  10,043
  11,149
  12,310
  13,526
  14,795
  16,119
  17,497
  18,931
  20,422
  21,972
Depreciation, amort., depletion, $m
  0
  0
  1
  1
  1
  1
  2
  2
  3
  4
  5
  6
  7
  8
  10
  11
  13
  15
  17
  19
  21
  24
  26
  29
  31
  34
  37
  40
  43
  47
Funds from operations, $m
  92
  145
  220
  321
  455
  627
  844
  1,109
  1,428
  1,805
  2,242
  2,742
  3,306
  3,934
  4,626
  5,381
  6,199
  7,077
  8,015
  9,011
  10,064
  11,173
  12,337
  13,554
  14,826
  16,153
  17,534
  18,971
  20,466
  22,019
Change in working capital, $m
  2
  3
  4
  6
  8
  10
  12
  15
  18
  21
  25
  28
  32
  35
  39
  43
  46
  50
  53
  56
  59
  63
  66
  69
  72
  75
  78
  81
  84
  88
Cash from operations, $m
  90
  142
  216
  315
  447
  618
  831
  1,094
  1,410
  1,784
  2,218
  2,714
  3,274
  3,898
  4,587
  5,338
  6,152
  7,028
  7,962
  8,955
  10,005
  11,110
  12,271
  13,486
  14,755
  16,078
  17,456
  18,890
  20,381
  21,931
Maintenance CAPEX, $m
  0
  0
  0
  0
  -1
  -1
  -1
  -2
  -2
  -3
  -4
  -5
  -6
  -7
  -8
  -10
  -11
  -13
  -15
  -17
  -19
  -21
  -24
  -26
  -29
  -31
  -34
  -37
  -40
  -43
New CAPEX, $m
  0
  -1
  -1
  -1
  -1
  -2
  -2
  -3
  -3
  -4
  -5
  -5
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -16
Cash from investing activities, $m
  0
  -1
  -1
  -1
  -2
  -3
  -3
  -5
  -5
  -7
  -9
  -10
  -12
  -14
  -15
  -18
  -20
  -22
  -25
  -28
  -30
  -33
  -36
  -39
  -42
  -45
  -49
  -52
  -56
  -59
Free cash flow, $m
  90
  142
  215
  314
  445
  615
  828
  1,089
  1,404
  1,777
  2,209
  2,704
  3,262
  3,885
  4,571
  5,321
  6,132
  7,005
  7,937
  8,928
  9,975
  11,077
  12,235
  13,447
  14,712
  16,033
  17,407
  18,838
  20,325
  21,871
Issuance/(repayment) of debt, $m
  14
  21
  29
  40
  52
  67
  85
  104
  125
  147
  171
  196
  221
  246
  271
  296
  320
  344
  368
  390
  413
  435
  456
  477
  499
  520
  542
  563
  586
  609
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  14
  21
  29
  40
  52
  67
  85
  104
  125
  147
  171
  196
  221
  246
  271
  296
  320
  344
  368
  390
  413
  435
  456
  477
  499
  520
  542
  563
  586
  609
Total cash flow (excl. dividends), $m
  104
  162
  244
  353
  498
  682
  912
  1,193
  1,529
  1,924
  2,380
  2,900
  3,483
  4,131
  4,842
  5,617
  6,453
  7,349
  8,305
  9,318
  10,387
  11,512
  12,691
  13,924
  15,211
  16,553
  17,949
  19,401
  20,911
  22,480
Retained Cash Flow (-), $m
  -75
  -110
  -154
  -210
  -277
  -356
  -448
  -549
  -661
  -780
  -906
  -1,035
  -1,168
  -1,301
  -1,434
  -1,565
  -1,695
  -1,821
  -1,945
  -2,065
  -2,183
  -2,299
  -2,413
  -2,525
  -2,638
  -2,750
  -2,864
  -2,980
  -3,099
  -3,221
Prev. year cash balance distribution, $m
  14
  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
  43
  53
  90
  144
  221
  326
  465
  644
  869
  1,144
  1,475
  1,864
  2,315
  2,830
  3,408
  4,051
  4,758
  5,528
  6,360
  7,253
  8,204
  9,213
  10,278
  11,399
  12,573
  13,802
  15,085
  16,421
  17,812
  19,259
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
  41
  48
  78
  119
  171
  236
  314
  402
  499
  600
  700
  796
  880
  950
  1,001
  1,030
  1,035
  1,018
  979
  922
  849
  764
  674
  581
  489
  403
  324
  254
  194
  145
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Hexindai Inc. is a consumer lending company. The Company is focused on offering borrowers a range of products designed-based on customer segmentation data and tailored to the specific needs of the emerging middle class in China. The Company also offers five tailored loan products such as Provident Fund Loans, Property-Owner Loans, Car-Owner Loans, Insurance-Holder Loans, and Premier Customer Loans. The Company offers products and services to Borrowers, and Investors.

FINANCIAL RATIOS  of  Hexindai Inc. (HX)

Valuation Ratios
P/E Ratio 13.5
Price to Sales 5.3
Price to Book 5.1
Price to Tangible Book
Price to Cash Flow 15.2
Price to Free Cash Flow 15.2
Growth Rates
Sales Growth Rate 91.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 36%
Ret/ On Assets - 3 Yr. Avg. 21.2%
Return On Total Capital 47.4%
Ret/ On T. Cap. - 3 Yr. Avg. 31.5%
Return On Equity 47.4%
Return On Equity - 3 Yr. Avg. 31.5%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 43.5%
EBITDA Margin - 3 Yr. Avg. 25.6%
Operating Margin 43.5%
Oper. Margin - 3 Yr. Avg. 25.6%
Pre-Tax Margin 43.5%
Pre-Tax Margin - 3 Yr. Avg. 25.6%
Net Profit Margin 39.1%
Net Profit Margin - 3 Yr. Avg. 24.2%
Effective Tax Rate 10%
Eff/ Tax Rate - 3 Yr. Avg. 3.3%
Payout Ratio 0%

HX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HX stock intrinsic value calculation we used $107 million for the last fiscal year's total revenue generated by Hexindai Inc.. The default revenue input number comes from 0001 income statement of Hexindai 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 HX stock valuation model: a) initial revenue growth rate of 60% 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 HX is calculated based on our internal credit rating of Hexindai 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 Hexindai 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 HX stock the variable cost ratio is equal to 21.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $8 million in the base year in the intrinsic value calculation for HX 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 Hexindai Inc..

Corporate tax rate of 27% is the nominal tax rate for Hexindai 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 HX 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 HX are equal to 0.6%.

Life of production assets of 3.4 years is the average useful life of capital assets used in Hexindai 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 HX is equal to 3.2%. 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 - $140.043069 million for Hexindai 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 49.055 million for Hexindai 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 Hexindai Inc. at the current share price and the inputted number of shares is $0.1 billion.

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