Intrinsic value of 51job, Inc. - JOBS

Previous Close

$90.20

  Intrinsic Value

$195.78

stock screener

  Rating & Target

str. buy

+117%

Previous close

$90.20

 
Intrinsic value

$195.78

 
Up/down potential

+117%

 
Rating

str. buy

We calculate the intrinsic value of JOBS 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 5.6

 

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, %
  27.90
  25.61
  23.55
  21.69
  20.02
  18.52
  17.17
  15.95
  14.86
  13.87
  12.98
  12.19
  11.47
  10.82
  10.24
  9.71
  9.24
  8.82
  8.44
  8.09
  7.78
  7.51
  7.26
  7.03
  6.83
  6.64
  6.48
  6.33
  6.20
  6.08
Revenue, $m
  551
  692
  855
  1,041
  1,250
  1,481
  1,735
  2,012
  2,311
  2,632
  2,973
  3,336
  3,718
  4,121
  4,542
  4,984
  5,444
  5,925
  6,424
  6,944
  7,485
  8,047
  8,631
  9,237
  9,868
  10,523
  11,205
  11,915
  12,653
  13,422
Variable operating expenses, $m
  292
  365
  449
  545
  653
  773
  904
  1,047
  1,201
  1,367
  1,536
  1,723
  1,921
  2,129
  2,347
  2,575
  2,813
  3,061
  3,319
  3,587
  3,867
  4,157
  4,459
  4,772
  5,098
  5,436
  5,789
  6,155
  6,537
  6,934
Fixed operating expenses, $m
  73
  74
  76
  77
  79
  81
  83
  85
  86
  88
  90
  92
  94
  96
  98
  101
  103
  105
  107
  110
  112
  115
  117
  120
  122
  125
  128
  131
  133
  136
Total operating expenses, $m
  365
  439
  525
  622
  732
  854
  987
  1,132
  1,287
  1,455
  1,626
  1,815
  2,015
  2,225
  2,445
  2,676
  2,916
  3,166
  3,426
  3,697
  3,979
  4,272
  4,576
  4,892
  5,220
  5,561
  5,917
  6,286
  6,670
  7,070
Operating income, $m
  186
  253
  330
  418
  517
  628
  749
  881
  1,023
  1,176
  1,347
  1,520
  1,703
  1,896
  2,097
  2,309
  2,529
  2,759
  2,998
  3,247
  3,506
  3,775
  4,055
  4,346
  4,648
  4,962
  5,289
  5,629
  5,983
  6,352
EBITDA, $m
  203
  271
  351
  442
  544
  658
  783
  920
  1,067
  1,225
  1,394
  1,573
  1,762
  1,960
  2,169
  2,387
  2,615
  2,852
  3,099
  3,356
  3,624
  3,902
  4,190
  4,491
  4,803
  5,127
  5,465
  5,816
  6,182
  6,563
Interest expense (income), $m
  5
  14
  23
  34
  46
  61
  77
  95
  114
  135
  159
  183
  210
  238
  267
  298
  331
  365
  400
  437
  476
  516
  557
  601
  646
  692
  741
  792
  844
  899
  956
Earnings before tax, $m
  173
  230
  296
  372
  457
  551
  654
  767
  888
  1,018
  1,164
  1,311
  1,466
  1,629
  1,799
  1,978
  2,165
  2,359
  2,561
  2,772
  2,990
  3,218
  3,454
  3,700
  3,955
  4,221
  4,497
  4,785
  5,084
  5,396
Tax expense, $m
  47
  62
  80
  100
  123
  149
  177
  207
  240
  275
  314
  354
  396
  440
  486
  534
  584
  637
  692
  748
  807
  869
  933
  999
  1,068
  1,140
  1,214
  1,292
  1,373
  1,457
Net income, $m
  126
  168
  216
  272
  333
  402
  477
  560
  648
  743
  850
  957
  1,070
  1,189
  1,314
  1,444
  1,580
  1,722
  1,870
  2,023
  2,183
  2,349
  2,522
  2,701
  2,887
  3,081
  3,283
  3,493
  3,712
  3,939

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
  954
  1,198
  1,480
  1,801
  2,162
  2,562
  3,002
  3,481
  3,998
  4,553
  5,144
  5,771
  6,433
  7,129
  7,859
  8,622
  9,419
  10,250
  11,115
  12,015
  12,950
  13,922
  14,932
  15,981
  17,072
  18,207
  19,386
  20,614
  21,892
  23,222
Adjusted assets (=assets-cash), $m
  954
  1,198
  1,480
  1,801
  2,162
  2,562
  3,002
  3,481
  3,998
  4,553
  5,144
  5,771
  6,433
  7,129
  7,859
  8,622
  9,419
  10,250
  11,115
  12,015
  12,950
  13,922
  14,932
  15,981
  17,072
  18,207
  19,386
  20,614
  21,892
  23,222
Revenue / Adjusted assets
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
Average production assets, $m
  167
  210
  259
  315
  379
  449
  526
  610
  700
  797
  901
  1,011
  1,127
  1,249
  1,376
  1,510
  1,650
  1,795
  1,947
  2,104
  2,268
  2,438
  2,615
  2,799
  2,990
  3,189
  3,395
  3,610
  3,834
  4,067
Working capital, $m
  -251
  -315
  -389
  -474
  -569
  -674
  -790
  -916
  -1,052
  -1,197
  -1,353
  -1,518
  -1,692
  -1,875
  -2,067
  -2,268
  -2,477
  -2,696
  -2,923
  -3,160
  -3,406
  -3,661
  -3,927
  -4,203
  -4,490
  -4,788
  -5,098
  -5,421
  -5,757
  -6,107
Total debt, $m
  424
  625
  858
  1,123
  1,421
  1,751
  2,114
  2,509
  2,936
  3,393
  3,881
  4,398
  4,944
  5,518
  6,121
  6,751
  7,408
  8,093
  8,807
  9,549
  10,321
  11,122
  11,956
  12,822
  13,722
  14,658
  15,631
  16,643
  17,698
  18,795
Total liabilities, $m
  787
  988
  1,221
  1,486
  1,784
  2,114
  2,477
  2,872
  3,299
  3,756
  4,244
  4,761
  5,307
  5,881
  6,484
  7,113
  7,771
  8,456
  9,170
  9,912
  10,684
  11,485
  12,319
  13,185
  14,085
  15,020
  15,994
  17,006
  18,061
  19,158
Total equity, $m
  167
  210
  259
  315
  378
  448
  525
  609
  700
  797
  900
  1,010
  1,126
  1,248
  1,375
  1,509
  1,648
  1,794
  1,945
  2,103
  2,266
  2,436
  2,613
  2,797
  2,988
  3,186
  3,393
  3,607
  3,831
  4,064
Total liabilities and equity, $m
  954
  1,198
  1,480
  1,801
  2,162
  2,562
  3,002
  3,481
  3,999
  4,553
  5,144
  5,771
  6,433
  7,129
  7,859
  8,622
  9,419
  10,250
  11,115
  12,015
  12,950
  13,921
  14,932
  15,982
  17,073
  18,206
  19,387
  20,613
  21,892
  23,222
Debt-to-equity ratio
  2.540
  2.980
  3.310
  3.560
  3.750
  3.900
  4.020
  4.120
  4.200
  4.260
  4.310
  4.350
  4.390
  4.420
  4.450
  4.470
  4.490
  4.510
  4.530
  4.540
  4.550
  4.570
  4.580
  4.580
  4.590
  4.600
  4.610
  4.610
  4.620
  4.620
Adjusted equity ratio
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  126
  168
  216
  272
  333
  402
  477
  560
  648
  743
  850
  957
  1,070
  1,189
  1,314
  1,444
  1,580
  1,722
  1,870
  2,023
  2,183
  2,349
  2,522
  2,701
  2,887
  3,081
  3,283
  3,493
  3,712
  3,939
Depreciation, amort., depletion, $m
  16
  18
  21
  24
  27
  31
  35
  39
  44
  49
  47
  52
  58
  65
  71
  78
  85
  93
  101
  109
  118
  126
  135
  145
  155
  165
  176
  187
  199
  211
Funds from operations, $m
  142
  186
  237
  295
  361
  433
  512
  599
  692
  792
  896
  1,009
  1,128
  1,254
  1,385
  1,522
  1,666
  1,815
  1,971
  2,132
  2,301
  2,475
  2,657
  2,846
  3,042
  3,247
  3,459
  3,680
  3,910
  4,150
Change in working capital, $m
  -55
  -64
  -74
  -84
  -95
  -105
  -116
  -126
  -136
  -146
  -155
  -165
  -174
  -183
  -192
  -201
  -210
  -218
  -227
  -237
  -246
  -256
  -266
  -276
  -287
  -298
  -310
  -323
  -336
  -350
Cash from operations, $m
  197
  251
  312
  380
  455
  538
  628
  725
  828
  938
  1,052
  1,174
  1,302
  1,437
  1,577
  1,723
  1,875
  2,033
  2,198
  2,369
  2,546
  2,731
  2,923
  3,122
  3,329
  3,545
  3,769
  4,003
  4,246
  4,500
Maintenance CAPEX, $m
  -7
  -9
  -11
  -13
  -16
  -20
  -23
  -27
  -32
  -36
  -41
  -47
  -52
  -58
  -65
  -71
  -78
  -85
  -93
  -101
  -109
  -118
  -126
  -135
  -145
  -155
  -165
  -176
  -187
  -199
New CAPEX, $m
  -36
  -43
  -49
  -56
  -63
  -70
  -77
  -84
  -91
  -97
  -104
  -110
  -116
  -122
  -128
  -134
  -140
  -145
  -151
  -158
  -164
  -170
  -177
  -184
  -191
  -199
  -207
  -215
  -224
  -233
Cash from investing activities, $m
  -43
  -52
  -60
  -69
  -79
  -90
  -100
  -111
  -123
  -133
  -145
  -157
  -168
  -180
  -193
  -205
  -218
  -230
  -244
  -259
  -273
  -288
  -303
  -319
  -336
  -354
  -372
  -391
  -411
  -432
Free cash flow, $m
  154
  199
  251
  310
  376
  448
  528
  613
  706
  804
  907
  1,018
  1,134
  1,256
  1,384
  1,518
  1,657
  1,802
  1,953
  2,110
  2,274
  2,443
  2,620
  2,803
  2,993
  3,191
  3,397
  3,612
  3,835
  4,068
Issuance/(repayment) of debt, $m
  172
  202
  233
  265
  298
  330
  363
  395
  427
  458
  488
  517
  546
  574
  602
  630
  658
  685
  713
  742
  772
  802
  833
  866
  900
  936
  973
  1,013
  1,054
  1,098
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  
  172
  202
  233
  265
  298
  330
  363
  395
  427
  458
  488
  517
  546
  574
  602
  630
  658
  685
  713
  742
  772
  802
  833
  866
  900
  936
  973
  1,013
  1,054
  1,098
Total cash flow (excl. dividends), $m
  326
  401
  484
  575
  673
  779
  891
  1,009
  1,132
  1,262
  1,395
  1,535
  1,680
  1,831
  1,987
  2,148
  2,315
  2,488
  2,667
  2,853
  3,045
  3,245
  3,453
  3,669
  3,893
  4,127
  4,371
  4,625
  4,890
  5,166
Retained Cash Flow (-), $m
  -36
  -43
  -49
  -56
  -63
  -70
  -77
  -84
  -91
  -97
  -103
  -110
  -116
  -122
  -128
  -134
  -139
  -145
  -151
  -157
  -164
  -170
  -177
  -184
  -191
  -199
  -206
  -215
  -224
  -233
Prev. year cash balance distribution, $m
  769
  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
  1,059
  358
  435
  519
  610
  709
  814
  925
  1,042
  1,165
  1,291
  1,425
  1,564
  1,709
  1,859
  2,014
  2,175
  2,342
  2,516
  2,695
  2,882
  3,075
  3,276
  3,485
  3,702
  3,929
  4,164
  4,410
  4,666
  4,933
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
  1,015
  328
  378
  427
  473
  514
  550
  578
  599
  611
  613
  608
  595
  574
  546
  512
  473
  431
  387
  342
  298
  255
  215
  177
  144
  115
  89
  68
  51
  37
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

51job, Inc. is a holding company. The Company is a provider of integrated human resource services in China. The Company focuses on online recruitment advertising. The Company operates over three Websites, including www.51job.com, www.yingjiesheng.com and www.51jingying.com, which are utilized by a base of corporate employers, reach an audience of job seekers and aggregate job information from over 100 cities across China. The Company provides a range of human resource services in the categories, such as recruitment advertising services, including online recruitment services provided by its Websites, and other human resource related services, including business process outsourcing, training, campus recruitment, professional assessment tools, salary and other human resource related surveys, human resource conferences and executive search services.

FINANCIAL RATIOS  of  51job, Inc. (JOBS)

Valuation Ratios
P/E Ratio 66.1
Price to Sales 16
Price to Book 7.5
Price to Tangible Book
Price to Cash Flow 34.5
Price to Free Cash Flow 36.1
Growth Rates
Sales Growth Rate 13.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -46.2%
Cap. Spend. - 3 Yr. Gr. Rate -26.2%
Financial Strength
Quick Ratio 5
Current Ratio 0.2
LT Debt to Equity 0%
Total Debt to Equity 25.3%
Interest Coverage 21
Management Effectiveness
Return On Assets 8.4%
Ret/ On Assets - 3 Yr. Avg. 9.4%
Return On Total Capital 9.9%
Ret/ On T. Cap. - 3 Yr. Avg. 11.1%
Return On Equity 12.5%
Return On Equity - 3 Yr. Avg. 13.8%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 71.6%
Gross Margin - 3 Yr. Avg. 72.3%
EBITDA Margin 34%
EBITDA Margin - 3 Yr. Avg. 35.9%
Operating Margin 26%
Oper. Margin - 3 Yr. Avg. 27.4%
Pre-Tax Margin 29.9%
Pre-Tax Margin - 3 Yr. Avg. 32.1%
Net Profit Margin 24.3%
Net Profit Margin - 3 Yr. Avg. 26%
Effective Tax Rate 18.8%
Eff/ Tax Rate - 3 Yr. Avg. 19.2%
Payout Ratio 0%

JOBS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the JOBS stock intrinsic value calculation we used $431 million for the last fiscal year's total revenue generated by 51job, Inc.. The default revenue input number comes from 0001 income statement of 51job, 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 JOBS stock valuation model: a) initial revenue growth rate of 27.9% 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 JOBS is calculated based on our internal credit rating of 51job, 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 51job, 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 JOBS stock the variable cost ratio is equal to 53.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $71 million in the base year in the intrinsic value calculation for JOBS 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 51job, Inc..

Corporate tax rate of 27% is the nominal tax rate for 51job, 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 JOBS 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 JOBS are equal to 30.3%.

Life of production assets of 19.3 years is the average useful life of capital assets used in 51job, 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 JOBS is equal to -45.5%. 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 - $899.996977025 million for 51job, 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 61.713 million for 51job, 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 51job, Inc. at the current share price and the inputted number of shares is $5.6 billion.

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