Intrinsic value of Jupai Holdings Limited - JP

Previous Close

$2.28

  Intrinsic Value

$771.50

stock screener

  Rating & Target

str. buy

+999%

Previous close

$2.28

 
Intrinsic value

$771.50

 
Up/down potential

+999%

 
Rating

str. buy

Our model is not good at valuating stocks of financial companies, such as JP.

We calculate the intrinsic value of JP 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, %
  58.80
  53.42
  48.58
  44.22
  40.30
  36.77
  33.59
  30.73
  28.16
  25.84
  23.76
  21.88
  20.19
  18.68
  17.31
  16.08
  14.97
  13.97
  13.08
  12.27
  11.54
  10.89
  10.30
  9.77
  9.29
  8.86
  8.48
  8.13
  7.82
  7.53
Revenue, $m
  410
  629
  934
  1,347
  1,890
  2,584
  3,453
  4,514
  5,785
  7,280
  9,009
  10,981
  13,198
  15,663
  18,374
  21,328
  24,521
  27,947
  31,601
  35,477
  39,572
  43,880
  48,399
  53,126
  58,063
  63,208
  68,566
  74,139
  79,934
  85,956
Variable operating expenses, $m
  249
  380
  562
  808
  1,132
  1,546
  2,064
  2,696
  3,454
  4,345
  5,372
  6,547
  7,869
  9,339
  10,955
  12,716
  14,620
  16,663
  18,841
  21,153
  23,594
  26,163
  28,857
  31,676
  34,619
  37,687
  40,881
  44,204
  47,659
  51,250
Fixed operating expenses, $m
  20
  21
  21
  22
  22
  23
  23
  24
  24
  25
  25
  26
  27
  27
  28
  28
  29
  30
  30
  31
  32
  32
  33
  34
  34
  35
  36
  37
  38
  38
Total operating expenses, $m
  269
  401
  583
  830
  1,154
  1,569
  2,087
  2,720
  3,478
  4,370
  5,397
  6,573
  7,896
  9,366
  10,983
  12,744
  14,649
  16,693
  18,871
  21,184
  23,626
  26,195
  28,890
  31,710
  34,653
  37,722
  40,917
  44,241
  47,697
  51,288
Operating income, $m
  140
  228
  351
  517
  736
  1,016
  1,366
  1,794
  2,306
  2,909
  3,612
  4,408
  5,302
  6,297
  7,391
  8,583
  9,872
  11,254
  12,729
  14,294
  15,946
  17,685
  19,509
  21,417
  23,409
  25,486
  27,649
  29,898
  32,237
  34,668
EBITDA, $m
  149
  240
  366
  536
  761
  1,048
  1,407
  1,846
  2,372
  2,991
  3,707
  4,523
  5,441
  6,462
  7,584
  8,807
  10,129
  11,548
  13,061
  14,667
  16,362
  18,146
  20,018
  21,975
  24,020
  26,151
  28,369
  30,678
  33,077
  35,571
Interest expense (income), $m
  0
  0
  4
  9
  17
  28
  42
  59
  82
  109
  141
  179
  223
  274
  330
  393
  462
  538
  619
  706
  800
  899
  1,003
  1,113
  1,228
  1,349
  1,475
  1,606
  1,743
  1,885
  2,033
Earnings before tax, $m
  140
  224
  341
  500
  708
  974
  1,306
  1,712
  2,198
  2,768
  3,433
  4,184
  5,029
  5,967
  6,998
  8,121
  9,334
  10,635
  12,023
  13,494
  15,048
  16,682
  18,396
  20,189
  22,060
  24,011
  26,043
  28,155
  30,352
  32,635
Tax expense, $m
  38
  60
  92
  135
  191
  263
  353
  462
  593
  747
  927
  1,130
  1,358
  1,611
  1,889
  2,193
  2,520
  2,872
  3,246
  3,643
  4,063
  4,504
  4,967
  5,451
  5,956
  6,483
  7,031
  7,602
  8,195
  8,811
Net income, $m
  102
  163
  249
  365
  517
  711
  954
  1,250
  1,604
  2,021
  2,506
  3,055
  3,671
  4,356
  5,109
  5,928
  6,814
  7,764
  8,777
  9,851
  10,985
  12,178
  13,429
  14,738
  16,104
  17,528
  19,011
  20,553
  22,157
  23,823

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
  425
  653
  970
  1,399
  1,962
  2,684
  3,585
  4,687
  6,007
  7,559
  9,355
  11,403
  13,705
  16,265
  19,080
  22,147
  25,463
  29,020
  32,815
  36,841
  41,092
  45,566
  50,258
  55,168
  60,293
  65,637
  71,200
  76,988
  83,005
  89,258
Adjusted assets (=assets-cash), $m
  425
  653
  970
  1,399
  1,962
  2,684
  3,585
  4,687
  6,007
  7,559
  9,355
  11,403
  13,705
  16,265
  19,080
  22,147
  25,463
  29,020
  32,815
  36,841
  41,092
  45,566
  50,258
  55,168
  60,293
  65,637
  71,200
  76,988
  83,005
  89,258
Revenue / Adjusted assets
  0.965
  0.963
  0.963
  0.963
  0.963
  0.963
  0.963
  0.963
  0.963
  0.963
  0.963
  0.963
  0.963
  0.963
  0.963
  0.963
  0.963
  0.963
  0.963
  0.963
  0.963
  0.963
  0.963
  0.963
  0.963
  0.963
  0.963
  0.963
  0.963
  0.963
Average production assets, $m
  50
  77
  115
  166
  232
  318
  425
  555
  712
  895
  1,108
  1,351
  1,623
  1,927
  2,260
  2,623
  3,016
  3,437
  3,887
  4,364
  4,867
  5,397
  5,953
  6,535
  7,142
  7,775
  8,434
  9,119
  9,832
  10,573
Working capital, $m
  -82
  -125
  -186
  -268
  -376
  -514
  -687
  -898
  -1,151
  -1,449
  -1,793
  -2,185
  -2,626
  -3,117
  -3,656
  -4,244
  -4,880
  -5,561
  -6,289
  -7,060
  -7,875
  -8,732
  -9,631
  -10,572
  -11,554
  -12,578
  -13,645
  -14,754
  -15,907
  -17,105
Total debt, $m
  72
  175
  319
  514
  771
  1,099
  1,509
  2,011
  2,611
  3,318
  4,135
  5,066
  6,114
  7,279
  8,559
  9,955
  11,464
  13,082
  14,809
  16,640
  18,575
  20,611
  22,746
  24,979
  27,312
  29,743
  32,274
  34,907
  37,645
  40,491
Total liabilities, $m
  194
  297
  441
  636
  893
  1,221
  1,631
  2,133
  2,733
  3,440
  4,257
  5,188
  6,236
  7,401
  8,681
  10,077
  11,586
  13,204
  14,931
  16,762
  18,697
  20,732
  22,867
  25,101
  27,434
  29,865
  32,396
  35,029
  37,767
  40,613
Total equity, $m
  232
  356
  529
  762
  1,069
  1,463
  1,954
  2,554
  3,274
  4,120
  5,099
  6,214
  7,469
  8,864
  10,399
  12,070
  13,877
  15,816
  17,884
  20,078
  22,395
  24,833
  27,391
  30,066
  32,860
  35,772
  38,804
  41,958
  45,238
  48,646
Total liabilities and equity, $m
  426
  653
  970
  1,398
  1,962
  2,684
  3,585
  4,687
  6,007
  7,560
  9,356
  11,402
  13,705
  16,265
  19,080
  22,147
  25,463
  29,020
  32,815
  36,840
  41,092
  45,565
  50,258
  55,167
  60,294
  65,637
  71,200
  76,987
  83,005
  89,259
Debt-to-equity ratio
  0.310
  0.490
  0.600
  0.670
  0.720
  0.750
  0.770
  0.790
  0.800
  0.810
  0.810
  0.820
  0.820
  0.820
  0.820
  0.820
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
Adjusted equity ratio
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  102
  163
  249
  365
  517
  711
  954
  1,250
  1,604
  2,021
  2,506
  3,055
  3,671
  4,356
  5,109
  5,928
  6,814
  7,764
  8,777
  9,851
  10,985
  12,178
  13,429
  14,738
  16,104
  17,528
  19,011
  20,553
  22,157
  23,823
Depreciation, amort., depletion, $m
  9
  12
  15
  19
  25
  32
  41
  53
  66
  82
  95
  115
  139
  165
  193
  224
  258
  294
  332
  373
  416
  461
  509
  559
  610
  664
  721
  779
  840
  904
Funds from operations, $m
  112
  175
  264
  384
  542
  743
  995
  1,302
  1,670
  2,103
  2,601
  3,170
  3,810
  4,521
  5,302
  6,153
  7,072
  8,058
  9,109
  10,224
  11,401
  12,639
  13,938
  15,296
  16,715
  18,193
  19,732
  21,333
  22,997
  24,727
Change in working capital, $m
  -30
  -44
  -61
  -82
  -108
  -138
  -173
  -211
  -253
  -297
  -344
  -392
  -441
  -490
  -539
  -588
  -635
  -682
  -727
  -771
  -815
  -857
  -899
  -941
  -982
  -1,024
  -1,066
  -1,109
  -1,153
  -1,198
Cash from operations, $m
  142
  219
  325
  466
  650
  882
  1,168
  1,514
  1,923
  2,400
  2,945
  3,562
  4,251
  5,011
  5,841
  6,740
  7,707
  8,739
  9,836
  10,995
  12,216
  13,496
  14,837
  16,237
  17,697
  19,217
  20,798
  22,442
  24,150
  25,926
Maintenance CAPEX, $m
  -3
  -4
  -7
  -10
  -14
  -20
  -27
  -36
  -47
  -61
  -77
  -95
  -115
  -139
  -165
  -193
  -224
  -258
  -294
  -332
  -373
  -416
  -461
  -509
  -559
  -610
  -664
  -721
  -779
  -840
New CAPEX, $m
  -19
  -27
  -38
  -51
  -67
  -85
  -107
  -131
  -156
  -184
  -213
  -242
  -273
  -303
  -333
  -363
  -393
  -421
  -449
  -477
  -504
  -530
  -556
  -582
  -607
  -633
  -659
  -686
  -713
  -741
Cash from investing activities, $m
  -22
  -31
  -45
  -61
  -81
  -105
  -134
  -167
  -203
  -245
  -290
  -337
  -388
  -442
  -498
  -556
  -617
  -679
  -743
  -809
  -877
  -946
  -1,017
  -1,091
  -1,166
  -1,243
  -1,323
  -1,407
  -1,492
  -1,581
Free cash flow, $m
  120
  188
  281
  406
  569
  776
  1,034
  1,347
  1,719
  2,155
  2,656
  3,225
  3,863
  4,569
  5,343
  6,184
  7,090
  8,060
  9,093
  10,186
  11,339
  12,551
  13,820
  15,147
  16,531
  17,973
  19,475
  21,036
  22,658
  24,344
Issuance/(repayment) of debt, $m
  72
  103
  144
  195
  256
  328
  410
  501
  601
  706
  817
  931
  1,048
  1,165
  1,281
  1,396
  1,508
  1,619
  1,726
  1,832
  1,935
  2,035
  2,135
  2,234
  2,332
  2,431
  2,531
  2,633
  2,738
  2,845
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  
  72
  103
  144
  195
  256
  328
  410
  501
  601
  706
  817
  931
  1,048
  1,165
  1,281
  1,396
  1,508
  1,619
  1,726
  1,832
  1,935
  2,035
  2,135
  2,234
  2,332
  2,431
  2,531
  2,633
  2,738
  2,845
Total cash flow (excl. dividends), $m
  192
  291
  425
  601
  825
  1,105
  1,444
  1,848
  2,320
  2,862
  3,473
  4,157
  4,911
  5,734
  6,624
  7,580
  8,599
  9,679
  10,819
  12,018
  13,274
  14,586
  15,955
  17,381
  18,863
  20,405
  22,006
  23,669
  25,396
  27,190
Retained Cash Flow (-), $m
  -86
  -124
  -173
  -234
  -307
  -393
  -491
  -601
  -719
  -846
  -979
  -1,116
  -1,255
  -1,395
  -1,534
  -1,672
  -1,807
  -1,939
  -2,068
  -2,194
  -2,317
  -2,438
  -2,557
  -2,676
  -2,794
  -2,912
  -3,032
  -3,154
  -3,279
  -3,408
Prev. year cash balance distribution, $m
  129
  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
  235
  167
  252
  367
  518
  711
  953
  1,248
  1,601
  2,016
  2,494
  3,041
  3,656
  4,339
  5,090
  5,908
  6,792
  7,740
  8,751
  9,824
  10,956
  12,148
  13,398
  14,705
  16,070
  17,493
  18,974
  20,515
  22,117
  23,782
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
  225
  153
  219
  302
  402
  516
  644
  780
  919
  1,057
  1,184
  1,298
  1,390
  1,457
  1,494
  1,501
  1,478
  1,425
  1,347
  1,248
  1,133
  1,008
  878
  749
  625
  510
  407
  317
  241
  179
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

Jupai Holdings Limited (Jupai), formerly Jupai Investment Group, is a Cayman Islands-based third-party wealth management service provider. The Company focuses on distributing wealth management products and providing advisory services to individuals in People's Republic of China (PRC) who have investable assets in excess of three million Renminbi (RMB). It also sources products from third parties. Its product choices include fixed income products, private equity and venture capital funds, public market products and other products, such as insurance products and tailored alternative investments. It also provides asset management services in the management and advisory of real estate or related funds, other fund products and funds of funds. Its client base consists of entrepreneurs, corporate executives, professionals and other investors. It has a network of client centers in approximately 18 cities in the regions of the Bohai Rim, the Yangtze River Delta and the Pearl River Delta.

FINANCIAL RATIOS  of  Jupai Holdings Limited (JP)

Valuation Ratios
P/E Ratio 13.6
Price to Sales 2.5
Price to Book 1.9
Price to Tangible Book
Price to Cash Flow 15.2
Price to Free Cash Flow 21.6
Growth Rates
Sales Growth Rate 88.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 300%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 11.2%
Ret/ On Assets - 3 Yr. Avg. 18.5%
Return On Total Capital 16%
Ret/ On T. Cap. - 3 Yr. Avg. 26.8%
Return On Equity 16%
Return On Equity - 3 Yr. Avg. 26.8%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 57.3%
Gross Margin - 3 Yr. Avg. 63.4%
EBITDA Margin 29.9%
EBITDA Margin - 3 Yr. Avg. 40.5%
Operating Margin 26.2%
Oper. Margin - 3 Yr. Avg. 35.2%
Pre-Tax Margin 27.4%
Pre-Tax Margin - 3 Yr. Avg. 38.9%
Net Profit Margin 18.3%
Net Profit Margin - 3 Yr. Avg. 27.1%
Effective Tax Rate 26.7%
Eff/ Tax Rate - 3 Yr. Avg. 26.8%
Payout Ratio 0%

JP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the JP stock intrinsic value calculation we used $258 million for the last fiscal year's total revenue generated by Jupai Holdings Limited. The default revenue input number comes from 0001 income statement of Jupai Holdings Limited. 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 JP stock valuation model: a) initial revenue growth rate of 58.8% 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 JP is calculated based on our internal credit rating of Jupai Holdings Limited, 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 Jupai Holdings Limited.
    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 JP stock the variable cost ratio is equal to 61.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $20 million in the base year in the intrinsic value calculation for JP 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 Jupai Holdings Limited.

Corporate tax rate of 27% is the nominal tax rate for Jupai Holdings Limited. 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 JP 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 JP are equal to 12.3%.

Life of production assets of 11.7 years is the average useful life of capital assets used in Jupai Holdings Limited 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 JP is equal to -19.9%. 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 - $274.992707981 million for Jupai Holdings Limited - 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 33.025 million for Jupai Holdings Limited 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 Jupai Holdings Limited at the current share price and the inputted number of shares is $0.1 billion.

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