Intrinsic value of Jerash Holdings (US), Inc. - JRSH

Previous Close

$7.00

  Intrinsic Value

$73.69

stock screener

  Rating & Target

str. buy

+953%

Previous close

$7.00

 
Intrinsic value

$73.69

 
Up/down potential

+953%

 
Rating

str. buy

We calculate the intrinsic value of JRSH 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
  110
  171
  255
  370
  522
  718
  964
  1,265
  1,628
  2,056
  2,554
  3,122
  3,763
  4,477
  5,265
  6,124
  7,054
  8,054
  9,122
  10,255
  11,454
  12,716
  14,040
  15,427
  16,875
  18,385
  19,958
  21,594
  23,295
  25,063
Variable operating expenses, $m
  91
  140
  210
  304
  429
  590
  792
  1,040
  1,338
  1,690
  2,098
  2,565
  3,092
  3,679
  4,326
  5,032
  5,796
  6,618
  7,495
  8,426
  9,411
  10,448
  11,536
  12,675
  13,865
  15,106
  16,398
  17,743
  19,140
  20,593
Fixed operating expenses, $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 operating expenses, $m
  91
  140
  210
  304
  429
  590
  792
  1,040
  1,338
  1,690
  2,098
  2,565
  3,092
  3,679
  4,326
  5,032
  5,796
  6,618
  7,495
  8,426
  9,411
  10,448
  11,536
  12,675
  13,865
  15,106
  16,398
  17,743
  19,140
  20,593
Operating income, $m
  19
  30
  45
  66
  93
  128
  172
  225
  290
  366
  455
  557
  671
  799
  939
  1,092
  1,258
  1,436
  1,627
  1,829
  2,043
  2,268
  2,504
  2,751
  3,010
  3,279
  3,559
  3,851
  4,155
  4,470
EBITDA, $m
  21
  32
  48
  69
  98
  134
  180
  237
  304
  384
  477
  584
  703
  837
  984
  1,145
  1,319
  1,506
  1,705
  1,917
  2,141
  2,377
  2,625
  2,884
  3,155
  3,437
  3,731
  4,037
  4,355
  4,686
Interest expense (income), $m
  0
  0
  0
  1
  1
  2
  3
  4
  6
  8
  10
  13
  17
  20
  25
  30
  35
  41
  47
  54
  61
  68
  76
  85
  94
  103
  113
  123
  133
  144
  156
Earnings before tax, $m
  19
  30
  44
  64
  91
  125
  167
  219
  282
  356
  442
  540
  651
  774
  909
  1,057
  1,218
  1,390
  1,573
  1,768
  1,975
  2,192
  2,419
  2,658
  2,907
  3,166
  3,437
  3,718
  4,010
  4,314
Tax expense, $m
  5
  8
  12
  17
  25
  34
  45
  59
  76
  96
  119
  146
  176
  209
  246
  285
  329
  375
  425
  477
  533
  592
  653
  718
  785
  855
  928
  1,004
  1,083
  1,165
Net income, $m
  14
  22
  32
  47
  66
  91
  122
  160
  206
  260
  323
  394
  475
  565
  664
  772
  889
  1,014
  1,149
  1,291
  1,441
  1,600
  1,766
  1,940
  2,122
  2,311
  2,509
  2,714
  2,928
  3,150

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
  61
  94
  141
  204
  288
  396
  531
  697
  897
  1,133
  1,407
  1,720
  2,073
  2,467
  2,901
  3,374
  3,887
  4,437
  5,026
  5,650
  6,311
  7,006
  7,736
  8,500
  9,297
  10,129
  10,996
  11,897
  12,835
  13,809
Adjusted assets (=assets-cash), $m
  61
  94
  141
  204
  288
  396
  531
  697
  897
  1,133
  1,407
  1,720
  2,073
  2,467
  2,901
  3,374
  3,887
  4,437
  5,026
  5,650
  6,311
  7,006
  7,736
  8,500
  9,297
  10,129
  10,996
  11,897
  12,835
  13,809
Revenue / Adjusted assets
  1.803
  1.819
  1.809
  1.814
  1.813
  1.813
  1.815
  1.815
  1.815
  1.815
  1.815
  1.815
  1.815
  1.815
  1.815
  1.815
  1.815
  1.815
  1.815
  1.815
  1.815
  1.815
  1.815
  1.815
  1.815
  1.815
  1.815
  1.815
  1.815
  1.815
Average production assets, $m
  5
  7
  11
  16
  22
  31
  41
  54
  70
  88
  110
  134
  162
  193
  226
  263
  303
  346
  392
  441
  493
  547
  604
  663
  726
  791
  858
  929
  1,002
  1,078
Working capital, $m
  28
  44
  66
  95
  134
  184
  248
  325
  418
  528
  656
  802
  967
  1,151
  1,353
  1,574
  1,813
  2,070
  2,344
  2,636
  2,944
  3,268
  3,608
  3,965
  4,337
  4,725
  5,129
  5,550
  5,987
  6,441
Total debt, $m
  6
  14
  24
  38
  57
  81
  112
  149
  194
  247
  309
  379
  459
  547
  645
  752
  867
  991
  1,123
  1,264
  1,412
  1,569
  1,733
  1,905
  2,084
  2,272
  2,467
  2,669
  2,880
  3,099
Total liabilities, $m
  14
  21
  32
  46
  65
  89
  119
  157
  202
  255
  317
  387
  466
  555
  653
  759
  874
  998
  1,131
  1,271
  1,420
  1,576
  1,741
  1,912
  2,092
  2,279
  2,474
  2,677
  2,888
  3,107
Total equity, $m
  47
  73
  109
  158
  223
  307
  411
  540
  695
  878
  1,090
  1,333
  1,607
  1,912
  2,248
  2,615
  3,012
  3,439
  3,895
  4,379
  4,891
  5,430
  5,995
  6,587
  7,206
  7,850
  8,522
  9,220
  9,947
  10,702
Total liabilities and equity, $m
  61
  94
  141
  204
  288
  396
  530
  697
  897
  1,133
  1,407
  1,720
  2,073
  2,467
  2,901
  3,374
  3,886
  4,437
  5,026
  5,650
  6,311
  7,006
  7,736
  8,499
  9,298
  10,129
  10,996
  11,897
  12,835
  13,809
Debt-to-equity ratio
  0.130
  0.190
  0.220
  0.240
  0.260
  0.270
  0.270
  0.280
  0.280
  0.280
  0.280
  0.280
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
Adjusted equity ratio
  0.775
  0.775
  0.775
  0.775
  0.775
  0.775
  0.775
  0.775
  0.775
  0.775
  0.775
  0.775
  0.775
  0.775
  0.775
  0.775
  0.775
  0.775
  0.775
  0.775
  0.775
  0.775
  0.775
  0.775
  0.775
  0.775
  0.775
  0.775
  0.775
  0.775

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  14
  22
  32
  47
  66
  91
  122
  160
  206
  260
  323
  394
  475
  565
  664
  772
  889
  1,014
  1,149
  1,291
  1,441
  1,600
  1,766
  1,940
  2,122
  2,311
  2,509
  2,714
  2,928
  3,150
Depreciation, amort., depletion, $m
  1
  2
  2
  3
  5
  6
  9
  11
  14
  18
  22
  27
  32
  39
  45
  53
  61
  69
  78
  88
  99
  109
  121
  133
  145
  158
  172
  186
  200
  216
Funds from operations, $m
  15
  24
  35
  51
  71
  97
  131
  171
  220
  278
  345
  421
  507
  603
  709
  825
  949
  1,084
  1,227
  1,379
  1,540
  1,709
  1,887
  2,073
  2,267
  2,470
  2,680
  2,900
  3,128
  3,365
Change in working capital, $m
  11
  15
  22
  30
  39
  50
  63
  78
  93
  110
  128
  146
  165
  184
  202
  221
  239
  257
  274
  291
  308
  324
  340
  356
  372
  388
  404
  420
  437
  454
Cash from operations, $m
  5
  8
  13
  21
  32
  47
  67
  94
  127
  168
  217
  275
  343
  420
  507
  604
  710
  827
  953
  1,088
  1,232
  1,385
  1,546
  1,717
  1,895
  2,081
  2,276
  2,479
  2,691
  2,911
Maintenance CAPEX, $m
  -1
  -1
  -1
  -2
  -3
  -4
  -6
  -8
  -11
  -14
  -18
  -22
  -27
  -32
  -39
  -45
  -53
  -61
  -69
  -78
  -88
  -99
  -109
  -121
  -133
  -145
  -158
  -172
  -186
  -200
New CAPEX, $m
  -2
  -3
  -4
  -5
  -7
  -8
  -11
  -13
  -16
  -18
  -21
  -24
  -28
  -31
  -34
  -37
  -40
  -43
  -46
  -49
  -52
  -54
  -57
  -60
  -62
  -65
  -68
  -70
  -73
  -76
Cash from investing activities, $m
  -3
  -4
  -5
  -7
  -10
  -12
  -17
  -21
  -27
  -32
  -39
  -46
  -55
  -63
  -73
  -82
  -93
  -104
  -115
  -127
  -140
  -153
  -166
  -181
  -195
  -210
  -226
  -242
  -259
  -276
Free cash flow, $m
  2
  5
  8
  14
  22
  34
  51
  72
  100
  135
  178
  229
  288
  357
  434
  521
  618
  723
  837
  961
  1,092
  1,232
  1,380
  1,536
  1,700
  1,871
  2,051
  2,237
  2,432
  2,634
Issuance/(repayment) of debt, $m
  5
  7
  10
  14
  19
  24
  30
  37
  45
  53
  62
  70
  79
  89
  98
  107
  115
  124
  132
  141
  149
  156
  164
  172
  180
  187
  195
  203
  211
  219
Issuance/(repurchase) of shares, $m
  4
  4
  4
  2
  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  
  9
  11
  14
  16
  19
  24
  30
  37
  45
  53
  62
  70
  79
  89
  98
  107
  115
  124
  132
  141
  149
  156
  164
  172
  180
  187
  195
  203
  211
  219
Total cash flow (excl. dividends), $m
  11
  16
  22
  30
  41
  59
  81
  110
  145
  188
  239
  299
  368
  445
  532
  628
  733
  847
  970
  1,101
  1,241
  1,389
  1,544
  1,708
  1,879
  2,059
  2,246
  2,440
  2,643
  2,853
Retained Cash Flow (-), $m
  -18
  -26
  -36
  -49
  -65
  -84
  -105
  -129
  -155
  -183
  -212
  -243
  -274
  -305
  -336
  -367
  -397
  -427
  -456
  -484
  -512
  -539
  -566
  -592
  -618
  -645
  -671
  -699
  -726
  -755
Prev. year cash balance distribution, $m
  4
  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
  -10
  -14
  -19
  -24
  -25
  -24
  -19
  -10
  6
  27
  56
  94
  140
  196
  261
  336
  420
  514
  617
  729
  850
  979
  1,116
  1,261
  1,414
  1,574
  1,742
  1,916
  2,098
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
  -9
  -12
  -16
  -18
  -18
  -16
  -12
  -5
  3
  13
  24
  36
  47
  58
  66
  73
  77
  79
  78
  75
  71
  64
  57
  49
  41
  34
  27
  21
  16
Current shareholders' claim on cash, %
  95.1
  91.9
  89.9
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2

FINANCIAL RATIOS  of  Jerash Holdings (US), Inc. (JRSH)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
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 NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

JRSH stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the JRSH stock intrinsic value calculation we used $69 million for the last fiscal year's total revenue generated by Jerash Holdings (US), Inc.. The default revenue input number comes from 0001 income statement of Jerash Holdings (US), 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 JRSH 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 JRSH is calculated based on our internal credit rating of Jerash Holdings (US), 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 Jerash Holdings (US), 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 JRSH stock the variable cost ratio is equal to 82.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for JRSH 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 Jerash Holdings (US), Inc..

Corporate tax rate of 27% is the nominal tax rate for Jerash Holdings (US), 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 JRSH 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 JRSH are equal to 4.3%.

Life of production assets of 2.5 years is the average useful life of capital assets used in Jerash Holdings (US), 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 JRSH is equal to 25.7%. 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 - $33.747256 million for Jerash Holdings (US), 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 11.325 million for Jerash Holdings (US), 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 Jerash Holdings (US), Inc. at the current share price and the inputted number of shares is $0.1 billion.

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