Intrinsic value of LexinFintech Holdings ADR - LX

Previous Close

$10.05

  Intrinsic Value

$82.65

stock screener

  Rating & Target

str. buy

+722%

Previous close

$10.05

 
Intrinsic value

$82.65

 
Up/down potential

+722%

 
Rating

str. buy

We calculate the intrinsic value of LX 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 1.1

 

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, %
  35.10
  32.09
  29.38
  26.94
  24.75
  22.77
  21.00
  19.40
  17.96
  16.66
  15.50
  14.45
  13.50
  12.65
  11.89
  11.20
  10.58
  10.02
  9.52
  9.07
  8.66
  8.29
  7.96
  7.67
  7.40
  7.16
  6.94
  6.75
  6.58
  6.42
Revenue, $m
  1,140
  1,506
  1,948
  2,473
  3,085
  3,788
  4,583
  5,472
  6,454
  7,530
  8,696
  9,953
  11,296
  12,725
  14,238
  15,832
  17,507
  19,261
  21,094
  23,007
  24,999
  27,072
  29,228
  31,469
  33,798
  36,219
  38,734
  41,349
  44,067
  46,895
Variable operating expenses, $m
  773
  1,021
  1,321
  1,677
  2,092
  2,568
  3,107
  3,710
  4,376
  5,105
  5,896
  6,748
  7,659
  8,628
  9,653
  10,734
  11,870
  13,059
  14,302
  15,598
  16,949
  18,355
  19,817
  21,336
  22,915
  24,556
  26,262
  28,034
  29,878
  31,795
Fixed operating expenses, $m
  207
  212
  217
  221
  226
  231
  236
  242
  247
  252
  258
  264
  269
  275
  281
  288
  294
  300
  307
  314
  321
  328
  335
  342
  350
  357
  365
  373
  382
  390
Total operating expenses, $m
  980
  1,233
  1,538
  1,898
  2,318
  2,799
  3,343
  3,952
  4,623
  5,357
  6,154
  7,012
  7,928
  8,903
  9,934
  11,022
  12,164
  13,359
  14,609
  15,912
  17,270
  18,683
  20,152
  21,678
  23,265
  24,913
  26,627
  28,407
  30,260
  32,185
Operating income, $m
  160
  273
  411
  575
  767
  988
  1,239
  1,520
  1,831
  2,172
  2,542
  2,941
  3,368
  3,822
  4,303
  4,810
  5,343
  5,902
  6,485
  7,094
  7,729
  8,390
  9,077
  9,791
  10,533
  11,305
  12,107
  12,941
  13,808
  14,710
EBITDA, $m
  162
  276
  414
  579
  773
  995
  1,247
  1,530
  1,843
  2,186
  2,558
  2,959
  3,388
  3,845
  4,329
  4,839
  5,375
  5,936
  6,523
  7,136
  7,774
  8,438
  9,129
  9,848
  10,594
  11,370
  12,177
  13,015
  13,887
  14,795
Interest expense (income), $m
  0
  89
  126
  172
  228
  294
  371
  459
  560
  671
  795
  931
  1,078
  1,236
  1,405
  1,585
  1,776
  1,976
  2,187
  2,408
  2,639
  2,880
  3,131
  3,392
  3,664
  3,946
  4,239
  4,544
  4,861
  5,190
  5,533
Earnings before tax, $m
  71
  147
  239
  347
  473
  617
  780
  961
  1,160
  1,377
  1,612
  1,864
  2,132
  2,417
  2,718
  3,035
  3,367
  3,714
  4,077
  4,455
  4,849
  5,259
  5,684
  6,127
  6,587
  7,066
  7,563
  8,080
  8,618
  9,178
Tax expense, $m
  19
  40
  64
  94
  128
  167
  211
  259
  313
  372
  435
  503
  576
  653
  734
  819
  909
  1,003
  1,101
  1,203
  1,309
  1,420
  1,535
  1,654
  1,779
  1,908
  2,042
  2,182
  2,327
  2,478
Net income, $m
  52
  107
  174
  253
  345
  451
  569
  701
  847
  1,005
  1,176
  1,360
  1,556
  1,765
  1,984
  2,215
  2,458
  2,711
  2,976
  3,252
  3,540
  3,839
  4,150
  4,473
  4,809
  5,158
  5,521
  5,898
  6,291
  6,700

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
  3,008
  3,973
  5,140
  6,525
  8,140
  9,993
  12,092
  14,437
  17,030
  19,867
  22,945
  26,260
  29,805
  33,576
  37,567
  41,773
  46,192
  50,820
  55,657
  60,703
  65,960
  71,430
  77,119
  83,032
  89,178
  95,563
  102,200
  109,099
  116,273
  123,735
Adjusted assets (=assets-cash), $m
  3,008
  3,973
  5,140
  6,525
  8,140
  9,993
  12,092
  14,437
  17,030
  19,867
  22,945
  26,260
  29,805
  33,576
  37,567
  41,773
  46,192
  50,820
  55,657
  60,703
  65,960
  71,430
  77,119
  83,032
  89,178
  95,563
  102,200
  109,099
  116,273
  123,735
Revenue / Adjusted assets
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
Average production assets, $m
  10
  14
  18
  22
  28
  34
  41
  49
  58
  68
  78
  90
  102
  115
  128
  142
  158
  173
  190
  207
  225
  244
  263
  283
  304
  326
  349
  372
  397
  422
Working capital, $m
  570
  753
  974
  1,236
  1,542
  1,894
  2,291
  2,736
  3,227
  3,765
  4,348
  4,976
  5,648
  6,363
  7,119
  7,916
  8,753
  9,630
  10,547
  11,503
  12,499
  13,536
  14,614
  15,735
  16,899
  18,109
  19,367
  20,674
  22,034
  23,448
Total debt, $m
  2,331
  3,184
  4,216
  5,440
  6,868
  8,507
  10,362
  12,435
  14,727
  17,235
  19,956
  22,886
  26,020
  29,354
  32,882
  36,600
  40,506
  44,598
  48,874
  53,334
  57,981
  62,817
  67,846
  73,073
  78,505
  84,151
  90,017
  96,116
  102,457
  109,054
Total liabilities, $m
  2,659
  3,512
  4,544
  5,768
  7,196
  8,834
  10,689
  12,762
  15,054
  17,562
  20,284
  23,214
  26,348
  29,681
  33,209
  36,928
  40,834
  44,925
  49,201
  53,662
  58,309
  63,144
  68,173
  73,401
  78,833
  84,478
  90,345
  96,443
  102,785
  109,381
Total equity, $m
  349
  461
  596
  757
  944
  1,159
  1,403
  1,675
  1,975
  2,305
  2,662
  3,046
  3,457
  3,895
  4,358
  4,846
  5,358
  5,895
  6,456
  7,042
  7,651
  8,286
  8,946
  9,632
  10,345
  11,085
  11,855
  12,655
  13,488
  14,353
Total liabilities and equity, $m
  3,008
  3,973
  5,140
  6,525
  8,140
  9,993
  12,092
  14,437
  17,029
  19,867
  22,946
  26,260
  29,805
  33,576
  37,567
  41,774
  46,192
  50,820
  55,657
  60,704
  65,960
  71,430
  77,119
  83,033
  89,178
  95,563
  102,200
  109,098
  116,273
  123,734
Debt-to-equity ratio
  6.680
  6.910
  7.070
  7.190
  7.270
  7.340
  7.390
  7.430
  7.450
  7.480
  7.500
  7.510
  7.530
  7.540
  7.550
  7.550
  7.560
  7.570
  7.570
  7.570
  7.580
  7.580
  7.580
  7.590
  7.590
  7.590
  7.590
  7.590
  7.600
  7.600
Adjusted equity ratio
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  52
  107
  174
  253
  345
  451
  569
  701
  847
  1,005
  1,176
  1,360
  1,556
  1,765
  1,984
  2,215
  2,458
  2,711
  2,976
  3,252
  3,540
  3,839
  4,150
  4,473
  4,809
  5,158
  5,521
  5,898
  6,291
  6,700
Depreciation, amort., depletion, $m
  2
  3
  4
  4
  6
  7
  8
  10
  12
  14
  16
  18
  20
  23
  26
  28
  32
  35
  38
  41
  45
  49
  53
  57
  61
  65
  70
  74
  79
  84
Funds from operations, $m
  54
  110
  178
  258
  351
  458
  578
  711
  858
  1,019
  1,192
  1,378
  1,577
  1,787
  2,010
  2,244
  2,489
  2,746
  3,014
  3,294
  3,585
  3,887
  4,202
  4,530
  4,870
  5,223
  5,591
  5,973
  6,370
  6,784
Change in working capital, $m
  148
  183
  221
  262
  306
  351
  398
  444
  491
  538
  583
  628
  672
  715
  756
  797
  837
  877
  917
  956
  996
  1,037
  1,078
  1,121
  1,165
  1,210
  1,258
  1,307
  1,359
  1,414
Cash from operations, $m
  -94
  -73
  -43
  -5
  45
  106
  180
  267
  367
  481
  609
  750
  905
  1,073
  1,254
  1,447
  1,652
  1,869
  2,098
  2,338
  2,589
  2,851
  3,124
  3,409
  3,705
  4,013
  4,333
  4,665
  5,011
  5,370
Maintenance CAPEX, $m
  -2
  -2
  -3
  -4
  -4
  -6
  -7
  -8
  -10
  -12
  -14
  -16
  -18
  -20
  -23
  -26
  -28
  -32
  -35
  -38
  -41
  -45
  -49
  -53
  -57
  -61
  -65
  -70
  -74
  -79
New CAPEX, $m
  -2
  -3
  -4
  -5
  -6
  -6
  -7
  -8
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -24
  -25
Cash from investing activities, $m
  -4
  -5
  -7
  -9
  -10
  -12
  -14
  -16
  -19
  -22
  -25
  -27
  -30
  -33
  -37
  -40
  -43
  -48
  -51
  -55
  -59
  -64
  -68
  -73
  -78
  -83
  -88
  -94
  -98
  -104
Free cash flow, $m
  -98
  -78
  -50
  -13
  35
  94
  166
  250
  348
  460
  585
  723
  875
  1,040
  1,217
  1,407
  1,608
  1,822
  2,046
  2,282
  2,529
  2,787
  3,056
  3,336
  3,627
  3,930
  4,245
  4,572
  4,912
  5,265
Issuance/(repayment) of debt, $m
  690
  853
  1,032
  1,224
  1,428
  1,639
  1,855
  2,073
  2,292
  2,508
  2,721
  2,930
  3,134
  3,333
  3,528
  3,719
  3,906
  4,091
  4,276
  4,461
  4,647
  4,836
  5,029
  5,227
  5,432
  5,645
  5,867
  6,099
  6,341
  6,596
Issuance/(repurchase) of shares, $m
  40
  5
  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  
  730
  858
  1,032
  1,224
  1,428
  1,639
  1,855
  2,073
  2,292
  2,508
  2,721
  2,930
  3,134
  3,333
  3,528
  3,719
  3,906
  4,091
  4,276
  4,461
  4,647
  4,836
  5,029
  5,227
  5,432
  5,645
  5,867
  6,099
  6,341
  6,596
Total cash flow (excl. dividends), $m
  631
  780
  982
  1,211
  1,463
  1,733
  2,021
  2,324
  2,640
  2,968
  3,306
  3,653
  4,009
  4,373
  4,745
  5,125
  5,515
  5,913
  6,322
  6,743
  7,176
  7,623
  8,085
  8,564
  9,060
  9,575
  10,112
  10,671
  11,253
  11,862
Retained Cash Flow (-), $m
  -92
  -112
  -135
  -161
  -187
  -215
  -243
  -272
  -301
  -329
  -357
  -384
  -411
  -437
  -463
  -488
  -513
  -537
  -561
  -585
  -610
  -635
  -660
  -686
  -713
  -741
  -770
  -800
  -832
  -866
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
  540
  668
  846
  1,051
  1,275
  1,518
  1,777
  2,052
  2,339
  2,639
  2,949
  3,269
  3,598
  3,936
  4,282
  4,637
  5,002
  5,376
  5,761
  6,158
  6,566
  6,988
  7,425
  7,878
  8,347
  8,835
  9,342
  9,870
  10,421
  10,996
Discount rate, %
  10.00
  10.50
  11.03
  11.58
  12.16
  12.76
  13.40
  14.07
  14.77
  15.51
  16.29
  17.10
  17.96
  18.86
  19.80
  20.79
  21.83
  22.92
  24.07
  25.27
  26.53
  27.86
  29.25
  30.72
  32.25
  33.86
  35.56
  37.33
  39.20
  41.16
PV of cash for distribution, $m
  490
  547
  618
  678
  719
  738
  737
  716
  677
  624
  561
  492
  420
  350
  285
  226
  174
  131
  96
  68
  47
  31
  20
  13
  8
  4
  3
  1
  1
  0
Current shareholders' claim on cash, %
  96.5
  96.2
  96.2
  96.2
  96.2
  96.2
  96.2
  96.2
  96.2
  96.2
  96.2
  96.2
  96.2
  96.2
  96.2
  96.2
  96.2
  96.2
  96.2
  96.2
  96.2
  96.2
  96.2
  96.2
  96.2
  96.2
  96.2
  96.2
  96.2
  96.2

FINANCIAL RATIOS  of  LexinFintech Holdings ADR (LX)

Valuation Ratios
P/E Ratio -193.7
Price to Sales 5.2
Price to Book 1646.8
Price to Tangible Book
Price to Cash Flow 59.9
Price to Free Cash Flow 65.9
Growth Rates
Sales Growth Rate 72.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 150%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 5250%
Total Debt to Equity 56150%
Interest Coverage 0
Management Effectiveness
Return On Assets -1.9%
Ret/ On Assets - 3 Yr. Avg. -6.1%
Return On Total Capital -2.1%
Ret/ On T. Cap. - 3 Yr. Avg. -6.8%
Return On Equity -113.3%
Return On Equity - 3 Yr. Avg. -144.9%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 13.9%
Gross Margin - 3 Yr. Avg. 3.7%
EBITDA Margin -1.3%
EBITDA Margin - 3 Yr. Avg. -5.7%
Operating Margin 0.2%
Oper. Margin - 3 Yr. Avg. -5.2%
Pre-Tax Margin -1.4%
Pre-Tax Margin - 3 Yr. Avg. -5.8%
Net Profit Margin -2.7%
Net Profit Margin - 3 Yr. Avg. -5%
Effective Tax Rate -88.9%
Eff/ Tax Rate - 3 Yr. Avg. -22.2%
Payout Ratio 0%

LX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LX stock intrinsic value calculation we used $843.740779927 million for the last fiscal year's total revenue generated by LexinFintech Holdings ADR. The default revenue input number comes from 0001 income statement of LexinFintech Holdings ADR. 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 LX stock valuation model: a) initial revenue growth rate of 35.1% 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 10%, whose default value for LX is calculated based on our internal credit rating of LexinFintech Holdings ADR, 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 LexinFintech Holdings ADR.
    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 LX stock the variable cost ratio is equal to 67.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $203 million in the base year in the intrinsic value calculation for LX 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 LexinFintech Holdings ADR.

Corporate tax rate of 27% is the nominal tax rate for LexinFintech Holdings ADR. 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 LX 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 LX are equal to 0.9%.

Life of production assets of 2.7 years is the average useful life of capital assets used in LexinFintech Holdings ADR 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 LX is equal to 50%. 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 - $257.183494559 million for LexinFintech Holdings ADR - 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 110.335 million for LexinFintech Holdings ADR 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 LexinFintech Holdings ADR at the current share price and the inputted number of shares is $1.1 billion.

COMPANY NEWS

▶ Here's Why LexinFintech Holdings Stock Is Soaring Today   [Aug-23-18 11:36AM  Motley Fool]
▶ LexinFintech to Attend LendIt Fintech USA 2018   [Apr-03-18 06:30AM  PR Newswire]
▶ Lexin Appoints Two New Directors to Expand Board   [Mar-21-18 09:50PM  GlobeNewswire]
▶ Hot Chinese IPO LexinFintech Falls Short On Q4 Earnings, Revenue   [Mar-20-18 04:27PM  Investor's Business Daily]
▶ This IPO Takes Off As 'Buy Now, Pay Later' Craze Sweeps China   [Mar-19-18 01:50PM  Investor's Business Daily]
▶ Stock Market Momentum Continues, Beat Goes On   [Jan-23-18 11:53AM  TheStreet.com]

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