Intrinsic value of LexinFintech Holdings Ltd. - LX

Previous Close

$13.68

  Intrinsic Value

$56.61

stock screener

  Rating & Target

str. buy

+314%

Previous close

$13.68

 
Intrinsic value

$56.61

 
Up/down potential

+314%

 
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 2.2

 

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
  1,949
  2,474
  3,086
  3,789
  4,584
  5,473
  6,456
  7,532
  8,699
  9,956
  11,300
  12,729
  14,242
  15,837
  17,512
  19,267
  21,101
  23,014
  25,006
  27,080
  29,237
  31,479
  33,809
  36,230
  38,746
  41,361
  44,081
  46,910
Variable operating expenses, $m
  773
  1,021
  1,321
  1,677
  2,092
  2,569
  3,108
  3,711
  4,377
  5,107
  5,898
  6,750
  7,661
  8,630
  9,656
  10,737
  11,873
  13,063
  14,306
  15,603
  16,954
  18,361
  19,823
  21,343
  22,922
  24,564
  26,270
  28,043
  29,887
  31,805
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
  2,800
  3,344
  3,953
  4,624
  5,359
  6,156
  7,014
  7,930
  8,905
  9,937
  11,025
  12,167
  13,363
  14,613
  15,917
  17,275
  18,689
  20,158
  21,685
  23,272
  24,921
  26,635
  28,416
  30,269
  32,195
Operating income, $m
  160
  273
  411
  575
  767
  989
  1,240
  1,521
  1,832
  2,173
  2,543
  2,942
  3,369
  3,824
  4,305
  4,812
  5,345
  5,904
  6,487
  7,097
  7,731
  8,392
  9,079
  9,794
  10,537
  11,309
  12,111
  12,945
  13,812
  14,715
EBITDA, $m
  162
  276
  414
  580
  773
  995
  1,248
  1,531
  1,844
  2,186
  2,559
  2,960
  3,389
  3,846
  4,330
  4,840
  5,377
  5,938
  6,525
  7,138
  7,776
  8,441
  9,132
  9,851
  10,597
  11,374
  12,181
  13,019
  13,892
  14,799
Interest expense (income), $m
  0
  89
  126
  172
  228
  294
  371
  460
  560
  672
  795
  931
  1,078
  1,236
  1,406
  1,586
  1,776
  1,977
  2,188
  2,409
  2,640
  2,881
  3,132
  3,393
  3,665
  3,947
  4,241
  4,546
  4,862
  5,192
  5,534
Earnings before tax, $m
  71
  147
  239
  347
  473
  618
  780
  961
  1,160
  1,377
  1,612
  1,864
  2,133
  2,418
  2,719
  3,036
  3,368
  3,716
  4,078
  4,457
  4,851
  5,260
  5,686
  6,129
  6,589
  7,068
  7,565
  8,083
  8,621
  9,181
Tax expense, $m
  19
  40
  64
  94
  128
  167
  211
  260
  313
  372
  435
  503
  576
  653
  734
  820
  909
  1,003
  1,101
  1,203
  1,310
  1,420
  1,535
  1,655
  1,779
  1,908
  2,043
  2,182
  2,328
  2,479
Net income, $m
  52
  107
  174
  254
  346
  451
  570
  702
  847
  1,006
  1,177
  1,361
  1,557
  1,765
  1,985
  2,216
  2,459
  2,712
  2,977
  3,253
  3,541
  3,840
  4,151
  4,474
  4,810
  5,160
  5,523
  5,900
  6,293
  6,702

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
  3,009
  3,974
  5,142
  6,527
  8,142
  9,997
  12,095
  14,442
  17,035
  19,873
  22,952
  26,268
  29,815
  33,586
  37,578
  41,786
  46,206
  50,836
  55,674
  60,722
  65,980
  71,452
  77,143
  83,058
  89,205
  95,593
  102,232
  109,132
  116,308
  123,773
Adjusted assets (=assets-cash), $m
  3,009
  3,974
  5,142
  6,527
  8,142
  9,997
  12,095
  14,442
  17,035
  19,873
  22,952
  26,268
  29,815
  33,586
  37,578
  41,786
  46,206
  50,836
  55,674
  60,722
  65,980
  71,452
  77,143
  83,058
  89,205
  95,593
  102,232
  109,132
  116,308
  123,773
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
  143
  158
  173
  190
  207
  225
  244
  263
  283
  304
  326
  349
  372
  397
  422
Working capital, $m
  570
  753
  974
  1,237
  1,543
  1,894
  2,292
  2,737
  3,228
  3,766
  4,349
  4,978
  5,650
  6,365
  7,121
  7,918
  8,756
  9,633
  10,550
  11,507
  12,503
  13,540
  14,619
  15,739
  16,904
  18,115
  19,373
  20,681
  22,040
  23,455
Total debt, $m
  2,332
  3,185
  4,218
  5,442
  6,870
  8,509
  10,365
  12,439
  14,731
  17,240
  19,962
  22,893
  26,028
  29,363
  32,892
  36,611
  40,519
  44,611
  48,889
  53,351
  57,999
  62,836
  67,867
  73,096
  78,530
  84,176
  90,045
  96,146
  102,489
  109,087
Total liabilities, $m
  2,660
  3,513
  4,545
  5,770
  7,198
  8,837
  10,692
  12,766
  15,059
  17,568
  20,290
  23,221
  26,356
  29,690
  33,219
  36,939
  40,846
  44,939
  49,216
  53,678
  58,326
  63,164
  68,194
  73,423
  78,857
  84,504
  90,373
  96,473
  102,816
  109,415
Total equity, $m
  349
  461
  596
  757
  944
  1,160
  1,403
  1,675
  1,976
  2,305
  2,662
  3,047
  3,458
  3,896
  4,359
  4,847
  5,360
  5,897
  6,458
  7,044
  7,654
  8,288
  8,949
  9,635
  10,348
  11,089
  11,859
  12,659
  13,492
  14,358
Total liabilities and equity, $m
  3,009
  3,974
  5,141
  6,527
  8,142
  9,997
  12,095
  14,441
  17,035
  19,873
  22,952
  26,268
  29,814
  33,586
  37,578
  41,786
  46,206
  50,836
  55,674
  60,722
  65,980
  71,452
  77,143
  83,058
  89,205
  95,593
  102,232
  109,132
  116,308
  123,773
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
  254
  346
  451
  570
  702
  847
  1,006
  1,177
  1,361
  1,557
  1,765
  1,985
  2,216
  2,459
  2,712
  2,977
  3,253
  3,541
  3,840
  4,151
  4,474
  4,810
  5,160
  5,523
  5,900
  6,293
  6,702
Depreciation, amort., depletion, $m
  2
  3
  4
  4
  6
  7
  8
  10
  12
  14
  16
  18
  20
  23
  26
  29
  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
  859
  1,019
  1,193
  1,379
  1,577
  1,788
  2,011
  2,245
  2,490
  2,747
  3,015
  3,295
  3,586
  3,889
  4,204
  4,531
  4,871
  5,225
  5,592
  5,975
  6,372
  6,786
Change in working capital, $m
  148
  183
  221
  263
  306
  351
  398
  445
  491
  538
  584
  628
  672
  715
  756
  797
  838
  877
  917
  956
  996
  1,037
  1,078
  1,121
  1,165
  1,210
  1,258
  1,308
  1,360
  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
  1,653
  1,870
  2,098
  2,338
  2,589
  2,852
  3,125
  3,410
  3,706
  4,014
  4,334
  4,667
  5,013
  5,372
Maintenance CAPEX, $m
  -2
  -2
  -3
  -4
  -4
  -6
  -7
  -8
  -10
  -12
  -14
  -16
  -18
  -20
  -23
  -26
  -29
  -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
  -17
  -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
  -44
  -48
  -52
  -55
  -59
  -64
  -68
  -73
  -78
  -83
  -88
  -94
  -98
  -104
Free cash flow, $m
  -98
  -78
  -50
  -13
  35
  94
  166
  251
  349
  460
  585
  723
  875
  1,040
  1,218
  1,407
  1,609
  1,822
  2,047
  2,283
  2,530
  2,788
  3,057
  3,337
  3,629
  3,932
  4,247
  4,574
  4,914
  5,267
Issuance/(repayment) of debt, $m
  690
  853
  1,032
  1,225
  1,428
  1,639
  1,855
  2,074
  2,292
  2,509
  2,722
  2,931
  3,135
  3,334
  3,529
  3,720
  3,907
  4,093
  4,277
  4,462
  4,648
  4,837
  5,030
  5,229
  5,434
  5,647
  5,869
  6,100
  6,343
  6,599
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
  1,225
  1,428
  1,639
  1,855
  2,074
  2,292
  2,509
  2,722
  2,931
  3,135
  3,334
  3,529
  3,720
  3,907
  4,093
  4,277
  4,462
  4,648
  4,837
  5,030
  5,229
  5,434
  5,647
  5,869
  6,100
  6,343
  6,599
Total cash flow (excl. dividends), $m
  632
  780
  982
  1,212
  1,463
  1,734
  2,022
  2,325
  2,641
  2,969
  3,307
  3,654
  4,010
  4,374
  4,746
  5,127
  5,516
  5,915
  6,324
  6,745
  7,178
  7,625
  8,088
  8,566
  9,063
  9,579
  10,115
  10,674
  11,257
  11,865
Retained Cash Flow (-), $m
  -92
  -112
  -135
  -161
  -187
  -215
  -243
  -272
  -301
  -329
  -357
  -385
  -411
  -438
  -463
  -488
  -513
  -537
  -561
  -586
  -610
  -635
  -660
  -686
  -713
  -741
  -770
  -801
  -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
  847
  1,051
  1,276
  1,519
  1,778
  2,052
  2,340
  2,640
  2,950
  3,270
  3,599
  3,937
  4,283
  4,639
  5,004
  5,378
  5,763
  6,160
  6,568
  6,991
  7,427
  7,880
  8,350
  8,838
  9,345
  9,874
  10,425
  11,000
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
  491
  547
  619
  678
  719
  739
  737
  716
  677
  624
  561
  492
  420
  351
  285
  226
  174
  131
  96
  68
  47
  31
  20
  13
  8
  4
  3
  1
  1
  0
Current shareholders' claim on cash, %
  98.3
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1
  98.1

FINANCIAL RATIOS  of  LexinFintech Holdings Ltd. (LX)

Valuation Ratios
P/E Ratio -263.7
Price to Sales 7.1
Price to Book 2241.6
Price to Tangible Book
Price to Cash Flow 81.5
Price to Free Cash Flow 89.7
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 $844 million for the last fiscal year's total revenue generated by LexinFintech Holdings Ltd.. The default revenue input number comes from 0001 income statement of LexinFintech Holdings Ltd.. 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 Ltd., 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 Ltd..
    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 Ltd..

Corporate tax rate of 27% is the nominal tax rate for LexinFintech Holdings Ltd.. 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 Ltd. 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 Ltd. - 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 164.292 million for LexinFintech Holdings Ltd. 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 Ltd. at the current share price and the inputted number of shares is $2.2 billion.

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

Copyright © X-FIN.com 2005-2019. All rigths reserved.