Intrinsic value of MFC Bancorp - MFCB

Previous Close

$4.45

  Intrinsic Value

$4.35

stock screener

  Rating & Target

hold

-2%

Previous close

$4.45

 
Intrinsic value

$4.35

 
Up/down potential

-2%

 
Rating

hold

We calculate the intrinsic value of MFCB 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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  220
  225
  230
  237
  244
  252
  261
  270
  280
  291
  302
  314
  327
  341
  356
  372
  388
  406
  424
  443
  464
  486
  509
  533
  558
  585
  613
  642
  673
  706
Variable operating expenses, $m
  211
  216
  222
  228
  235
  243
  251
  260
  269
  280
  291
  303
  315
  329
  343
  358
  374
  391
  408
  427
  447
  468
  490
  513
  537
  563
  590
  619
  649
  680
Fixed operating expenses, $m
  33
  33
  34
  35
  36
  36
  37
  38
  39
  40
  41
  42
  42
  43
  44
  45
  46
  47
  48
  49
  51
  52
  53
  54
  55
  56
  58
  59
  60
  61
Total operating expenses, $m
  244
  249
  256
  263
  271
  279
  288
  298
  308
  320
  332
  345
  357
  372
  387
  403
  420
  438
  456
  476
  498
  520
  543
  567
  592
  619
  648
  678
  709
  741
Operating income, $m
  -25
  -25
  -26
  -26
  -27
  -27
  -28
  -28
  -29
  -29
  -29
  -30
  -30
  -31
  -31
  -32
  -32
  -32
  -33
  -33
  -33
  -34
  -34
  -34
  -34
  -35
  -35
  -35
  -35
  -35
EBITDA, $m
  -19
  -20
  -20
  -20
  -21
  -21
  -21
  -21
  -22
  -22
  -22
  -22
  -22
  -22
  -22
  -22
  -22
  -22
  -22
  -22
  -22
  -22
  -21
  -21
  -21
  -20
  -20
  -19
  -19
  -18
Interest expense (income), $m
  0
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  13
  13
  14
  15
  16
Earnings before tax, $m
  -27
  -28
  -28
  -29
  -30
  -30
  -31
  -32
  -33
  -33
  -34
  -35
  -36
  -37
  -37
  -38
  -39
  -40
  -41
  -42
  -43
  -43
  -44
  -45
  -46
  -47
  -48
  -49
  -50
  -51
Tax expense, $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
Net income, $m
  -27
  -28
  -28
  -29
  -30
  -30
  -31
  -32
  -33
  -33
  -34
  -35
  -36
  -37
  -37
  -38
  -39
  -40
  -41
  -42
  -43
  -43
  -44
  -45
  -46
  -47
  -48
  -49
  -50
  -51

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
  318
  326
  334
  343
  354
  365
  378
  391
  406
  421
  438
  456
  474
  495
  516
  538
  562
  588
  614
  643
  672
  704
  737
  772
  809
  847
  888
  931
  976
  1,023
Adjusted assets (=assets-cash), $m
  318
  326
  334
  343
  354
  365
  378
  391
  406
  421
  438
  456
  474
  495
  516
  538
  562
  588
  614
  643
  672
  704
  737
  772
  809
  847
  888
  931
  976
  1,023
Revenue / Adjusted assets
  0.692
  0.690
  0.689
  0.691
  0.689
  0.690
  0.690
  0.691
  0.690
  0.691
  0.689
  0.689
  0.690
  0.689
  0.690
  0.691
  0.690
  0.690
  0.691
  0.689
  0.690
  0.690
  0.691
  0.690
  0.690
  0.691
  0.690
  0.690
  0.690
  0.690
Average production assets, $m
  150
  153
  157
  161
  166
  172
  177
  184
  191
  198
  206
  214
  223
  232
  242
  253
  264
  276
  289
  302
  316
  331
  346
  363
  380
  398
  417
  437
  459
  481
Working capital, $m
  82
  84
  86
  88
  91
  94
  97
  101
  104
  108
  113
  117
  122
  127
  133
  139
  145
  151
  158
  165
  173
  181
  190
  199
  208
  218
  229
  240
  251
  263
Total debt, $m
  38
  40
  43
  45
  48
  52
  56
  60
  64
  69
  74
  79
  85
  91
  97
  104
  111
  119
  127
  135
  144
  154
  163
  174
  185
  197
  209
  222
  235
  249
Total liabilities, $m
  95
  98
  100
  103
  106
  110
  113
  117
  122
  126
  131
  137
  142
  148
  155
  162
  169
  176
  184
  193
  202
  211
  221
  232
  243
  254
  266
  279
  293
  307
Total equity, $m
  223
  228
  234
  240
  248
  256
  264
  274
  284
  295
  306
  319
  332
  346
  361
  377
  394
  411
  430
  450
  471
  493
  516
  540
  566
  593
  622
  652
  683
  716
Total liabilities and equity, $m
  318
  326
  334
  343
  354
  366
  377
  391
  406
  421
  437
  456
  474
  494
  516
  539
  563
  587
  614
  643
  673
  704
  737
  772
  809
  847
  888
  931
  976
  1,023
Debt-to-equity ratio
  0.170
  0.180
  0.180
  0.190
  0.200
  0.200
  0.210
  0.220
  0.230
  0.230
  0.240
  0.250
  0.260
  0.260
  0.270
  0.280
  0.280
  0.290
  0.290
  0.300
  0.310
  0.310
  0.320
  0.320
  0.330
  0.330
  0.340
  0.340
  0.340
  0.350
Adjusted equity ratio
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -27
  -28
  -28
  -29
  -30
  -30
  -31
  -32
  -33
  -33
  -34
  -35
  -36
  -37
  -37
  -38
  -39
  -40
  -41
  -42
  -43
  -43
  -44
  -45
  -46
  -47
  -48
  -49
  -50
  -51
Depreciation, amort., depletion, $m
  5
  6
  6
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  13
  13
  14
  14
  15
  16
  17
  17
Funds from operations, $m
  -22
  -22
  -23
  -23
  -24
  -24
  -25
  -25
  -26
  -26
  -27
  -27
  -28
  -28
  -29
  -29
  -29
  -30
  -30
  -31
  -31
  -32
  -32
  -32
  -33
  -33
  -33
  -33
  -34
  -34
Change in working capital, $m
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  5
  6
  6
  7
  7
  7
  8
  8
  9
  9
  9
  10
  10
  11
  12
  12
Cash from operations, $m
  -23
  -24
  -25
  -26
  -26
  -27
  -28
  -29
  -29
  -30
  -31
  -32
  -33
  -33
  -34
  -35
  -36
  -36
  -37
  -38
  -39
  -40
  -40
  -41
  -42
  -43
  -44
  -45
  -45
  -46
Maintenance CAPEX, $m
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -17
New CAPEX, $m
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
Cash from investing activities, $m
  -8
  -8
  -10
  -10
  -11
  -11
  -12
  -12
  -14
  -14
  -15
  -15
  -17
  -17
  -18
  -20
  -20
  -22
  -23
  -23
  -25
  -26
  -28
  -29
  -30
  -32
  -33
  -35
  -37
  -39
Free cash flow, $m
  -32
  -33
  -34
  -36
  -37
  -39
  -40
  -41
  -43
  -44
  -46
  -48
  -49
  -51
  -53
  -54
  -56
  -58
  -60
  -62
  -64
  -66
  -68
  -70
  -72
  -75
  -77
  -80
  -82
  -85
Issuance/(repayment) of debt, $m
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
Issuance/(repurchase) of shares, $m
  32
  33
  34
  36
  37
  38
  40
  41
  43
  44
  46
  47
  49
  51
  52
  54
  56
  58
  59
  61
  63
  65
  68
  70
  72
  74
  77
  79
  82
  85
Cash from financing (excl. dividends), $m  
  34
  35
  37
  39
  40
  41
  44
  45
  47
  49
  51
  52
  55
  57
  58
  61
  63
  66
  67
  69
  72
  74
  78
  80
  83
  86
  89
  92
  96
  99
Total cash flow (excl. dividends), $m
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  5
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
Retained Cash Flow (-), $m
  -32
  -33
  -34
  -36
  -37
  -38
  -40
  -41
  -43
  -44
  -46
  -47
  -49
  -51
  -52
  -54
  -56
  -58
  -59
  -61
  -63
  -65
  -68
  -70
  -72
  -74
  -77
  -79
  -82
  -85
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
  -30
  -31
  -32
  -33
  -34
  -35
  -36
  -37
  -39
  -40
  -41
  -42
  -43
  -45
  -46
  -47
  -49
  -50
  -52
  -53
  -55
  -56
  -58
  -60
  -61
  -63
  -65
  -67
  -69
  -71
Discount rate, %
  6.50
  6.83
  7.17
  7.52
  7.90
  8.30
  8.71
  9.15
  9.60
  10.08
  10.59
  11.12
  11.67
  12.26
  12.87
  13.51
  14.19
  14.90
  15.64
  16.43
  17.25
  18.11
  19.01
  19.96
  20.96
  22.01
  23.11
  24.27
  25.48
  26.75
PV of cash for distribution, $m
  -28
  -27
  -26
  -25
  -23
  -22
  -20
  -19
  -17
  -15
  -14
  -12
  -10
  -9
  -8
  -6
  -5
  -4
  -3
  -3
  -2
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  82.9
  68.5
  56.4
  46.3
  37.9
  31.1
  25.4
  20.8
  17.0
  13.9
  11.4
  9.3
  7.6
  6.3
  5.2
  4.2
  3.5
  2.9
  2.4
  2.0
  1.7
  1.4
  1.2
  1.0
  0.8
  0.7
  0.6
  0.5
  0.4
  0.4

MFC Bancorp Ltd., formerly FC Industrial Ltd., is a finance and supply chain company. The Company facilitates the working capital and other requirements of its customers. Its business activities involve customized structured financial solutions and are supported by captive sources and products secured from third parties. It operates through two segments: Finance and Supply Chain, which includes its marketing activities, captive supply assets, structured solutions, financial services and proprietary investing activities, and All Other, which encompasses its corporate and other investments, and business interests. The Company does business in multiple geographies and specializes in a range of industrial products, such as metals, ceramics, minerals, various steel products and ferro-alloys, and wood products. It also offers a range of structured finance solutions, including factoring, inventory, financing, forfaiting, marketing, and other types of risk management and financing solutions.

FINANCIAL RATIOS  of  MFC Bancorp (MFCB)

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%

MFCB stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MFCB stock intrinsic value calculation we used $215.267085624 million for the last fiscal year's total revenue generated by MFC Bancorp. The default revenue input number comes from 0001 income statement of MFC Bancorp. 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 MFCB stock valuation model: a) initial revenue growth rate of 2% 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 6.5%, whose default value for MFCB is calculated based on our internal credit rating of MFC Bancorp, 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 MFC Bancorp.
    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 MFCB stock the variable cost ratio is equal to 96.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $32 million in the base year in the intrinsic value calculation for MFCB 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 6.8% for MFC Bancorp.

Corporate tax rate of 27% is the nominal tax rate for MFC Bancorp. 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 MFCB 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 MFCB are equal to 68.1%.

Life of production assets of 27.7 years is the average useful life of capital assets used in MFC Bancorp 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 MFCB is equal to 37.3%. 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 - $218.208955224 million for MFC Bancorp - 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 12.535 million for MFC Bancorp 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 MFC Bancorp at the current share price and the inputted number of shares is $0.1 billion.

RELATED COMPANIES Price Int.Val. Rating

COMPANY NEWS

▶ MFC Releases Results For The Year 2017 On Form 20-F   [Apr-10-18 05:39PM  PR Newswire]
▶ MFC Bancorp reports 3Q loss   [Nov-14-17 07:03AM  Associated Press]
▶ Why MFC Bancorp Ltds (MFCB) CEO Pay Matters To You   [Nov-13-17 06:55AM  Simply Wall St.]
▶ MFC Bancorp reports 2Q loss   [Aug-14-17 10:21PM  Associated Press]
▶ MFC Bancorp reports 1Q loss   [May-15-17 08:50AM  Associated Press]
▶ MFC Bancorp Ltd. Announces Management Change   [Mar-03-17 04:15PM  PR Newswire]
▶ MFC BANCORP LTD. Financials   [01:04PM  EDGAR Online Financials]
▶ MFC Bancorp Provides Update On Annual Filings   [Apr-06-16 09:04AM  PR Newswire]
▶ MFC Bancorp Completes Name And Symbol Change   [Feb-18-16 04:05PM  PR Newswire]
▶ MFC Provides Update On Bank Acquisition   [Dec-31  06:30AM  PR Newswire]

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