Intrinsic value of MFC Bancorp Ltd. - MFCB

Previous Close

$12.40

  Intrinsic Value

$4.35

stock screener

  Rating & Target

str. sell

-65%

Previous close

$12.40

 
Intrinsic value

$4.35

 
Up/down potential

-65%

 
Rating

str. sell

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 0.2

 

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, %
  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
  219
  224
  230
  237
  244
  252
  260
  269
  279
  290
  302
  314
  327
  341
  355
  371
  388
  405
  423
  443
  463
  485
  508
  532
  557
  584
  612
  642
  673
  705
Variable operating expenses, $m
  211
  216
  222
  228
  235
  242
  251
  260
  269
  279
  291
  302
  315
  328
  342
  357
  373
  390
  408
  427
  446
  467
  489
  512
  537
  562
  589
  618
  648
  679
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
  278
  288
  298
  308
  319
  332
  344
  357
  371
  386
  402
  419
  437
  456
  476
  497
  519
  542
  566
  592
  618
  647
  677
  708
  740
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
  -35
  -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
  -22
  -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
  325
  333
  343
  353
  365
  377
  391
  405
  421
  437
  455
  474
  494
  515
  538
  562
  587
  614
  642
  672
  703
  736
  771
  808
  846
  887
  930
  975
  1,022
Adjusted assets (=assets-cash), $m
  318
  325
  333
  343
  353
  365
  377
  391
  405
  421
  437
  455
  474
  494
  515
  538
  562
  587
  614
  642
  672
  703
  736
  771
  808
  846
  887
  930
  975
  1,022
Revenue / Adjusted assets
  0.689
  0.689
  0.691
  0.691
  0.691
  0.690
  0.690
  0.688
  0.689
  0.689
  0.691
  0.690
  0.690
  0.690
  0.689
  0.690
  0.690
  0.690
  0.689
  0.690
  0.689
  0.690
  0.690
  0.690
  0.689
  0.690
  0.690
  0.690
  0.690
  0.690
Average production assets, $m
  149
  153
  157
  161
  166
  171
  177
  184
  190
  198
  205
  214
  223
  232
  242
  253
  264
  276
  288
  302
  316
  330
  346
  362
  379
  398
  417
  437
  458
  480
Working capital, $m
  82
  84
  86
  88
  91
  94
  97
  101
  104
  108
  113
  117
  122
  127
  133
  138
  145
  151
  158
  165
  173
  181
  189
  198
  208
  218
  228
  239
  251
  263
Total debt, $m
  38
  40
  42
  45
  48
  52
  56
  60
  64
  69
  74
  79
  85
  91
  97
  104
  111
  118
  126
  135
  144
  153
  163
  174
  185
  196
  208
  221
  235
  249
Total liabilities, $m
  95
  98
  100
  103
  106
  109
  113
  117
  122
  126
  131
  136
  142
  148
  155
  161
  169
  176
  184
  193
  201
  211
  221
  231
  242
  254
  266
  279
  292
  307
Total equity, $m
  222
  228
  233
  240
  247
  255
  264
  273
  284
  294
  306
  318
  332
  346
  361
  376
  393
  411
  430
  449
  470
  492
  515
  540
  565
  592
  621
  651
  682
  715
Total liabilities and equity, $m
  317
  326
  333
  343
  353
  364
  377
  390
  406
  420
  437
  454
  474
  494
  516
  537
  562
  587
  614
  642
  671
  703
  736
  771
  807
  846
  887
  930
  974
  1,022
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
  0.250
  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
  12
  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
  -30
  -30
  -30
  -31
  -31
  -32
  -32
  -32
  -33
  -33
  -33
  -34
  -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
  -12
  -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
  -28
  -30
  -32
  -33
  -35
  -37
  -39
Free cash flow, $m
  -31
  -33
  -34
  -36
  -37
  -39
  -40
  -41
  -43
  -44
  -46
  -48
  -49
  -51
  -52
  -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
  31
  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
  84
Cash from financing (excl. dividends), $m  
  33
  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
  98
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
  -31
  -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
  -84
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
  -7
  -6
  -5
  -4
  -3
  -3
  -2
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  83.2
  69.0
  56.9
  46.9
  38.6
  31.7
  26.0
  21.3
  17.5
  14.3
  11.7
  9.7
  7.9
  6.5
  5.4
  4.5
  3.7
  3.1
  2.5
  2.1
  1.8
  1.5
  1.2
  1.0
  0.9
  0.7
  0.6
  0.5
  0.5
  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 Ltd. (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 million for the last fiscal year's total revenue generated by MFC Bancorp Ltd.. The default revenue input number comes from 0001 income statement of MFC Bancorp 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 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 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 MFC Bancorp 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 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 Ltd..

Corporate tax rate of 27% is the nominal tax rate for MFC Bancorp 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 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 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 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 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 12.535 million for MFC Bancorp 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 MFC Bancorp Ltd. at the current share price and the inputted number of shares is $0.2 billion.

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