Intrinsic value of MiX Telematics ADR - MIXT

Previous Close

$11.63

  Intrinsic Value

$6.72

stock screener

  Rating & Target

sell

-42%

Previous close

$11.63

 
Intrinsic value

$6.72

 
Up/down potential

-42%

 
Rating

sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of MIXT 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 2017), $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 0.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  4.50
  6.90
  6.71
  6.54
  6.39
  6.25
  6.12
  6.01
  5.91
  5.82
  5.74
  5.66
  5.60
  5.54
  5.48
  5.43
  5.39
  5.35
  5.32
  5.29
  5.26
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
  5.12
  5.11
  5.10
  5.09
Revenue, $m
  116
  124
  132
  141
  150
  159
  169
  179
  190
  201
  212
  224
  237
  250
  264
  278
  293
  309
  325
  343
  361
  379
  399
  420
  442
  464
  488
  513
  539
  567
  596
Variable operating expenses, $m
 
  112
  119
  127
  134
  142
  151
  160
  169
  178
  188
  194
  205
  216
  228
  240
  253
  267
  281
  296
  312
  328
  345
  363
  382
  401
  422
  444
  466
  490
  515
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
  106
  112
  119
  127
  134
  142
  151
  160
  169
  178
  188
  194
  205
  216
  228
  240
  253
  267
  281
  296
  312
  328
  345
  363
  382
  401
  422
  444
  466
  490
  515
Operating income, $m
  10
  12
  13
  14
  16
  17
  18
  20
  21
  23
  24
  30
  32
  34
  36
  38
  40
  42
  44
  46
  49
  51
  54
  57
  60
  63
  66
  70
  73
  77
  81
EBITDA, $m
  20
  21
  23
  24
  26
  28
  29
  31
  33
  35
  37
  39
  41
  43
  46
  48
  51
  53
  56
  59
  62
  66
  69
  73
  76
  80
  84
  89
  93
  98
  103
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
Earnings before tax, $m
  11
  12
  13
  14
  15
  17
  18
  19
  20
  22
  23
  29
  31
  33
  34
  36
  38
  40
  42
  44
  47
  49
  51
  54
  57
  60
  63
  66
  69
  72
  76
Tax expense, $m
  2
  3
  4
  4
  4
  4
  5
  5
  6
  6
  6
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
Net income, $m
  9
  9
  10
  10
  11
  12
  13
  14
  15
  16
  17
  21
  23
  24
  25
  26
  28
  29
  31
  32
  34
  36
  38
  39
  41
  43
  46
  48
  50
  53
  56

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  28
  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
  144
  124
  132
  141
  150
  159
  169
  179
  190
  201
  212
  224
  237
  250
  264
  278
  293
  309
  325
  343
  361
  379
  399
  420
  442
  464
  488
  513
  539
  567
  596
Adjusted assets (=assets-cash), $m
  116
  124
  132
  141
  150
  159
  169
  179
  190
  201
  212
  224
  237
  250
  264
  278
  293
  309
  325
  343
  361
  379
  399
  420
  442
  464
  488
  513
  539
  567
  596
Revenue / Adjusted assets
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
Average production assets, $m
  38
  40
  43
  46
  48
  51
  55
  58
  61
  65
  69
  72
  77
  81
  85
  90
  95
  100
  105
  111
  116
  123
  129
  136
  143
  150
  158
  166
  174
  183
  192
Working capital, $m
  26
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
Total debt, $m
  1
  2
  5
  7
  10
  13
  16
  19
  22
  25
  28
  32
  35
  39
  43
  48
  52
  57
  61
  66
  72
  77
  83
  89
  95
  102
  109
  116
  124
  132
  141
Total liabilities, $m
  35
  36
  39
  41
  44
  47
  50
  53
  56
  59
  62
  66
  69
  73
  77
  82
  86
  91
  95
  100
  106
  111
  117
  123
  129
  136
  143
  150
  158
  166
  175
Total equity, $m
  109
  88
  94
  100
  106
  113
  120
  127
  134
  142
  150
  159
  168
  177
  187
  197
  207
  218
  230
  242
  255
  268
  282
  297
  312
  328
  345
  363
  381
  401
  421
Total liabilities and equity, $m
  144
  124
  133
  141
  150
  160
  170
  180
  190
  201
  212
  225
  237
  250
  264
  279
  293
  309
  325
  342
  361
  379
  399
  420
  441
  464
  488
  513
  539
  567
  596
Debt-to-equity ratio
  0.009
  0.030
  0.050
  0.070
  0.090
  0.110
  0.130
  0.150
  0.160
  0.180
  0.190
  0.200
  0.210
  0.220
  0.230
  0.240
  0.250
  0.260
  0.270
  0.270
  0.280
  0.290
  0.290
  0.300
  0.310
  0.310
  0.320
  0.320
  0.330
  0.330
  0.330
Adjusted equity ratio
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  9
  9
  10
  10
  11
  12
  13
  14
  15
  16
  17
  21
  23
  24
  25
  26
  28
  29
  31
  32
  34
  36
  38
  39
  41
  43
  46
  48
  50
  53
  56
Depreciation, amort., depletion, $m
  10
  9
  10
  10
  10
  11
  11
  11
  12
  12
  13
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
Funds from operations, $m
  25
  18
  19
  20
  22
  23
  24
  25
  27
  28
  30
  30
  32
  33
  35
  37
  39
  41
  43
  45
  48
  50
  53
  55
  58
  61
  64
  67
  71
  74
  78
Change in working capital, $m
  1
  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 from operations, $m
  24
  18
  19
  20
  22
  23
  24
  25
  27
  28
  30
  30
  32
  33
  35
  37
  39
  41
  43
  45
  48
  50
  53
  55
  58
  61
  64
  67
  71
  74
  78
Maintenance CAPEX, $m
  0
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
New CAPEX, $m
  -14
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
Cash from investing activities, $m
  -22
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -11
  -12
  -12
  -12
  -13
  -13
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -20
  -22
  -23
  -24
  -25
  -26
  -27
  -29
  -30
Free cash flow, $m
  2
  11
  12
  13
  13
  14
  15
  16
  17
  18
  18
  18
  19
  20
  21
  22
  24
  25
  26
  28
  29
  30
  32
  34
  35
  37
  39
  41
  43
  45
  48
Issuance/(repayment) of debt, $m
  0
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
Issuance/(repurchase) of shares, $m
  -35
  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 from financing (excl. dividends), $m  
  -35
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
Total cash flow (excl. dividends), $m
  -34
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  22
  23
  24
  25
  27
  28
  29
  31
  33
  34
  36
  38
  40
  42
  44
  46
  48
  51
  53
  56
Retained Cash Flow (-), $m
  36
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -19
  -20
Prev. year cash balance distribution, $m
 
  27
  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
 
  35
  9
  9
  10
  10
  11
  12
  12
  13
  14
  13
  14
  15
  16
  17
  17
  18
  19
  20
  22
  23
  24
  25
  26
  28
  29
  31
  32
  34
  36
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
 
  34
  8
  8
  8
  8
  8
  8
  8
  7
  7
  6
  6
  6
  5
  5
  4
  4
  4
  3
  3
  2
  2
  2
  1
  1
  1
  1
  0
  0
  0
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
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MiX Telematics Limited is a South Africa-based provider of fleet and mobile asset management solutions delivered as Software-as-a-Service (SaaS) to customers. The Company's operating segments include Africa, Europe, Americas, Middle East and Australasia, Brazil and Central Services Organization. The Company's products and services provide enterprise fleets, small fleets and consumers with solutions for safety, risk management and security. The Company's solutions include MiX Fleet Manager, which consists of an on-board computer, an online tracking and information portal, as well as access to fleet and driver reports and analytics; MiX SafeDrive provides In-Vehicle Monitoring Systems (IVMS) that monitor driver performance, identify unsafe behaviors and provide audible alerts; Matrix is focused on personal safety and consumer telematics through vehicle tracking-and-recovery products and services, and Beam-e, which is a wireless device that fits into vehicles, motorbikes or caravan.

FINANCIAL RATIOS  of  MiX Telematics ADR (MIXT)

Valuation Ratios
P/E Ratio 728.1
Price to Sales 56.5
Price to Book 60.1
Price to Tangible Book
Price to Cash Flow 273
Price to Free Cash Flow 655.3
Growth Rates
Sales Growth Rate 4.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 16.7%
Cap. Spend. - 3 Yr. Gr. Rate 18.5%
Financial Strength
Quick Ratio 28
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0.9%
Interest Coverage 0
Management Effectiveness
Return On Assets 5.6%
Ret/ On Assets - 3 Yr. Avg. 6.9%
Return On Total Capital 7%
Ret/ On T. Cap. - 3 Yr. Avg. 8.3%
Return On Equity 7.1%
Return On Equity - 3 Yr. Avg. 8.4%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 68.1%
Gross Margin - 3 Yr. Avg. 68.4%
EBITDA Margin 18.1%
EBITDA Margin - 3 Yr. Avg. 23.6%
Operating Margin 8.6%
Oper. Margin - 3 Yr. Avg. 9.7%
Pre-Tax Margin 9.5%
Pre-Tax Margin - 3 Yr. Avg. 15.2%
Net Profit Margin 7.8%
Net Profit Margin - 3 Yr. Avg. 10.3%
Effective Tax Rate 18.2%
Eff/ Tax Rate - 3 Yr. Avg. 29.9%
Payout Ratio 44.4%

MIXT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MIXT stock intrinsic value calculation we used $116 million for the last fiscal year's total revenue generated by MiX Telematics ADR. The default revenue input number comes from 2017 income statement of MiX Telematics 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 MIXT stock valuation model: a) initial revenue growth rate of 6.9% 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 MIXT is calculated based on our internal credit rating of MiX Telematics 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 MiX Telematics 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 MIXT stock the variable cost ratio is equal to 90.5%.

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 MIXT 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 3.5% for MiX Telematics ADR.

Corporate tax rate of 27% is the nominal tax rate for MiX Telematics 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 MIXT 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 MIXT are equal to 32.3%.

Life of production assets of 8.6 years is the average useful life of capital assets used in MiX Telematics 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 MIXT is equal to -0.9%. 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 - $109 million for MiX Telematics 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 23.915 million for MiX Telematics 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 MiX Telematics ADR at the current share price and the inputted number of shares is $0.3 billion.

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COMPANY NEWS

▶ MiX Telematics to Present at Upcoming Investor Conferences   [Jul-26-17 09:00AM  Business Wire]
▶ Tech Slide Makes These 5 Value Stocks Must-Buys   [Jun-13-17 02:14PM  Zacks]
▶ 5 Breakout Stocks Offering Stupendous Returns   [Jun-05-17 08:56AM  Zacks]
▶ 5 of the Best Stocks Under $10 for 2017   [Mar-02-17 01:42PM  Zacks]
▶ MiX Telematics Appoints Interim Chief Financial Officer   [Feb-02-17 06:05AM  Business Wire]
▶ How Limelight Networks, Inc. (LLNW) Stacks Up Against Its Peers   [Dec-12-16 08:19PM  at Insider Monkey]
▶ MiX Telematics Announces Changes to the Board of Directors   [Oct-03-16 09:00AM  Business Wire]
▶ MiX Telematics to Hold Analyst and Investor Day   [Aug-29-16 04:15PM  Business Wire]
▶ MiX Telematics Announces Results of General Meeting   [Aug-01-16 12:45PM  Business Wire]
▶ MiX Telematics to Present at Upcoming Investor Conferences   [Jul-27-16 04:15PM  Business Wire]
▶ MiX Telematics Announces Change to the Board of Directors   [Jun-02-16 12:30PM  Business Wire]
Financial statements of MIXT
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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