Intrinsic value of MagnaChip Semiconductor Corporation - MX

Previous Close

$10.68

  Intrinsic Value

$2.57

stock screener

  Rating & Target

str. sell

-76%

Previous close

$10.68

 
Intrinsic value

$2.57

 
Up/down potential

-76%

 
Rating

str. sell

We calculate the intrinsic value of MX 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 0.4

 

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, %
  2.80
  3.02
  3.22
  3.40
  3.56
  3.70
  3.83
  3.95
  4.05
  4.15
  4.23
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.63
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.82
  4.84
  4.86
  4.87
  4.88
  4.90
Revenue, $m
  772
  795
  821
  849
  879
  912
  946
  984
  1,024
  1,066
  1,111
  1,159
  1,210
  1,264
  1,320
  1,381
  1,444
  1,511
  1,581
  1,656
  1,734
  1,817
  1,904
  1,995
  2,091
  2,193
  2,299
  2,411
  2,529
  2,653
Variable operating expenses, $m
  682
  703
  726
  750
  777
  806
  837
  870
  905
  942
  982
  1,024
  1,069
  1,116
  1,167
  1,220
  1,276
  1,335
  1,397
  1,463
  1,532
  1,605
  1,682
  1,763
  1,848
  1,937
  2,031
  2,130
  2,234
  2,344
Fixed operating expenses, $m
  41
  42
  43
  44
  45
  46
  47
  48
  49
  50
  51
  52
  53
  54
  55
  57
  58
  59
  60
  62
  63
  65
  66
  67
  69
  70
  72
  74
  75
  77
Total operating expenses, $m
  723
  745
  769
  794
  822
  852
  884
  918
  954
  992
  1,033
  1,076
  1,122
  1,170
  1,222
  1,277
  1,334
  1,394
  1,457
  1,525
  1,595
  1,670
  1,748
  1,830
  1,917
  2,007
  2,103
  2,204
  2,309
  2,421
Operating income, $m
  49
  51
  53
  55
  57
  60
  63
  67
  70
  74
  79
  83
  88
  93
  98
  104
  110
  117
  124
  131
  139
  147
  156
  165
  175
  185
  196
  207
  220
  232
EBITDA, $m
  82
  84
  88
  91
  95
  99
  104
  109
  114
  119
  126
  132
  139
  146
  154
  162
  171
  181
  190
  201
  212
  224
  236
  249
  263
  277
  293
  309
  326
  344
Interest expense (income), $m
  15
  22
  18
  19
  20
  22
  23
  25
  27
  29
  31
  33
  35
  37
  40
  43
  46
  49
  52
  55
  59
  63
  67
  71
  75
  80
  85
  90
  96
  101
  107
Earnings before tax, $m
  27
  33
  34
  35
  36
  37
  38
  40
  42
  44
  46
  48
  50
  53
  56
  59
  62
  65
  68
  72
  76
  80
  85
  90
  95
  100
  106
  112
  118
  125
Tax expense, $m
  7
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  18
  19
  21
  22
  23
  24
  26
  27
  29
  30
  32
  34
Net income, $m
  19
  24
  25
  25
  26
  27
  28
  29
  30
  32
  34
  35
  37
  39
  41
  43
  45
  47
  50
  53
  56
  59
  62
  65
  69
  73
  77
  82
  86
  91

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
  599
  618
  637
  659
  682
  708
  735
  764
  795
  828
  863
  900
  939
  981
  1,025
  1,072
  1,121
  1,173
  1,228
  1,286
  1,346
  1,410
  1,478
  1,549
  1,624
  1,702
  1,785
  1,872
  1,963
  2,059
Adjusted assets (=assets-cash), $m
  599
  618
  637
  659
  682
  708
  735
  764
  795
  828
  863
  900
  939
  981
  1,025
  1,072
  1,121
  1,173
  1,228
  1,286
  1,346
  1,410
  1,478
  1,549
  1,624
  1,702
  1,785
  1,872
  1,963
  2,059
Revenue / Adjusted assets
  1.289
  1.286
  1.289
  1.288
  1.289
  1.288
  1.287
  1.288
  1.288
  1.287
  1.287
  1.288
  1.289
  1.288
  1.288
  1.288
  1.288
  1.288
  1.287
  1.288
  1.288
  1.289
  1.288
  1.288
  1.288
  1.288
  1.288
  1.288
  1.288
  1.288
Average production assets, $m
  212
  218
  225
  233
  241
  250
  259
  270
  280
  292
  304
  318
  332
  346
  362
  378
  396
  414
  433
  454
  475
  498
  522
  547
  573
  601
  630
  661
  693
  727
Working capital, $m
  90
  93
  96
  99
  103
  107
  111
  115
  120
  125
  130
  136
  142
  148
  154
  162
  169
  177
  185
  194
  203
  213
  223
  233
  245
  257
  269
  282
  296
  310
Total debt, $m
  243
  259
  277
  296
  317
  340
  364
  391
  418
  448
  480
  513
  549
  586
  626
  668
  712
  759
  808
  860
  915
  972
  1,033
  1,097
  1,164
  1,235
  1,310
  1,388
  1,470
  1,557
Total liabilities, $m
  539
  556
  574
  593
  614
  637
  661
  687
  715
  745
  777
  810
  845
  883
  923
  965
  1,009
  1,056
  1,105
  1,157
  1,212
  1,269
  1,330
  1,394
  1,461
  1,532
  1,606
  1,685
  1,767
  1,854
Total equity, $m
  60
  62
  64
  66
  68
  71
  73
  76
  79
  83
  86
  90
  94
  98
  103
  107
  112
  117
  123
  129
  135
  141
  148
  155
  162
  170
  178
  187
  196
  206
Total liabilities and equity, $m
  599
  618
  638
  659
  682
  708
  734
  763
  794
  828
  863
  900
  939
  981
  1,026
  1,072
  1,121
  1,173
  1,228
  1,286
  1,347
  1,410
  1,478
  1,549
  1,623
  1,702
  1,784
  1,872
  1,963
  2,060
Debt-to-equity ratio
  4.050
  4.190
  4.340
  4.490
  4.650
  4.800
  4.960
  5.110
  5.260
  5.410
  5.560
  5.700
  5.840
  5.970
  6.100
  6.230
  6.350
  6.470
  6.580
  6.690
  6.790
  6.890
  6.990
  7.080
  7.170
  7.260
  7.340
  7.410
  7.490
  7.560
Adjusted equity ratio
  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
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  19
  24
  25
  25
  26
  27
  28
  29
  30
  32
  34
  35
  37
  39
  41
  43
  45
  47
  50
  53
  56
  59
  62
  65
  69
  73
  77
  82
  86
  91
Depreciation, amort., depletion, $m
  33
  34
  35
  36
  37
  39
  40
  42
  44
  45
  47
  49
  51
  53
  56
  58
  61
  64
  67
  70
  73
  77
  80
  84
  88
  92
  97
  102
  107
  112
Funds from operations, $m
  52
  58
  60
  61
  64
  66
  68
  71
  74
  77
  80
  84
  88
  92
  96
  101
  106
  111
  117
  122
  129
  135
  142
  150
  157
  165
  174
  183
  193
  203
Change in working capital, $m
  2
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
Cash from operations, $m
  50
  55
  57
  58
  60
  62
  64
  67
  69
  72
  75
  78
  82
  86
  90
  94
  98
  103
  108
  114
  120
  126
  132
  139
  146
  154
  162
  170
  179
  189
Maintenance CAPEX, $m
  -32
  -33
  -34
  -35
  -36
  -37
  -38
  -40
  -41
  -43
  -45
  -47
  -49
  -51
  -53
  -56
  -58
  -61
  -64
  -67
  -70
  -73
  -77
  -80
  -84
  -88
  -92
  -97
  -102
  -107
New CAPEX, $m
  -5
  -6
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -26
  -28
  -29
  -31
  -32
  -34
Cash from investing activities, $m
  -37
  -39
  -41
  -43
  -44
  -46
  -48
  -50
  -52
  -55
  -57
  -60
  -63
  -66
  -69
  -72
  -75
  -79
  -83
  -87
  -91
  -96
  -101
  -105
  -110
  -116
  -121
  -128
  -134
  -141
Free cash flow, $m
  13
  16
  16
  16
  16
  16
  16
  17
  17
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  30
  32
  34
  36
  38
  40
  43
  45
  48
Issuance/(repayment) of debt, $m
  -61
  16
  18
  19
  21
  23
  24
  26
  28
  30
  32
  33
  35
  38
  40
  42
  44
  47
  49
  52
  55
  58
  61
  64
  67
  71
  74
  78
  82
  87
Issuance/(repurchase) of shares, $m
  58
  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  
  -3
  16
  18
  19
  21
  23
  24
  26
  28
  30
  32
  33
  35
  38
  40
  42
  44
  47
  49
  52
  55
  58
  61
  64
  67
  71
  74
  78
  82
  87
Total cash flow (excl. dividends), $m
  9
  33
  34
  35
  37
  39
  41
  43
  45
  47
  49
  52
  55
  57
  61
  64
  67
  71
  75
  79
  83
  88
  92
  97
  103
  108
  114
  121
  127
  135
Retained Cash Flow (-), $m
  -77
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
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
  -68
  31
  32
  33
  35
  36
  38
  40
  42
  44
  46
  48
  51
  53
  56
  59
  62
  66
  69
  73
  77
  81
  86
  90
  95
  101
  106
  112
  118
  125
Discount rate, %
  8.30
  8.72
  9.15
  9.61
  10.09
  10.59
  11.12
  11.68
  12.26
  12.88
  13.52
  14.20
  14.91
  15.65
  16.43
  17.26
  18.12
  19.02
  19.97
  20.97
  22.02
  23.12
  24.28
  25.49
  26.77
  28.11
  29.51
  30.99
  32.54
  34.16
PV of cash for distribution, $m
  -63
  26
  25
  23
  21
  20
  18
  16
  15
  13
  11
  10
  8
  7
  6
  5
  4
  3
  2
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
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MagnaChip Semiconductor Corporation is a designer and manufacturer of analog and mixed-signal semiconductor products for consumer, computing, communication, industrial, automotive and Internet of Things (IoT) applications. The Company provides technology platforms for analog, mixed signal, power, high voltage, non-volatile memory and Radio Frequency (RF) applications. The Company has two segments: Foundry Services Group and Standard Products Group. The Company's Foundry Services Group provides analog and mixed-signal foundry services to semiconductor companies and Integrated Device Manufacturers (IDMs) that serve consumer, computing, communication, industrial, automotive and IoT applications. The Company manufactures wafers-based on its customers’ product designs. The Company's Standard Products Group includes its Display Solutions and Power Solutions business lines.

FINANCIAL RATIOS  of  MagnaChip Semiconductor Corporation (MX)

Valuation Ratios
P/E Ratio -12.5
Price to Sales 0.5
Price to Book -5.2
Price to Tangible Book
Price to Cash Flow 46.8
Price to Free Cash Flow -31.2
Growth Rates
Sales Growth Rate 8.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 185.7%
Cap. Spend. - 3 Yr. Gr. Rate -14.2%
Financial Strength
Quick Ratio NaN
Current Ratio 0.2
LT Debt to Equity -306.9%
Total Debt to Equity -306.9%
Interest Coverage -1
Management Effectiveness
Return On Assets -2.8%
Ret/ On Assets - 3 Yr. Avg. -11.6%
Return On Total Capital -19.5%
Ret/ On T. Cap. - 3 Yr. Avg. -37.4%
Return On Equity 44.8%
Return On Equity - 3 Yr. Avg. -38.9%
Asset Turnover 1.5
Profitability Ratios
Gross Margin 22.7%
Gross Margin - 3 Yr. Avg. 22%
EBITDA Margin 2%
EBITDA Margin - 3 Yr. Avg. -5.8%
Operating Margin 0.4%
Oper. Margin - 3 Yr. Avg. -5.8%
Pre-Tax Margin -3.8%
Pre-Tax Margin - 3 Yr. Avg. -12.1%
Net Profit Margin -4.4%
Net Profit Margin - 3 Yr. Avg. -11.5%
Effective Tax Rate -15.4%
Eff/ Tax Rate - 3 Yr. Avg. -0.4%
Payout Ratio 0%

MX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MX stock intrinsic value calculation we used $751 million for the last fiscal year's total revenue generated by MagnaChip Semiconductor Corporation. The default revenue input number comes from 0001 income statement of MagnaChip Semiconductor Corporation. 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 MX stock valuation model: a) initial revenue growth rate of 2.8% 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 8.3%, whose default value for MX is calculated based on our internal credit rating of MagnaChip Semiconductor Corporation, 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 MagnaChip Semiconductor Corporation.
    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 MX stock the variable cost ratio is equal to 88.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $40 million in the base year in the intrinsic value calculation for MX 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 7.3% for MagnaChip Semiconductor Corporation.

Corporate tax rate of 27% is the nominal tax rate for MagnaChip Semiconductor Corporation. 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 MX 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 MX are equal to 27.4%.

Life of production assets of 6.5 years is the average useful life of capital assets used in MagnaChip Semiconductor Corporation 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 MX is equal to 11.7%. 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 - $-17.31 million for MagnaChip Semiconductor Corporation - 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 34.091 million for MagnaChip Semiconductor Corporation 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 MagnaChip Semiconductor Corporation at the current share price and the inputted number of shares is $0.4 billion.

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