Intrinsic value of Nova Lifestyle - NVFY

Previous Close

$0.90

  Intrinsic Value

$32.39

stock screener

  Rating & Target

str. buy

+999%

Previous close

$0.90

 
Intrinsic value

$32.39

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of NVFY 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 0.0

 

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, %
  23.50
  21.65
  19.99
  18.49
  17.14
  15.92
  14.83
  13.85
  12.96
  12.17
  11.45
  10.81
  10.22
  9.70
  9.23
  8.81
  8.43
  8.09
  7.78
  7.50
  7.25
  7.02
  6.82
  6.64
  6.48
  6.33
  6.20
  6.08
  5.97
  5.87
Revenue, $m
  132
  160
  192
  227
  266
  309
  355
  404
  456
  512
  570
  632
  696
  764
  835
  908
  985
  1,064
  1,147
  1,233
  1,322
  1,415
  1,512
  1,612
  1,717
  1,825
  1,938
  2,056
  2,179
  2,307
Variable operating expenses, $m
  62
  75
  90
  107
  125
  145
  166
  189
  214
  240
  267
  296
  326
  357
  390
  425
  461
  498
  537
  577
  619
  662
  707
  754
  803
  854
  907
  962
  1,019
  1,079
Fixed operating expenses, $m
  51
  52
  53
  55
  56
  57
  58
  60
  61
  62
  64
  65
  66
  68
  69
  71
  72
  74
  76
  77
  79
  81
  82
  84
  86
  88
  90
  92
  94
  96
Total operating expenses, $m
  113
  127
  143
  162
  181
  202
  224
  249
  275
  302
  331
  361
  392
  425
  459
  496
  533
  572
  613
  654
  698
  743
  789
  838
  889
  942
  997
  1,054
  1,113
  1,175
Operating income, $m
  18
  32
  48
  66
  86
  107
  130
  155
  181
  210
  240
  271
  304
  339
  375
  412
  452
  492
  535
  579
  625
  672
  722
  774
  827
  883
  941
  1,002
  1,065
  1,131
EBITDA, $m
  20
  34
  50
  68
  87
  109
  132
  157
  184
  213
  243
  275
  308
  343
  379
  417
  457
  498
  541
  585
  632
  680
  730
  782
  836
  893
  952
  1,013
  1,077
  1,143
Interest expense (income), $m
  0
  0
  0
  1
  1
  1
  1
  1
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  10
  10
  11
  12
  12
Earnings before tax, $m
  18
  32
  48
  65
  85
  106
  129
  153
  180
  207
  237
  268
  301
  335
  371
  408
  447
  487
  529
  573
  618
  665
  714
  765
  818
  874
  931
  991
  1,054
  1,119
Tax expense, $m
  5
  9
  13
  18
  23
  29
  35
  41
  48
  56
  64
  72
  81
  90
  100
  110
  121
  131
  143
  155
  167
  180
  193
  207
  221
  236
  251
  268
  285
  302
Net income, $m
  13
  23
  35
  48
  62
  77
  94
  112
  131
  151
  173
  196
  220
  245
  271
  298
  326
  356
  386
  418
  451
  486
  521
  559
  597
  638
  680
  724
  769
  817

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
  95
  116
  139
  165
  193
  224
  257
  293
  331
  371
  413
  458
  505
  554
  605
  658
  713
  771
  831
  893
  958
  1,026
  1,096
  1,168
  1,244
  1,323
  1,405
  1,490
  1,579
  1,672
Adjusted assets (=assets-cash), $m
  95
  116
  139
  165
  193
  224
  257
  293
  331
  371
  413
  458
  505
  554
  605
  658
  713
  771
  831
  893
  958
  1,026
  1,096
  1,168
  1,244
  1,323
  1,405
  1,490
  1,579
  1,672
Revenue / Adjusted assets
  1.389
  1.379
  1.381
  1.376
  1.378
  1.379
  1.381
  1.379
  1.378
  1.380
  1.380
  1.380
  1.378
  1.379
  1.380
  1.380
  1.381
  1.380
  1.380
  1.381
  1.380
  1.379
  1.380
  1.380
  1.380
  1.379
  1.379
  1.380
  1.380
  1.380
Average production assets, $m
  3
  4
  5
  6
  7
  8
  9
  10
  12
  13
  15
  16
  18
  20
  22
  24
  26
  28
  30
  32
  34
  37
  39
  42
  45
  47
  50
  53
  57
  60
Working capital, $m
  66
  80
  96
  114
  133
  154
  177
  202
  228
  256
  285
  316
  348
  382
  417
  454
  492
  532
  573
  616
  661
  708
  756
  806
  858
  913
  969
  1,028
  1,089
  1,153
Total debt, $m
  7
  10
  14
  17
  22
  26
  31
  36
  42
  48
  54
  61
  68
  75
  83
  91
  99
  108
  117
  126
  136
  146
  156
  167
  178
  190
  202
  215
  228
  242
Total liabilities, $m
  14
  17
  21
  25
  29
  33
  38
  44
  49
  55
  62
  68
  75
  82
  90
  98
  106
  115
  124
  133
  143
  153
  163
  174
  185
  197
  209
  222
  235
  249
Total equity, $m
  81
  99
  118
  140
  164
  190
  219
  249
  281
  316
  352
  390
  429
  471
  515
  560
  607
  656
  707
  760
  815
  873
  932
  994
  1,059
  1,126
  1,195
  1,268
  1,344
  1,422
Total liabilities and equity, $m
  95
  116
  139
  165
  193
  223
  257
  293
  330
  371
  414
  458
  504
  553
  605
  658
  713
  771
  831
  893
  958
  1,026
  1,095
  1,168
  1,244
  1,323
  1,404
  1,490
  1,579
  1,671
Debt-to-equity ratio
  0.090
  0.100
  0.110
  0.120
  0.130
  0.140
  0.140
  0.150
  0.150
  0.150
  0.150
  0.160
  0.160
  0.160
  0.160
  0.160
  0.160
  0.160
  0.160
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
Adjusted equity ratio
  0.851
  0.851
  0.851
  0.851
  0.851
  0.851
  0.851
  0.851
  0.851
  0.851
  0.851
  0.851
  0.851
  0.851
  0.851
  0.851
  0.851
  0.851
  0.851
  0.851
  0.851
  0.851
  0.851
  0.851
  0.851
  0.851
  0.851
  0.851
  0.851
  0.851

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  13
  23
  35
  48
  62
  77
  94
  112
  131
  151
  173
  196
  220
  245
  271
  298
  326
  356
  386
  418
  451
  486
  521
  559
  597
  638
  680
  724
  769
  817
Depreciation, amort., depletion, $m
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
Funds from operations, $m
  14
  25
  36
  49
  64
  79
  96
  114
  134
  155
  176
  199
  223
  249
  275
  303
  331
  361
  392
  424
  458
  493
  529
  567
  606
  647
  690
  734
  781
  829
Change in working capital, $m
  13
  14
  16
  18
  19
  21
  23
  25
  26
  28
  29
  31
  32
  34
  35
  37
  38
  40
  41
  43
  45
  46
  48
  50
  52
  54
  57
  59
  61
  64
Cash from operations, $m
  2
  10
  20
  32
  44
  58
  73
  90
  108
  127
  147
  168
  191
  215
  240
  266
  293
  321
  351
  381
  413
  446
  481
  517
  554
  593
  633
  675
  719
  765
Maintenance CAPEX, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
New CAPEX, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
Cash from investing activities, $m
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
Free cash flow, $m
  1
  9
  19
  30
  42
  56
  71
  87
  104
  123
  143
  164
  186
  209
  234
  260
  286
  314
  343
  373
  405
  437
  471
  506
  543
  581
  621
  662
  705
  750
Issuance/(repayment) of debt, $m
  3
  3
  3
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
Issuance/(repurchase) of shares, $m
  2
  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  
  5
  3
  3
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
Total cash flow (excl. dividends), $m
  6
  12
  22
  33
  46
  60
  75
  92
  110
  129
  149
  170
  193
  217
  242
  267
  294
  323
  352
  382
  414
  447
  481
  517
  554
  593
  633
  675
  719
  764
Retained Cash Flow (-), $m
  -16
  -18
  -20
  -22
  -24
  -26
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -43
  -45
  -47
  -49
  -51
  -53
  -55
  -57
  -60
  -62
  -64
  -67
  -70
  -73
  -76
  -79
Prev. year cash balance distribution, $m
  3
  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
  -7
  -5
  2
  12
  22
  34
  47
  62
  78
  95
  113
  132
  153
  175
  198
  222
  247
  274
  301
  329
  359
  390
  422
  455
  490
  526
  563
  602
  643
  685
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
  -6
  -5
  2
  10
  17
  25
  32
  39
  45
  50
  54
  57
  58
  59
  58
  56
  54
  50
  46
  42
  37
  32
  28
  23
  19
  15
  12
  9
  7
  5
Current shareholders' claim on cash, %
  95.0
  95.0
  95.0
  95.0
  95.0
  95.0
  95.0
  95.0
  95.0
  95.0
  95.0
  95.0
  95.0
  95.0
  95.0
  95.0
  95.0
  95.0
  95.0
  95.0
  95.0
  95.0
  95.0
  95.0
  95.0
  95.0
  95.0
  95.0
  95.0
  95.0

Nova LifeStyle, Inc. is a manufacturer of contemporary styled residential furniture incorporated into a marketing and sales platform offering retail, as well as online selection. The Company operates through the design, manufacture and sale of furniture segment. The Company monitors trending and work to create design elements that are then integrated into its product lines that can be used as standalone, as well as whole room and home furnishing solutions. Through its global network, the Company also sells (through a third-party manufacturing partner) a range of bedding foundation components. Its LifeStyle brand family includes Diamond Sofa (www.diamondsofa.com), Colorful World, Giorgio Mobili and Bright Swallow International Group Limited (Bright Swallow). The Company's customers principally consist of distributors and retailers having a specific geographic coverage that deploy middle to high-end private label home furnishings.

FINANCIAL RATIOS  of  Nova Lifestyle (NVFY)

Valuation Ratios
P/E Ratio -24.6
Price to Sales 0.3
Price to Book 0.4
Price to Tangible Book
Price to Cash Flow -4.1
Price to Free Cash Flow -4.1
Growth Rates
Sales Growth Rate 3.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate -100%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 12.7%
Interest Coverage 0
Management Effectiveness
Return On Assets -1.2%
Ret/ On Assets - 3 Yr. Avg. 4.6%
Return On Total Capital -1.4%
Ret/ On T. Cap. - 3 Yr. Avg. 6.2%
Return On Equity -1.6%
Return On Equity - 3 Yr. Avg. 7.2%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 15.1%
Gross Margin - 3 Yr. Avg. 17%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 5.9%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 3.9%
Pre-Tax Margin -1.1%
Pre-Tax Margin - 3 Yr. Avg. 4.5%
Net Profit Margin -1.1%
Net Profit Margin - 3 Yr. Avg. 3.4%
Effective Tax Rate 100%
Eff/ Tax Rate - 3 Yr. Avg. 45%
Payout Ratio 0%

NVFY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NVFY stock intrinsic value calculation we used $106.494132 million for the last fiscal year's total revenue generated by Nova Lifestyle. The default revenue input number comes from 0001 income statement of Nova Lifestyle. 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 NVFY stock valuation model: a) initial revenue growth rate of 23.5% 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 NVFY is calculated based on our internal credit rating of Nova Lifestyle, 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 Nova Lifestyle.
    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 NVFY stock the variable cost ratio is equal to 47.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $50 million in the base year in the intrinsic value calculation for NVFY 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 Nova Lifestyle.

Corporate tax rate of 27% is the nominal tax rate for Nova Lifestyle. 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 NVFY 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 NVFY are equal to 2.6%.

Life of production assets of 3.5 years is the average useful life of capital assets used in Nova Lifestyle 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 NVFY 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 - $68.447604 million for Nova Lifestyle - 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 27.585 million for Nova Lifestyle 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 Nova Lifestyle at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ Who Are The Top Investors In Nova LifeStyle Inc (NASDAQ:NVFY)?   [Jun-06-18 12:34PM  Simply Wall St.]
▶ Nova LifeStyle Announces First Quarter Financial Results   [May-14-18 07:45AM  GlobeNewswire]
▶ Best Cheap Stocks To Buy This May   [May-02-18 10:02AM  Simply Wall St.]
▶ Nova LifeStyle Issues FY 2018 Financial Guidance   [Apr-10-18 07:45AM  GlobeNewswire]
▶ Top NasdaqGM Undervalued Stock   [Apr-01-18 10:02AM  Simply Wall St.]
▶ Nova LifeStyle Raises Fourth Quarter 2017 Earnings Guidance   [Jan-22-18 07:45AM  GlobeNewswire]
▶ Nova Lifestyle Gets Blockchain Fever   [Dec-27-17 09:45AM  24/7 Wall St.]
▶ Nova LifeStyle Provides 4th Quarter 2017 Financial Guidance   [Nov-17-17 07:45AM  GlobeNewswire]
▶ Should You Have Nova Lifestyle Incs (NVFY) In Your Portfolio?   [Oct-02-17 07:52PM  Simply Wall St.]
▶ ETFs with exposure to Nova Lifestyle, Inc. : June 6, 2017   [Jun-06-17 11:46AM  Capital Cube]
▶ ETFs with exposure to Nova Lifestyle, Inc. : May 23, 2017   [May-23-17 01:02PM  Capital Cube]
▶ Nova LifeStyle Reports First Quarter 2017 Financial Results   [May-15-17 04:00PM  GlobeNewswire]
▶ ETFs with exposure to Nova Lifestyle, Inc. : May 12, 2017   [May-12-17 04:17PM  Capital Cube]
▶ ETFs with exposure to Nova Lifestyle, Inc. : May 1, 2017   [May-01-17 04:12PM  Capital Cube]
▶ Five Stocks Under $5.00 for December (NAK, GGB)   [Nov-23-16 10:59AM  Investopedia]
▶ Nova LifeStyle Reports Third Quarter 2016 Financial Results   [Nov-14-16 08:30AM  GlobeNewswire]
▶ Nova LifeStyle Announces Leadership Change   [Oct-10-16 07:00AM  GlobeNewswire]
▶ Heres Why These Five Stocks Are on the Move Today   [Sep-30-16 12:50PM  Insider Monkey]

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