Intrinsic value of OneSmart International Education Group A - ONE

Previous Close

$7.74

  Intrinsic Value

$218.54

stock screener

  Rating & Target

str. buy

+999%

Previous close

$7.74

 
Intrinsic value

$218.54

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of ONE 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, %
  36.30
  33.17
  30.35
  27.82
  25.54
  23.48
  21.63
  19.97
  18.47
  17.13
  15.91
  14.82
  13.84
  12.96
  12.16
  11.44
  10.80
  10.22
  9.70
  9.23
  8.81
  8.42
  8.08
  7.77
  7.50
  7.25
  7.02
  6.82
  6.64
  6.47
Revenue, $m
  425
  566
  738
  943
  1,184
  1,462
  1,778
  2,134
  2,528
  2,961
  3,432
  3,941
  4,486
  5,067
  5,683
  6,334
  7,018
  7,735
  8,485
  9,268
  10,084
  10,934
  11,818
  12,736
  13,691
  14,683
  15,714
  16,786
  17,900
  19,059
Variable operating expenses, $m
  361
  480
  625
  799
  1,002
  1,238
  1,505
  1,805
  2,139
  2,505
  2,902
  3,332
  3,794
  4,285
  4,806
  5,356
  5,935
  6,541
  7,176
  7,838
  8,528
  9,247
  9,994
  10,771
  11,578
  12,417
  13,289
  14,196
  15,138
  16,118
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
  361
  480
  625
  799
  1,002
  1,238
  1,505
  1,805
  2,139
  2,505
  2,902
  3,332
  3,794
  4,285
  4,806
  5,356
  5,935
  6,541
  7,176
  7,838
  8,528
  9,247
  9,994
  10,771
  11,578
  12,417
  13,289
  14,196
  15,138
  16,118
Operating income, $m
  65
  86
  113
  145
  182
  225
  273
  328
  389
  456
  530
  608
  692
  782
  877
  977
  1,083
  1,194
  1,309
  1,430
  1,556
  1,687
  1,824
  1,966
  2,113
  2,266
  2,425
  2,591
  2,762
  2,941
EBITDA, $m
  75
  99
  130
  166
  208
  257
  312
  375
  444
  520
  602
  692
  787
  889
  998
  1,112
  1,232
  1,358
  1,489
  1,627
  1,770
  1,919
  2,074
  2,236
  2,403
  2,577
  2,758
  2,946
  3,142
  3,345
Interest expense (income), $m
  0
  0
  -8
  0
  9
  21
  34
  49
  66
  86
  107
  131
  157
  185
  215
  246
  280
  316
  353
  392
  433
  476
  521
  568
  616
  666
  718
  773
  829
  888
  949
Earnings before tax, $m
  65
  94
  113
  135
  161
  191
  224
  262
  303
  348
  398
  451
  508
  567
  631
  697
  767
  841
  917
  997
  1,080
  1,166
  1,256
  1,350
  1,447
  1,548
  1,652
  1,761
  1,875
  1,993
Tax expense, $m
  17
  25
  30
  36
  43
  51
  61
  71
  82
  94
  108
  122
  137
  153
  170
  188
  207
  227
  248
  269
  292
  315
  339
  364
  391
  418
  446
  476
  506
  538
Net income, $m
  47
  69
  82
  99
  118
  139
  164
  191
  221
  254
  291
  329
  370
  414
  460
  509
  560
  614
  669
  728
  788
  851
  917
  985
  1,056
  1,130
  1,206
  1,286
  1,369
  1,455

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
  479
  638
  831
  1,062
  1,333
  1,647
  2,003
  2,403
  2,847
  3,334
  3,865
  4,438
  5,052
  5,706
  6,400
  7,133
  7,903
  8,711
  9,555
  10,437
  11,356
  12,313
  13,308
  14,343
  15,418
  16,535
  17,696
  18,903
  20,158
  21,463
Adjusted assets (=assets-cash), $m
  479
  638
  831
  1,062
  1,333
  1,647
  2,003
  2,403
  2,847
  3,334
  3,865
  4,438
  5,052
  5,706
  6,400
  7,133
  7,903
  8,711
  9,555
  10,437
  11,356
  12,313
  13,308
  14,343
  15,418
  16,535
  17,696
  18,903
  20,158
  21,463
Revenue / Adjusted assets
  0.887
  0.887
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
Average production assets, $m
  45
  60
  78
  100
  126
  155
  189
  226
  268
  314
  364
  418
  476
  537
  602
  671
  744
  820
  899
  982
  1,069
  1,159
  1,253
  1,350
  1,451
  1,556
  1,666
  1,779
  1,897
  2,020
Working capital, $m
  -366
  -487
  -635
  -811
  -1,018
  -1,257
  -1,529
  -1,835
  -2,174
  -2,546
  -2,951
  -3,389
  -3,858
  -4,358
  -4,888
  -5,447
  -6,035
  -6,652
  -7,297
  -7,971
  -8,672
  -9,403
  -10,163
  -10,953
  -11,774
  -12,628
  -13,514
  -14,436
  -15,394
  -16,391
Total debt, $m
  -141
  2
  176
  384
  628
  910
  1,230
  1,590
  1,990
  2,429
  2,906
  3,422
  3,974
  4,563
  5,188
  5,847
  6,540
  7,267
  8,028
  8,821
  9,648
  10,509
  11,405
  12,336
  13,304
  14,310
  15,355
  16,441
  17,570
  18,745
Total liabilities, $m
  431
  574
  748
  956
  1,200
  1,482
  1,803
  2,162
  2,562
  3,001
  3,478
  3,994
  4,547
  5,136
  5,760
  6,419
  7,113
  7,840
  8,600
  9,393
  10,221
  11,082
  11,977
  12,908
  13,876
  14,882
  15,927
  17,013
  18,142
  19,317
Total equity, $m
  48
  64
  83
  106
  133
  165
  200
  240
  285
  333
  386
  444
  505
  571
  640
  713
  790
  871
  956
  1,044
  1,136
  1,231
  1,331
  1,434
  1,542
  1,654
  1,770
  1,890
  2,016
  2,146
Total liabilities and equity, $m
  479
  638
  831
  1,062
  1,333
  1,647
  2,003
  2,402
  2,847
  3,334
  3,864
  4,438
  5,052
  5,707
  6,400
  7,132
  7,903
  8,711
  9,556
  10,437
  11,357
  12,313
  13,308
  14,342
  15,418
  16,536
  17,697
  18,903
  20,158
  21,463
Debt-to-equity ratio
  -2.950
  0.020
  2.110
  3.610
  4.710
  5.520
  6.140
  6.620
  6.990
  7.280
  7.520
  7.710
  7.870
  8.000
  8.110
  8.200
  8.280
  8.340
  8.400
  8.450
  8.500
  8.540
  8.570
  8.600
  8.630
  8.650
  8.680
  8.700
  8.720
  8.730
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
  47
  69
  82
  99
  118
  139
  164
  191
  221
  254
  291
  329
  370
  414
  460
  509
  560
  614
  669
  728
  788
  851
  917
  985
  1,056
  1,130
  1,206
  1,286
  1,369
  1,455
Depreciation, amort., depletion, $m
  10
  13
  17
  21
  26
  32
  39
  46
  55
  64
  73
  84
  95
  107
  120
  134
  149
  164
  180
  196
  214
  232
  251
  270
  290
  311
  333
  356
  379
  404
Funds from operations, $m
  57
  82
  99
  120
  144
  171
  202
  237
  276
  318
  364
  413
  466
  522
  581
  643
  709
  778
  849
  924
  1,002
  1,083
  1,168
  1,255
  1,346
  1,441
  1,539
  1,642
  1,748
  1,859
Change in working capital, $m
  -97
  -121
  -148
  -177
  -207
  -239
  -272
  -305
  -339
  -372
  -405
  -437
  -469
  -500
  -530
  -559
  -588
  -617
  -645
  -673
  -702
  -731
  -760
  -790
  -821
  -853
  -887
  -922
  -958
  -997
Cash from operations, $m
  155
  203
  247
  296
  351
  410
  475
  543
  615
  690
  769
  850
  935
  1,021
  1,111
  1,203
  1,297
  1,394
  1,494
  1,598
  1,704
  1,814
  1,928
  2,045
  2,167
  2,294
  2,426
  2,563
  2,706
  2,855
Maintenance CAPEX, $m
  -7
  -9
  -12
  -16
  -20
  -25
  -31
  -38
  -45
  -54
  -63
  -73
  -84
  -95
  -107
  -120
  -134
  -149
  -164
  -180
  -196
  -214
  -232
  -251
  -270
  -290
  -311
  -333
  -356
  -379
New CAPEX, $m
  -12
  -15
  -18
  -22
  -26
  -29
  -34
  -38
  -42
  -46
  -50
  -54
  -58
  -62
  -65
  -69
  -73
  -76
  -80
  -83
  -87
  -90
  -94
  -97
  -101
  -105
  -109
  -114
  -118
  -123
Cash from investing activities, $m
  -19
  -24
  -30
  -38
  -46
  -54
  -65
  -76
  -87
  -100
  -113
  -127
  -142
  -157
  -172
  -189
  -207
  -225
  -244
  -263
  -283
  -304
  -326
  -348
  -371
  -395
  -420
  -447
  -474
  -502
Free cash flow, $m
  136
  179
  217
  259
  305
  356
  410
  467
  528
  591
  656
  724
  793
  865
  938
  1,013
  1,090
  1,170
  1,251
  1,335
  1,421
  1,510
  1,602
  1,697
  1,796
  1,899
  2,006
  2,117
  2,232
  2,353
Issuance/(repayment) of debt, $m
  -142
  143
  174
  208
  244
  282
  321
  360
  399
  439
  478
  516
  553
  589
  625
  659
  693
  727
  760
  794
  827
  861
  896
  931
  968
  1,006
  1,045
  1,086
  1,129
  1,175
Issuance/(repurchase) of shares, $m
  222
  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  
  80
  143
  174
  208
  244
  282
  321
  360
  399
  439
  478
  516
  553
  589
  625
  659
  693
  727
  760
  794
  827
  861
  896
  931
  968
  1,006
  1,045
  1,086
  1,129
  1,175
Total cash flow (excl. dividends), $m
  216
  322
  391
  467
  549
  638
  731
  827
  927
  1,030
  1,134
  1,239
  1,346
  1,454
  1,563
  1,672
  1,784
  1,896
  2,011
  2,128
  2,248
  2,371
  2,498
  2,629
  2,764
  2,904
  3,051
  3,203
  3,362
  3,528
Retained Cash Flow (-), $m
  -270
  -16
  -19
  -23
  -27
  -31
  -36
  -40
  -44
  -49
  -53
  -57
  -61
  -65
  -69
  -73
  -77
  -81
  -84
  -88
  -92
  -96
  -100
  -103
  -108
  -112
  -116
  -121
  -125
  -131
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
  -53
  306
  371
  444
  522
  606
  695
  787
  883
  981
  1,081
  1,182
  1,285
  1,388
  1,493
  1,599
  1,707
  1,816
  1,927
  2,040
  2,156
  2,275
  2,398
  2,525
  2,656
  2,793
  2,934
  3,082
  3,236
  3,397
Discount rate, %
  5.30
  5.57
  5.84
  6.14
  6.44
  6.76
  7.10
  7.46
  7.83
  8.22
  8.63
  9.06
  9.52
  9.99
  10.49
  11.02
  11.57
  12.15
  12.76
  13.39
  14.06
  14.77
  15.50
  16.28
  17.09
  17.95
  18.85
  19.79
  20.78
  21.82
PV of cash for distribution, $m
  -51
  275
  313
  350
  382
  409
  430
  443
  448
  445
  435
  417
  394
  366
  334
  300
  265
  231
  197
  165
  136
  110
  87
  68
  51
  38
  28
  20
  14
  9
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
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

FINANCIAL RATIOS  of  OneSmart International Education Group A (ONE)

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%

ONE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ONE stock intrinsic value calculation we used $311.892830074 million for the last fiscal year's total revenue generated by OneSmart International Education Group A. The default revenue input number comes from 0001 income statement of OneSmart International Education Group A. 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 ONE stock valuation model: a) initial revenue growth rate of 36.3% 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 5.3%, whose default value for ONE is calculated based on our internal credit rating of OneSmart International Education Group A, 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 OneSmart International Education Group A.
    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 ONE stock the variable cost ratio is equal to 84.9%.

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 ONE 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 OneSmart International Education Group A.

Corporate tax rate of 27% is the nominal tax rate for OneSmart International Education Group A. 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 ONE 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 ONE are equal to 10.6%.

Life of production assets of 3.7 years is the average useful life of capital assets used in OneSmart International Education Group A 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 ONE is equal to -86%. 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 - $-221.633772927 million for OneSmart International Education Group A - 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 16.3 million for OneSmart International Education Group A 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 OneSmart International Education Group A at the current share price and the inputted number of shares is $0.1 billion.

COMPANY NEWS

▶ OneSmart Announces Pricing of Initial Public Offering   [Mar-28-18 06:30AM  PR Newswire]

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