Intrinsic value of PLDT ADR - PHI

Previous Close

$25.29

  Intrinsic Value

$5,696

stock screener

  Rating & Target

str. buy

+999%

Previous close

$25.29

 
Intrinsic value

$5,696

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of PHI 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 2016), $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 5.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2017
   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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  264,419
  408,528
  610,953
  886,462
  1,250,670
  1,719,383
  2,307,915
  3,030,438
  3,899,438
  4,925,307
  6,116,113
  7,477,535
  9,012,944
  10,723,624
  12,609,077
  14,667,384
  16,895,596
  19,290,116
  21,847,060
  24,562,581
  27,433,140
  30,455,736
  33,628,078
  36,948,722
  40,417,155
  44,033,860
  47,800,338
  51,719,122
  55,793,768
  60,028,833
Variable operating expenses, $m
  211,020
  322,196
  478,362
  690,910
  971,887
  1,333,486
  1,787,523
  2,344,931
  3,015,341
  3,806,772
  4,718,420
  5,768,721
  6,953,248
  8,272,993
  9,727,570
  11,315,499
  13,034,506
  14,881,815
  16,854,430
  18,949,382
  21,163,943
  23,495,796
  25,943,174
  28,504,963
  31,180,768
  33,970,960
  36,876,698
  39,899,937
  43,043,418
  46,310,659
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
  211,020
  322,196
  478,362
  690,910
  971,887
  1,333,486
  1,787,523
  2,344,931
  3,015,341
  3,806,772
  4,718,420
  5,768,721
  6,953,248
  8,272,993
  9,727,570
  11,315,499
  13,034,506
  14,881,815
  16,854,430
  18,949,382
  21,163,943
  23,495,796
  25,943,174
  28,504,963
  31,180,768
  33,970,960
  36,876,698
  39,899,937
  43,043,418
  46,310,659
Operating income, $m
  53,399
  86,331
  132,591
  195,552
  278,783
  385,896
  520,392
  685,507
  884,096
  1,118,535
  1,397,693
  1,708,814
  2,059,696
  2,450,631
  2,881,507
  3,351,885
  3,861,090
  4,408,301
  4,992,630
  5,613,199
  6,269,197
  6,959,940
  7,684,904
  8,443,759
  9,236,388
  10,062,900
  10,923,640
  11,819,185
  12,750,350
  13,718,174
EBITDA, $m
  82,770
  127,880
  191,244
  277,486
  391,493
  538,212
  722,438
  948,607
  1,220,627
  1,541,751
  1,914,505
  2,340,666
  2,821,289
  3,356,778
  3,946,974
  4,591,279
  5,288,768
  6,038,316
  6,838,707
  7,688,737
  8,587,297
  9,533,450
  10,526,477
  11,565,926
  12,651,637
  13,783,761
  14,962,768
  16,189,451
  17,464,923
  18,790,610
Interest expense (income), $m
  141
  14,432
  31,565
  56,500
  91,527
  139,199
  202,220
  283,323
  385,160
  510,181
  660,548
  838,059
  1,044,109
  1,279,682
  1,545,361
  1,841,368
  2,167,616
  2,523,774
  2,909,332
  3,323,666
  3,766,106
  4,235,984
  4,732,690
  5,255,703
  5,804,628
  6,379,214
  6,979,372
  7,605,187
  8,256,918
  8,935,002
  9,640,057
Earnings before tax, $m
  38,966
  54,767
  76,091
  104,025
  139,584
  183,677
  237,068
  300,347
  373,915
  457,987
  559,635
  664,705
  780,013
  905,270
  1,040,140
  1,184,269
  1,337,316
  1,498,969
  1,668,964
  1,847,093
  2,033,213
  2,227,250
  2,429,201
  2,639,131
  2,857,174
  3,083,528
  3,318,453
  3,562,268
  3,815,347
  4,078,117
Tax expense, $m
  10,521
  14,787
  20,544
  28,087
  37,688
  49,593
  64,008
  81,094
  100,957
  123,656
  151,101
  179,470
  210,604
  244,423
  280,838
  319,753
  361,075
  404,722
  450,620
  498,715
  548,967
  601,357
  655,884
  712,565
  771,437
  832,552
  895,982
  961,812
  1,030,144
  1,101,092
Net income, $m
  28,445
  39,980
  55,546
  75,938
  101,896
  134,084
  173,060
  219,254
  272,958
  334,330
  408,533
  485,235
  569,410
  660,847
  759,302
  864,516
  976,241
  1,094,248
  1,218,344
  1,348,378
  1,484,245
  1,625,892
  1,773,317
  1,926,566
  2,085,737
  2,250,975
  2,422,470
  2,600,456
  2,785,203
  2,977,026

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
  759,825
  1,173,930
  1,755,612
  2,547,306
  3,593,879
  4,940,755
  6,631,939
  8,708,156
  11,205,280
  14,153,180
  17,575,039
  21,487,169
  25,899,263
  30,815,011
  36,232,979
  42,147,655
  48,550,563
  55,431,368
  62,778,909
  70,582,129
  78,830,862
  87,516,482
  96,632,409
  106,174,488
  116,141,251
  126,534,080
  137,357,293
  148,618,167
  160,326,918
  172,496,647
Adjusted assets (=assets-cash), $m
  759,825
  1,173,930
  1,755,612
  2,547,306
  3,593,879
  4,940,755
  6,631,939
  8,708,156
  11,205,280
  14,153,180
  17,575,039
  21,487,169
  25,899,263
  30,815,011
  36,232,979
  42,147,655
  48,550,563
  55,431,368
  62,778,909
  70,582,129
  78,830,862
  87,516,482
  96,632,409
  106,174,488
  116,141,251
  126,534,080
  137,357,293
  148,618,167
  160,326,918
  172,496,647
Revenue / Adjusted assets
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
Average production assets, $m
  223,434
  345,206
  516,255
  749,061
  1,056,816
  1,452,879
  1,950,188
  2,560,720
  3,295,025
  4,161,884
  5,168,116
  6,318,517
  7,615,937
  9,061,462
  10,654,670
  12,393,940
  14,276,779
  16,300,148
  18,460,766
  20,755,381
  23,181,003
  25,735,097
  28,415,726
  31,221,670
  34,152,496
  37,208,611
  40,391,285
  43,702,658
  47,145,734
  50,724,364
Working capital, $m
  -81,177
  -125,418
  -187,563
  -272,144
  -383,956
  -527,851
  -708,530
  -930,345
  -1,197,127
  -1,512,069
  -1,877,647
  -2,295,603
  -2,766,974
  -3,292,153
  -3,870,987
  -4,502,887
  -5,186,948
  -5,922,066
  -6,707,048
  -7,540,712
  -8,421,974
  -9,349,911
  -10,323,820
  -11,343,258
  -12,408,067
  -13,518,395
  -14,674,704
  -15,877,770
  -17,128,687
  -18,428,852
Total debt, $m
  404,673
  724,362
  1,173,421
  1,784,608
  2,592,563
  3,632,351
  4,937,945
  6,540,784
  8,468,564
  10,744,343
  13,386,018
  16,406,182
  19,812,319
  23,607,277
  27,789,948
  32,356,078
  37,299,123
  42,611,104
  48,283,406
  54,307,492
  60,675,514
  67,380,812
  74,418,307
  81,784,793
  89,479,134
  97,502,398
  105,857,918
  114,551,313
  123,590,469
  132,985,499
Total liabilities, $m
  586,585
  906,274
  1,355,333
  1,966,520
  2,774,475
  3,814,263
  5,119,857
  6,722,696
  8,650,476
  10,926,255
  13,567,930
  16,588,094
  19,994,231
  23,789,189
  27,971,860
  32,537,990
  37,481,035
  42,793,016
  48,465,318
  54,489,404
  60,857,426
  67,562,724
  74,600,219
  81,966,705
  89,661,046
  97,684,310
  106,039,830
  114,733,225
  123,772,381
  133,167,411
Total equity, $m
  173,240
  267,656
  400,280
  580,786
  819,404
  1,126,492
  1,512,082
  1,985,460
  2,554,804
  3,226,925
  4,007,109
  4,899,074
  5,905,032
  7,025,823
  8,261,119
  9,609,665
  11,069,528
  12,638,352
  14,313,591
  16,092,725
  17,973,437
  19,953,758
  22,032,189
  24,207,783
  26,480,205
  28,849,770
  31,317,463
  33,884,942
  36,554,537
  39,329,235
Total liabilities and equity, $m
  759,825
  1,173,930
  1,755,613
  2,547,306
  3,593,879
  4,940,755
  6,631,939
  8,708,156
  11,205,280
  14,153,180
  17,575,039
  21,487,168
  25,899,263
  30,815,012
  36,232,979
  42,147,655
  48,550,563
  55,431,368
  62,778,909
  70,582,129
  78,830,863
  87,516,482
  96,632,408
  106,174,488
  116,141,251
  126,534,080
  137,357,293
  148,618,167
  160,326,918
  172,496,646
Debt-to-equity ratio
  2.340
  2.710
  2.930
  3.070
  3.160
  3.220
  3.270
  3.290
  3.310
  3.330
  3.340
  3.350
  3.360
  3.360
  3.360
  3.370
  3.370
  3.370
  3.370
  3.370
  3.380
  3.380
  3.380
  3.380
  3.380
  3.380
  3.380
  3.380
  3.380
  3.380
Adjusted equity ratio
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  28,445
  39,980
  55,546
  75,938
  101,896
  134,084
  173,060
  219,254
  272,958
  334,330
  408,533
  485,235
  569,410
  660,847
  759,302
  864,516
  976,241
  1,094,248
  1,218,344
  1,348,378
  1,484,245
  1,625,892
  1,773,317
  1,926,566
  2,085,737
  2,250,975
  2,422,470
  2,600,456
  2,785,203
  2,977,026
Depreciation, amort., depletion, $m
  29,371
  41,549
  58,654
  81,934
  112,710
  152,316
  202,047
  263,100
  336,530
  423,216
  516,812
  631,852
  761,594
  906,146
  1,065,467
  1,239,394
  1,427,678
  1,630,015
  1,846,077
  2,075,538
  2,318,100
  2,573,510
  2,841,573
  3,122,167
  3,415,250
  3,720,861
  4,039,129
  4,370,266
  4,714,573
  5,072,436
Funds from operations, $m
  57,817
  81,528
  114,200
  157,873
  214,606
  286,400
  375,107
  482,354
  609,489
  757,547
  925,345
  1,117,086
  1,331,004
  1,566,994
  1,824,769
  2,103,910
  2,403,918
  2,724,262
  3,064,420
  3,423,916
  3,802,346
  4,199,402
  4,614,889
  5,048,733
  5,500,986
  5,971,836
  6,461,599
  6,970,721
  7,499,777
  8,049,462
Change in working capital, $m
  -30,441
  -44,241
  -62,145
  -84,581
  -111,812
  -143,895
  -180,679
  -221,815
  -266,783
  -314,942
  -365,578
  -417,956
  -471,371
  -525,179
  -578,834
  -631,900
  -684,061
  -735,118
  -784,982
  -833,665
  -881,262
  -927,937
  -973,909
  -1,019,438
  -1,064,809
  -1,110,328
  -1,156,309
  -1,203,067
  -1,250,916
  -1,300,165
Cash from operations, $m
  88,258
  125,770
  176,344
  242,454
  326,417
  430,295
  555,786
  704,168
  876,271
  1,072,488
  1,290,923
  1,535,043
  1,802,374
  2,092,172
  2,403,603
  2,735,810
  3,087,980
  3,459,380
  3,849,402
  4,257,581
  4,683,607
  5,127,339
  5,588,798
  6,068,170
  6,565,796
  7,082,165
  7,617,908
  8,173,788
  8,750,693
  9,349,627
Maintenance CAPEX, $m
  -13,959
  -22,343
  -34,521
  -51,626
  -74,906
  -105,682
  -145,288
  -195,019
  -256,072
  -329,502
  -416,188
  -516,812
  -631,852
  -761,594
  -906,146
  -1,065,467
  -1,239,394
  -1,427,678
  -1,630,015
  -1,846,077
  -2,075,538
  -2,318,100
  -2,573,510
  -2,841,573
  -3,122,167
  -3,415,250
  -3,720,861
  -4,039,129
  -4,370,266
  -4,714,573
New CAPEX, $m
  -83,843
  -121,772
  -171,050
  -232,805
  -307,755
  -396,062
  -497,310
  -610,532
  -734,304
  -866,859
  -1,006,232
  -1,150,401
  -1,297,421
  -1,445,525
  -1,593,208
  -1,739,270
  -1,882,839
  -2,023,369
  -2,160,618
  -2,294,615
  -2,425,622
  -2,554,093
  -2,680,629
  -2,805,944
  -2,930,826
  -3,056,115
  -3,182,674
  -3,311,373
  -3,443,075
  -3,578,630
Cash from investing activities, $m
  -97,802
  -144,115
  -205,571
  -284,431
  -382,661
  -501,744
  -642,598
  -805,551
  -990,376
  -1,196,361
  -1,422,420
  -1,667,213
  -1,929,273
  -2,207,119
  -2,499,354
  -2,804,737
  -3,122,233
  -3,451,047
  -3,790,633
  -4,140,692
  -4,501,160
  -4,872,193
  -5,254,139
  -5,647,517
  -6,052,993
  -6,471,365
  -6,903,535
  -7,350,502
  -7,813,341
  -8,293,203
Free cash flow, $m
  -9,544
  -18,345
  -29,226
  -41,977
  -56,244
  -71,449
  -86,812
  -101,383
  -114,105
  -123,873
  -131,498
  -132,170
  -126,898
  -114,946
  -95,751
  -68,926
  -34,254
  8,333
  58,770
  116,889
  182,447
  255,145
  334,659
  420,654
  512,802
  610,800
  714,373
  823,287
  937,352
  1,056,423
Issuance/(repayment) of debt, $m
  219,641
  319,689
  449,059
  611,187
  807,955
  1,039,789
  1,305,594
  1,602,839
  1,927,780
  2,275,778
  2,641,675
  3,020,165
  3,406,137
  3,794,958
  4,182,671
  4,566,130
  4,943,045
  5,311,981
  5,672,302
  6,024,086
  6,368,022
  6,705,298
  7,037,495
  7,366,485
  7,694,341
  8,023,264
  8,355,520
  8,693,395
  9,039,156
  9,395,030
Issuance/(repurchase) of shares, $m
  36,620
  54,436
  77,077
  104,568
  136,723
  173,004
  212,530
  254,124
  296,386
  337,791
  371,650
  406,731
  436,548
  459,943
  475,995
  484,030
  483,622
  474,576
  456,896
  430,756
  396,466
  354,429
  305,115
  249,029
  186,685
  118,590
  45,222
  0
  0
  0
Cash from financing (excl. dividends), $m  
  256,261
  374,125
  526,136
  715,755
  944,678
  1,212,793
  1,518,124
  1,856,963
  2,224,166
  2,613,569
  3,013,325
  3,426,896
  3,842,685
  4,254,901
  4,658,666
  5,050,160
  5,426,667
  5,786,557
  6,129,198
  6,454,842
  6,764,488
  7,059,727
  7,342,610
  7,615,514
  7,881,026
  8,141,854
  8,400,742
  8,693,395
  9,039,156
  9,395,030
Total cash flow (excl. dividends), $m
  246,717
  355,780
  496,910
  673,778
  888,433
  1,141,343
  1,431,313
  1,755,580
  2,110,061
  2,489,696
  2,881,828
  3,294,726
  3,715,787
  4,139,955
  4,562,915
  4,981,234
  5,392,414
  5,794,890
  6,187,967
  6,571,732
  6,946,934
  7,314,872
  7,677,269
  8,036,167
  8,393,828
  8,752,653
  9,115,115
  9,516,682
  9,976,508
  10,451,454
Retained Cash Flow (-), $m
  -65,065
  -94,416
  -132,624
  -180,506
  -238,619
  -307,088
  -385,590
  -473,377
  -569,344
  -672,121
  -780,184
  -891,966
  -1,005,958
  -1,120,791
  -1,235,297
  -1,348,546
  -1,459,863
  -1,568,823
  -1,675,239
  -1,779,134
  -1,880,711
  -1,980,321
  -2,078,431
  -2,175,594
  -2,272,422
  -2,369,565
  -2,467,693
  -2,567,479
  -2,669,595
  -2,774,698
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
  181,652
  261,364
  364,287
  493,272
  649,815
  834,255
  1,045,723
  1,282,203
  1,540,717
  1,817,575
  2,101,644
  2,402,760
  2,709,829
  3,019,164
  3,327,618
  3,632,688
  3,932,551
  4,226,066
  4,512,728
  4,792,597
  5,066,223
  5,334,551
  5,598,838
  5,860,573
  6,121,406
  6,383,088
  6,647,422
  6,949,203
  7,306,912
  7,676,756
Discount rate, %
  4.40
  4.62
  4.85
  5.09
  5.35
  5.62
  5.90
  6.19
  6.50
  6.83
  7.17
  7.53
  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
PV of cash for distribution, $m
  173,996
  238,790
  316,028
  404,373
  500,787
  601,076
  700,241
  792,953
  874,071
  939,137
  981,480
  1,005,942
  1,008,256
  989,156
  950,581
  895,408
  827,145
  749,615
  666,658
  581,885
  498,482
  419,080
  345,693
  279,698
  221,875
  172,470
  131,290
  98,267
  72,379
  52,056
Current shareholders' claim on cash, %
  67.4
  46.5
  33.0
  24.0
  18.0
  13.8
  10.9
  8.8
  7.2
  6.1
  5.2
  4.6
  4.0
  3.6
  3.3
  3.1
  2.9
  2.7
  2.6
  2.5
  2.4
  2.3
  2.3
  2.2
  2.2
  2.2
  2.2
  2.2
  2.2
  2.2

PLDT, Inc., formerly Philippine Long Distance Telephone Company (PLDT), is a telecommunications service provider in the Philippines. The Company operates through three business segments: Wireless, Fixed Line and Others. The Company, through its business segments, offers a range of telecommunications services across the Philippines' fiber optic backbone and wireless and fixed line networks. The Company's wireless segment provides cellular, wireless broadband and other services, and digital platforms and mobile financial services. Its Fixed Line segment provides local exchange, international long distance, national long distance, data and other network and miscellaneous services under its fixed line business. It offers postpaid and prepaid fixed line services. Its Other business consists of PLDT Communications and Energy Ventures, Inc. (PCEV), an investment holding company. It also focuses on providing wireless voice communications and wireless data communications.

FINANCIAL RATIOS  of  PLDT ADR (PHI)

Valuation Ratios
P/E Ratio 13.8
Price to Sales 1.7
Price to Book 2.5
Price to Tangible Book
Price to Cash Flow 5.6
Price to Free Cash Flow 41.1
Growth Rates
Sales Growth Rate -3.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -1.3%
Cap. Spend. - 3 Yr. Gr. Rate 8.3%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 140.3%
Total Debt to Equity 171%
Interest Coverage 4
Management Effectiveness
Return On Assets 5.7%
Ret/ On Assets - 3 Yr. Avg. 6.9%
Return On Total Capital 7%
Ret/ On T. Cap. - 3 Yr. Avg. 9.6%
Return On Equity 18%
Return On Equity - 3 Yr. Avg. 20.3%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 89.9%
Gross Margin - 3 Yr. Avg. 90.8%
EBITDA Margin 39%
EBITDA Margin - 3 Yr. Avg. 41.7%
Operating Margin 14.9%
Oper. Margin - 3 Yr. Avg. 18.1%
Pre-Tax Margin 13.3%
Pre-Tax Margin - 3 Yr. Avg. 18.3%
Net Profit Margin 12.1%
Net Profit Margin - 3 Yr. Avg. 15%
Effective Tax Rate 8.7%
Eff/ Tax Rate - 3 Yr. Avg. 16.2%
Payout Ratio 114.9%

PHI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PHI stock intrinsic value calculation we used $165262 million for the last fiscal year's total revenue generated by PLDT ADR. The default revenue input number comes from 2016 income statement of PLDT 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 PHI stock valuation model: a) initial revenue growth rate of 60% 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 4.4%, whose default value for PHI is calculated based on our internal credit rating of PLDT 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 PLDT 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 PHI stock the variable cost ratio is equal to 81.4%.

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 PHI 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 7.8% for PLDT ADR.

Corporate tax rate of 27% is the nominal tax rate for PLDT 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 PHI 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 PHI are equal to 84.5%.

Life of production assets of 10 years is the average useful life of capital assets used in PLDT 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 PHI is equal to -30.7%. 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 - $108175 million for PLDT 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 216 million for PLDT 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 PLDT ADR at the current share price and the inputted number of shares is $5.5 billion.

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COMPANY NEWS

▶ 5 Value Picks to Exploit the Dip in Emerging Markets   [Jun-28-18 11:45AM  InvestorPlace]
▶ PLDT (PHI) Enters Oversold Territory   [Jun-01-18 07:06AM  Zacks]
▶ PLDT, Smart ink seven-year US$300M deal with Amdocs   [Jan-24-18 06:00AM  GlobeNewswire]
▶ ETFs with exposure to PLDT, Inc. : December 25, 2017   [Dec-25-17 12:19PM  Capital Cube]
▶ ETFs with exposure to PLDT, Inc. : December 12, 2017   [Dec-12-17 01:57PM  Capital Cube]
▶ ETFs with exposure to PLDT, Inc. : November 20, 2017   [Nov-20-17 01:05PM  Capital Cube]
▶ ETFs with exposure to PLDT, Inc. : August 24, 2017   [Aug-24-17 03:54PM  Capital Cube]
▶ ETFs with exposure to PLDT, Inc. : June 19, 2017   [Jun-19-17 03:56PM  Capital Cube]
▶ ETFs with exposure to PLDT, Inc. : June 2, 2017   [Jun-02-17 02:24PM  Capital Cube]
▶ ETFs with exposure to PLDT, Inc. : May 19, 2017   [May-19-17 02:05PM  Capital Cube]
▶ Is PLDT Inc. a Great Stock for Value Investors?   [Apr-12-17 09:55AM  Zacks]
▶ ETFs with exposure to PLDT, Inc. : April 5, 2017   [Apr-05-17 05:17PM  Capital Cube]
▶ ETFs with exposure to PLDT, Inc. : January 11, 2017   [Jan-11-17 01:09PM  Capital Cube]
▶ 14 Emerging Market Stock Losers Of 2016   [Jan-03-17 05:17PM  at Barrons.com]
▶ ETFs with exposure to PLDT, Inc. : December 29, 2016   [Dec-29-16 02:22PM  Capital Cube]
▶ ETFs with exposure to PLDT, Inc. : September 14, 2016   [Sep-14-16 10:26AM  Capital Cube]
▶ 3 Ways to Get Exposure to Philippines Stocks in the U.S.   [Aug-22-16 12:51PM  Investopedia]
▶ ETFs with exposure to PLDT Inc. : August 9, 2016   [Aug-09-16 01:59PM  Capital Cube]
▶ Filipinos fume over snail-pace internet   [Jul-26-16 11:01PM  AAP]
▶ [$$] Telecoms company's typhoon reaction   [Jul-11-16 07:29PM  at Financial Times]
▶ Philippine Telecoms Giant PLDT's Profit Falls 34%   [May-03-16 12:28AM  at Bloomberg]
▶ PHI raises 4.8 million USD   [Mar-23-16 06:37AM  at noodls]
▶ PHI raises 5 million USD   [06:14AM  at noodls]
▶ PLDT, Globe Shares Rally as San Miguel, Telstra Talks End   [Mar-13-16 09:55PM  at Bloomberg]
▶ These 5 Stocks Still Look Toxic in 2016   [06:34AM  at TheStreet]
▶ Mobile app maker raises chunk of $50M funding   [Dec-29  11:55AM  at bizjournals.com]
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▶ GMA Network Owners End Stake Sale Talks With Ramon Ang   [Jun-23  01:33AM  at Bloomberg]
▶ 5 Telco Stocks to Trade for Gains   [May-27  07:00AM  at TheStreet]
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