Intrinsic value of PLDT ADR - PHI

Previous Close

$28.30

  Intrinsic Value

$113.13

stock screener

  Rating & Target

str. buy

+300%

Previous close

$28.30

 
Intrinsic value

$113.13

 
Up/down potential

+300%

 
Rating

str. buy

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

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 6.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   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, %
  -3.41
  19.10
  17.69
  16.42
  15.28
  14.25
  13.33
  12.49
  11.74
  11.07
  10.46
  9.92
  9.42
  8.98
  8.58
  8.23
  7.90
  7.61
  7.35
  7.12
  6.90
  6.71
  6.54
  6.39
  6.25
  6.12
  6.01
  5.91
  5.82
  5.74
  5.66
Revenue, $m
  3,281
  3,908
  4,599
  5,354
  6,172
  7,052
  7,991
  8,990
  10,046
  11,158
  12,325
  13,547
  14,824
  16,156
  17,542
  18,985
  20,486
  22,045
  23,666
  25,350
  27,100
  28,920
  30,812
  32,781
  34,829
  36,963
  39,185
  41,501
  43,916
  46,436
  49,067
Variable operating expenses, $m
 
  2,571
  3,005
  3,478
  3,991
  4,542
  5,131
  5,757
  6,419
  7,116
  7,848
  8,492
  9,292
  10,127
  10,996
  11,901
  12,841
  13,819
  14,835
  15,891
  16,988
  18,128
  19,315
  20,548
  21,833
  23,170
  24,563
  26,015
  27,529
  29,108
  30,757
Fixed operating expenses, $m
 
  644
  660
  676
  693
  711
  728
  746
  765
  784
  804
  824
  845
  866
  887
  910
  932
  956
  979
  1,004
  1,029
  1,055
  1,081
  1,108
  1,136
  1,164
  1,193
  1,223
  1,254
  1,285
  1,317
Total operating expenses, $m
  2,791
  3,215
  3,665
  4,154
  4,684
  5,253
  5,859
  6,503
  7,184
  7,900
  8,652
  9,316
  10,137
  10,993
  11,883
  12,811
  13,773
  14,775
  15,814
  16,895
  18,017
  19,183
  20,396
  21,656
  22,969
  24,334
  25,756
  27,238
  28,783
  30,393
  32,074
Operating income, $m
  490
  693
  934
  1,200
  1,488
  1,799
  2,132
  2,486
  2,862
  3,257
  3,673
  4,231
  4,687
  5,163
  5,659
  6,175
  6,712
  7,271
  7,852
  8,456
  9,084
  9,737
  10,417
  11,124
  11,861
  12,628
  13,429
  14,263
  15,134
  16,043
  16,992
EBITDA, $m
  1,192
  1,455
  1,811
  2,200
  2,622
  3,078
  3,565
  4,083
  4,631
  5,209
  5,817
  6,453
  7,119
  7,813
  8,536
  9,289
  10,072
  10,887
  11,733
  12,614
  13,529
  14,480
  15,471
  16,501
  17,574
  18,691
  19,856
  21,070
  22,337
  23,659
  25,040
Interest expense (income), $m
  141
  124
  176
  233
  296
  363
  436
  514
  597
  684
  776
  873
  974
  1,080
  1,191
  1,306
  1,425
  1,549
  1,679
  1,813
  1,952
  2,098
  2,248
  2,405
  2,568
  2,738
  2,915
  3,099
  3,291
  3,491
  3,700
Earnings before tax, $m
  438
  569
  759
  967
  1,192
  1,436
  1,696
  1,972
  2,265
  2,573
  2,897
  3,358
  3,713
  4,083
  4,468
  4,869
  5,287
  5,721
  6,173
  6,643
  7,131
  7,639
  8,168
  8,719
  9,293
  9,890
  10,514
  11,164
  11,843
  12,552
  13,292
Tax expense, $m
  38
  154
  205
  261
  322
  388
  458
  532
  611
  695
  782
  907
  1,002
  1,102
  1,206
  1,315
  1,427
  1,545
  1,667
  1,794
  1,925
  2,063
  2,205
  2,354
  2,509
  2,670
  2,839
  3,014
  3,198
  3,389
  3,589
Net income, $m
  397
  415
  554
  706
  871
  1,048
  1,238
  1,440
  1,653
  1,878
  2,115
  2,451
  2,710
  2,980
  3,262
  3,555
  3,859
  4,177
  4,506
  4,849
  5,206
  5,577
  5,963
  6,365
  6,784
  7,220
  7,675
  8,150
  8,645
  9,163
  9,703

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  830
  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
  9,433
  10,256
  12,071
  14,053
  16,200
  18,509
  20,975
  23,596
  26,367
  29,285
  32,349
  35,557
  38,908
  42,403
  46,043
  49,830
  53,768
  57,862
  62,115
  66,536
  71,130
  75,906
  80,872
  86,039
  91,416
  97,015
  102,847
  108,927
  115,266
  121,880
  128,784
Adjusted assets (=assets-cash), $m
  8,603
  10,256
  12,071
  14,053
  16,200
  18,509
  20,975
  23,596
  26,367
  29,285
  32,349
  35,557
  38,908
  42,403
  46,043
  49,830
  53,768
  57,862
  62,115
  66,536
  71,130
  75,906
  80,872
  86,039
  91,416
  97,015
  102,847
  108,927
  115,266
  121,880
  128,784
Revenue / Adjusted assets
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
Average production assets, $m
  4,146
  4,935
  5,808
  6,762
  7,795
  8,906
  10,093
  11,354
  12,688
  14,092
  15,567
  17,110
  18,723
  20,405
  22,156
  23,979
  25,874
  27,843
  29,890
  32,017
  34,228
  36,526
  38,916
  41,402
  43,990
  46,684
  49,491
  52,416
  55,466
  58,649
  61,971
Working capital, $m
  -1,907
  -2,474
  -2,911
  -3,389
  -3,907
  -4,464
  -5,059
  -5,691
  -6,359
  -7,063
  -7,802
  -8,575
  -9,384
  -10,226
  -11,104
  -12,018
  -12,968
  -13,955
  -14,981
  -16,047
  -17,155
  -18,306
  -19,504
  -20,750
  -22,047
  -23,397
  -24,804
  -26,270
  -27,799
  -29,394
  -31,059
Total debt, $m
  3,674
  4,286
  5,683
  7,210
  8,863
  10,641
  12,540
  14,558
  16,691
  18,939
  21,298
  23,768
  26,348
  29,039
  31,842
  34,758
  37,791
  40,943
  44,218
  47,622
  51,159
  54,836
  58,661
  62,639
  66,779
  71,090
  75,582
  80,263
  85,144
  90,237
  95,552
Total liabilities, $m
  7,286
  7,897
  9,294
  10,821
  12,474
  14,252
  16,151
  18,169
  20,302
  22,550
  24,909
  27,379
  29,959
  32,650
  35,453
  38,369
  41,402
  44,554
  47,829
  51,233
  54,770
  58,447
  62,272
  66,250
  70,390
  74,701
  79,193
  83,874
  88,755
  93,848
  99,163
Total equity, $m
  2,148
  2,359
  2,776
  3,232
  3,726
  4,257
  4,824
  5,427
  6,064
  6,736
  7,440
  8,178
  8,949
  9,753
  10,590
  11,461
  12,367
  13,308
  14,287
  15,303
  16,360
  17,458
  18,601
  19,789
  21,026
  22,313
  23,655
  25,053
  26,511
  28,032
  29,620
Total liabilities and equity, $m
  9,434
  10,256
  12,070
  14,053
  16,200
  18,509
  20,975
  23,596
  26,366
  29,286
  32,349
  35,557
  38,908
  42,403
  46,043
  49,830
  53,769
  57,862
  62,116
  66,536
  71,130
  75,905
  80,873
  86,039
  91,416
  97,014
  102,848
  108,927
  115,266
  121,880
  128,783
Debt-to-equity ratio
  1.710
  1.820
  2.050
  2.230
  2.380
  2.500
  2.600
  2.680
  2.750
  2.810
  2.860
  2.910
  2.940
  2.980
  3.010
  3.030
  3.060
  3.080
  3.100
  3.110
  3.130
  3.140
  3.150
  3.170
  3.180
  3.190
  3.200
  3.200
  3.210
  3.220
  3.230
Adjusted equity ratio
  0.153
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  397
  415
  554
  706
  871
  1,048
  1,238
  1,440
  1,653
  1,878
  2,115
  2,451
  2,710
  2,980
  3,262
  3,555
  3,859
  4,177
  4,506
  4,849
  5,206
  5,577
  5,963
  6,365
  6,784
  7,220
  7,675
  8,150
  8,645
  9,163
  9,703
Depreciation, amort., depletion, $m
  702
  763
  876
  1,000
  1,134
  1,279
  1,433
  1,596
  1,770
  1,952
  2,144
  2,222
  2,432
  2,650
  2,877
  3,114
  3,360
  3,616
  3,882
  4,158
  4,445
  4,744
  5,054
  5,377
  5,713
  6,063
  6,427
  6,807
  7,203
  7,617
  8,048
Funds from operations, $m
  479
  1,178
  1,430
  1,706
  2,005
  2,327
  2,670
  3,036
  3,423
  3,830
  4,258
  4,673
  5,142
  5,630
  6,139
  6,669
  7,220
  7,793
  8,388
  9,007
  9,651
  10,320
  11,017
  11,742
  12,497
  13,283
  14,102
  14,957
  15,849
  16,780
  17,752
Change in working capital, $m
  -493
  -397
  -438
  -478
  -518
  -557
  -595
  -632
  -668
  -704
  -739
  -774
  -808
  -843
  -878
  -913
  -950
  -987
  -1,026
  -1,066
  -1,108
  -1,152
  -1,198
  -1,246
  -1,297
  -1,350
  -1,407
  -1,466
  -1,529
  -1,595
  -1,665
Cash from operations, $m
  972
  1,575
  1,868
  2,184
  2,523
  2,883
  3,265
  3,668
  4,091
  4,534
  4,997
  5,447
  5,950
  6,473
  7,017
  7,582
  8,169
  8,780
  9,414
  10,073
  10,759
  11,472
  12,215
  12,988
  13,793
  14,633
  15,509
  16,423
  17,378
  18,375
  19,417
Maintenance CAPEX, $m
  0
  -538
  -641
  -754
  -878
  -1,012
  -1,157
  -1,311
  -1,475
  -1,648
  -1,830
  -2,022
  -2,222
  -2,432
  -2,650
  -2,877
  -3,114
  -3,360
  -3,616
  -3,882
  -4,158
  -4,445
  -4,744
  -5,054
  -5,377
  -5,713
  -6,063
  -6,427
  -6,807
  -7,203
  -7,617
New CAPEX, $m
  -839
  -790
  -873
  -954
  -1,033
  -1,111
  -1,187
  -1,261
  -1,333
  -1,404
  -1,474
  -1,544
  -1,613
  -1,682
  -1,752
  -1,822
  -1,895
  -1,970
  -2,047
  -2,127
  -2,211
  -2,298
  -2,390
  -2,486
  -2,587
  -2,694
  -2,807
  -2,925
  -3,051
  -3,183
  -3,322
Cash from investing activities, $m
  -834
  -1,328
  -1,514
  -1,708
  -1,911
  -2,123
  -2,344
  -2,572
  -2,808
  -3,052
  -3,304
  -3,566
  -3,835
  -4,114
  -4,402
  -4,699
  -5,009
  -5,330
  -5,663
  -6,009
  -6,369
  -6,743
  -7,134
  -7,540
  -7,964
  -8,407
  -8,870
  -9,352
  -9,858
  -10,386
  -10,939
Free cash flow, $m
  138
  247
  354
  476
  611
  760
  922
  1,096
  1,283
  1,482
  1,693
  1,882
  2,115
  2,360
  2,615
  2,882
  3,160
  3,450
  3,751
  4,064
  4,390
  4,729
  5,081
  5,448
  5,829
  6,226
  6,640
  7,071
  7,520
  7,989
  8,478
Issuance/(repayment) of debt, $m
  295
  1,273
  1,397
  1,526
  1,653
  1,778
  1,899
  2,018
  2,134
  2,247
  2,359
  2,470
  2,580
  2,691
  2,803
  2,916
  3,032
  3,152
  3,275
  3,404
  3,537
  3,677
  3,824
  3,978
  4,140
  4,311
  4,491
  4,681
  4,881
  5,093
  5,316
Issuance/(repurchase) of shares, $m
  -11
  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  
  151
  1,273
  1,397
  1,526
  1,653
  1,778
  1,899
  2,018
  2,134
  2,247
  2,359
  2,470
  2,580
  2,691
  2,803
  2,916
  3,032
  3,152
  3,275
  3,404
  3,537
  3,677
  3,824
  3,978
  4,140
  4,311
  4,491
  4,681
  4,881
  5,093
  5,316
Total cash flow (excl. dividends), $m
  302
  1,520
  1,751
  2,002
  2,264
  2,538
  2,821
  3,114
  3,417
  3,729
  4,052
  4,352
  4,696
  5,051
  5,418
  5,799
  6,193
  6,602
  7,026
  7,468
  7,928
  8,406
  8,905
  9,426
  9,969
  10,537
  11,131
  11,752
  12,401
  13,081
  13,793
Retained Cash Flow (-), $m
  108
  -380
  -417
  -456
  -494
  -531
  -567
  -603
  -637
  -671
  -705
  -738
  -771
  -804
  -837
  -871
  -906
  -941
  -978
  -1,017
  -1,057
  -1,098
  -1,142
  -1,188
  -1,237
  -1,288
  -1,342
  -1,398
  -1,458
  -1,521
  -1,588
Prev. year cash balance distribution, $m
 
  169
  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
 
  1,309
  1,333
  1,546
  1,771
  2,007
  2,254
  2,511
  2,780
  3,058
  3,347
  3,614
  3,925
  4,247
  4,581
  4,927
  5,287
  5,660
  6,048
  6,451
  6,871
  7,308
  7,763
  8,238
  8,733
  9,249
  9,789
  10,353
  10,943
  11,560
  12,206
Discount rate, %
 
  5.70
  5.99
  6.28
  6.60
  6.93
  7.27
  7.64
  8.02
  8.42
  8.84
  9.28
  9.75
  10.24
  10.75
  11.29
  11.85
  12.44
  13.06
  13.72
  14.40
  15.12
  15.88
  16.67
  17.51
  18.38
  19.30
  20.27
  21.28
  22.34
  23.46
PV of cash for distribution, $m
 
  1,239
  1,187
  1,288
  1,371
  1,436
  1,479
  1,500
  1,499
  1,477
  1,434
  1,361
  1,285
  1,196
  1,097
  991
  881
  771
  663
  561
  466
  380
  303
  237
  182
  136
  100
  71
  49
  33
  22
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
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

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 15.4
Price to Sales 1.9
Price to Book 2.8
Price to Tangible Book
Price to Cash Flow 6.3
Price to Free Cash Flow 46
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 $3281 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 19.1% 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 5.7%, 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 66.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $628 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 4.1% 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 126.3%.

Life of production assets of 7.7 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 -63.3%. 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 - $2148 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 218.598 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 $6.2 billion.

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COMPANY NEWS

▶ 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]
▶ Should You Avoid Autodesk, Inc. (ADSK)?   [Dec-01  09:44AM  at Insider Monkey]
▶ Is CGI Group Inc. (USA) (GIB) a Good Buy?   [Nov-27  11:04AM  at Insider Monkey]
▶ What Hedge Funds Think About H&R Block, Inc. (HRB)?   [Nov-23  06:13PM  at Insider Monkey]
▶ Public Homebuilding Companies Poised For Gains   [Jul-21  04:01PM  at Investopedia]
▶ 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]
Financial statements of PHI
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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