Intrinsic value of PetroChina ADR - PTR

Previous Close

$74.25

  Intrinsic Value

$5,059

stock screener

  Rating & Target

str. buy

+999%

Previous close

$74.25

 
Intrinsic value

$5,059

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of PTR 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 0.6

 

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, %
  30.90
  28.31
  25.98
  23.88
  21.99
  20.29
  18.76
  17.39
  16.15
  15.03
  14.03
  13.13
  12.31
  11.58
  10.93
  10.33
  9.80
  9.32
  8.89
  8.50
  8.15
  7.83
  7.55
  7.30
  7.07
  6.86
  6.67
  6.51
  6.36
  6.22
Revenue, $m
  398,851
  511,766
  644,718
  798,683
  974,338
  1,172,067
  1,391,997
  1,634,036
  1,897,919
  2,183,255
  2,489,583
  2,816,408
  3,163,246
  3,529,659
  3,915,277
  4,319,826
  4,743,140
  5,185,171
  5,646,001
  6,125,838
  6,625,022
  7,144,023
  7,683,437
  8,243,982
  8,826,498
  9,431,939
  10,061,372
  10,715,972
  11,397,023
  12,105,909
Variable operating expenses, $m
  383,660
  491,876
  619,296
  766,855
  935,200
  1,124,702
  1,335,481
  1,567,448
  1,820,350
  2,093,814
  2,385,990
  2,699,216
  3,031,622
  3,382,788
  3,752,361
  4,140,076
  4,545,776
  4,969,414
  5,411,068
  5,870,939
  6,349,352
  6,846,758
  7,363,726
  7,900,947
  8,459,224
  9,039,472
  9,642,714
  10,270,076
  10,922,788
  11,602,177
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
  383,660
  491,876
  619,296
  766,855
  935,200
  1,124,702
  1,335,481
  1,567,448
  1,820,350
  2,093,814
  2,385,990
  2,699,216
  3,031,622
  3,382,788
  3,752,361
  4,140,076
  4,545,776
  4,969,414
  5,411,068
  5,870,939
  6,349,352
  6,846,758
  7,363,726
  7,900,947
  8,459,224
  9,039,472
  9,642,714
  10,270,076
  10,922,788
  11,602,177
Operating income, $m
  15,192
  19,890
  25,422
  31,829
  39,138
  47,365
  56,517
  66,588
  77,568
  89,441
  103,593
  117,192
  131,624
  146,871
  162,916
  179,750
  197,364
  215,757
  234,932
  254,899
  275,670
  297,266
  319,711
  343,036
  367,274
  392,467
  418,658
  445,896
  474,235
  503,732
EBITDA, $m
  62,172
  79,773
  100,497
  124,496
  151,877
  182,698
  216,980
  254,709
  295,842
  340,319
  388,069
  439,013
  493,078
  550,193
  610,302
  673,362
  739,347
  808,249
  880,082
  954,878
  1,032,689
  1,113,590
  1,197,672
  1,285,048
  1,375,849
  1,470,223
  1,568,337
  1,670,375
  1,776,535
  1,887,034
Interest expense (income), $m
  2,789
  3,798
  6,866
  10,533
  14,851
  19,852
  25,557
  31,978
  39,121
  46,982
  55,552
  64,819
  74,768
  85,382
  96,646
  108,546
  121,070
  134,209
  147,957
  162,313
  177,280
  192,863
  209,076
  225,931
  243,450
  261,655
  280,574
  300,237
  320,679
  341,939
  364,057
Earnings before tax, $m
  11,394
  13,024
  14,889
  16,977
  19,286
  21,809
  24,539
  27,467
  30,587
  33,889
  38,774
  42,424
  46,242
  50,224
  54,370
  58,679
  63,155
  67,800
  72,619
  77,619
  82,807
  88,190
  93,780
  99,585
  105,619
  111,893
  118,421
  125,217
  132,296
  139,675
Tax expense, $m
  3,076
  3,516
  4,020
  4,584
  5,207
  5,888
  6,625
  7,416
  8,258
  9,150
  10,469
  11,455
  12,485
  13,561
  14,680
  15,843
  17,052
  18,306
  19,607
  20,957
  22,358
  23,811
  25,321
  26,888
  28,517
  30,211
  31,974
  33,809
  35,720
  37,712
Net income, $m
  8,318
  9,507
  10,869
  12,394
  14,079
  15,920
  17,913
  20,051
  22,328
  24,739
  28,305
  30,970
  33,757
  36,664
  39,690
  42,836
  46,103
  49,494
  53,012
  56,662
  60,449
  64,379
  68,459
  72,697
  77,102
  81,682
  86,447
  91,408
  96,576
  101,962

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
  475,956
  610,699
  769,353
  953,083
  1,162,694
  1,398,648
  1,661,095
  1,949,924
  2,264,819
  2,605,316
  2,970,862
  3,360,868
  3,774,757
  4,212,003
  4,672,168
  5,154,924
  5,660,071
  6,187,555
  6,737,471
  7,310,069
  7,905,755
  8,525,088
  9,168,779
  9,837,688
  10,532,814
  11,255,297
  12,006,410
  12,787,557
  13,600,266
  14,446,192
Adjusted assets (=assets-cash), $m
  475,956
  610,699
  769,353
  953,083
  1,162,694
  1,398,648
  1,661,095
  1,949,924
  2,264,819
  2,605,316
  2,970,862
  3,360,868
  3,774,757
  4,212,003
  4,672,168
  5,154,924
  5,660,071
  6,187,555
  6,737,471
  7,310,069
  7,905,755
  8,525,088
  9,168,779
  9,837,688
  10,532,814
  11,255,297
  12,006,410
  12,787,557
  13,600,266
  14,446,192
Revenue / Adjusted assets
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
  0.838
Average production assets, $m
  341,816
  438,584
  552,523
  684,472
  835,008
  1,004,461
  1,192,942
  1,400,369
  1,626,516
  1,871,050
  2,133,572
  2,413,661
  2,710,902
  3,024,917
  3,355,392
  3,702,091
  4,064,871
  4,443,692
  4,838,623
  5,249,843
  5,677,644
  6,122,428
  6,584,705
  7,065,093
  7,564,309
  8,083,172
  8,622,596
  9,183,588
  9,767,249
  10,374,764
Working capital, $m
  -25,925
  -33,265
  -41,907
  -51,914
  -63,332
  -76,184
  -90,480
  -106,212
  -123,365
  -141,912
  -161,823
  -183,066
  -205,611
  -229,428
  -254,493
  -280,789
  -308,304
  -337,036
  -366,990
  -398,179
  -430,626
  -464,362
  -499,423
  -535,859
  -573,722
  -613,076
  -653,989
  -696,538
  -740,806
  -786,884
Total debt, $m
  127,153
  195,063
  275,025
  367,624
  473,269
  592,189
  724,462
  870,032
  1,028,740
  1,200,350
  1,384,585
  1,581,148
  1,789,748
  2,010,120
  2,242,043
  2,485,352
  2,739,947
  3,005,799
  3,282,956
  3,571,546
  3,871,771
  4,183,915
  4,508,335
  4,845,465
  5,195,809
  5,559,940
  5,938,501
  6,332,199
  6,741,805
  7,168,152
Total liabilities, $m
  239,882
  307,792
  387,754
  480,354
  585,998
  704,919
  837,192
  982,762
  1,141,469
  1,313,080
  1,497,315
  1,693,878
  1,902,477
  2,122,850
  2,354,773
  2,598,082
  2,852,676
  3,118,528
  3,395,686
  3,684,275
  3,984,500
  4,296,644
  4,621,065
  4,958,195
  5,308,538
  5,672,670
  6,051,231
  6,444,929
  6,854,534
  7,280,881
Total equity, $m
  236,074
  302,907
  381,599
  472,729
  576,696
  693,729
  823,903
  967,162
  1,123,350
  1,292,237
  1,473,548
  1,666,991
  1,872,279
  2,089,153
  2,317,395
  2,556,842
  2,807,395
  3,069,027
  3,341,786
  3,625,794
  3,921,254
  4,228,443
  4,547,714
  4,879,493
  5,224,276
  5,582,627
  5,955,179
  6,342,628
  6,745,732
  7,165,311
Total liabilities and equity, $m
  475,956
  610,699
  769,353
  953,083
  1,162,694
  1,398,648
  1,661,095
  1,949,924
  2,264,819
  2,605,317
  2,970,863
  3,360,869
  3,774,756
  4,212,003
  4,672,168
  5,154,924
  5,660,071
  6,187,555
  6,737,472
  7,310,069
  7,905,754
  8,525,087
  9,168,779
  9,837,688
  10,532,814
  11,255,297
  12,006,410
  12,787,557
  13,600,266
  14,446,192
Debt-to-equity ratio
  0.540
  0.640
  0.720
  0.780
  0.820
  0.850
  0.880
  0.900
  0.920
  0.930
  0.940
  0.950
  0.960
  0.960
  0.970
  0.970
  0.980
  0.980
  0.980
  0.990
  0.990
  0.990
  0.990
  0.990
  0.990
  1.000
  1.000
  1.000
  1.000
  1.000
Adjusted equity ratio
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  8,318
  9,507
  10,869
  12,394
  14,079
  15,920
  17,913
  20,051
  22,328
  24,739
  28,305
  30,970
  33,757
  36,664
  39,690
  42,836
  46,103
  49,494
  53,012
  56,662
  60,449
  64,379
  68,459
  72,697
  77,102
  81,682
  86,447
  91,408
  96,576
  101,962
Depreciation, amort., depletion, $m
  46,980
  59,883
  75,075
  92,668
  112,739
  135,333
  160,464
  188,121
  218,274
  250,878
  284,476
  321,822
  361,454
  403,322
  447,386
  493,612
  541,983
  592,492
  645,150
  699,979
  757,019
  816,324
  877,961
  942,012
  1,008,574
  1,077,756
  1,149,679
  1,224,478
  1,302,300
  1,383,302
Funds from operations, $m
  55,298
  69,390
  85,943
  105,061
  126,818
  151,253
  178,377
  208,172
  240,602
  275,617
  312,781
  352,791
  395,210
  439,986
  487,076
  536,448
  588,086
  641,986
  698,162
  756,641
  817,468
  880,703
  946,420
  1,014,710
  1,085,676
  1,159,438
  1,236,127
  1,315,887
  1,398,876
  1,485,264
Change in working capital, $m
  -6,120
  -7,339
  -8,642
  -10,008
  -11,418
  -12,852
  -14,295
  -15,733
  -17,152
  -18,547
  -19,911
  -21,244
  -22,545
  -23,817
  -25,065
  -26,296
  -27,515
  -28,732
  -29,954
  -31,189
  -32,447
  -33,735
  -35,062
  -36,435
  -37,864
  -39,354
  -40,913
  -42,549
  -44,268
  -46,078
Cash from operations, $m
  61,418
  76,729
  94,585
  115,069
  138,236
  164,106
  192,672
  223,904
  257,754
  294,164
  332,692
  374,035
  417,755
  463,803
  512,141
  562,744
  615,601
  670,718
  728,116
  787,830
  849,915
  914,438
  981,482
  1,051,145
  1,123,540
  1,198,792
  1,277,040
  1,358,436
  1,443,144
  1,531,342
Maintenance CAPEX, $m
  -34,818
  -45,575
  -58,478
  -73,670
  -91,263
  -111,334
  -133,928
  -159,059
  -186,716
  -216,869
  -249,473
  -284,476
  -321,822
  -361,454
  -403,322
  -447,386
  -493,612
  -541,983
  -592,492
  -645,150
  -699,979
  -757,019
  -816,324
  -877,961
  -942,012
  -1,008,574
  -1,077,756
  -1,149,679
  -1,224,478
  -1,302,300
New CAPEX, $m
  -80,679
  -96,768
  -113,940
  -131,949
  -150,536
  -169,454
  -188,480
  -207,427
  -226,147
  -244,534
  -262,523
  -280,089
  -297,241
  -314,015
  -330,475
  -346,699
  -362,780
  -378,821
  -394,931
  -411,220
  -427,801
  -444,784
  -462,277
  -480,387
  -499,216
  -518,863
  -539,424
  -560,993
  -583,660
  -607,515
Cash from investing activities, $m
  -115,497
  -142,343
  -172,418
  -205,619
  -241,799
  -280,788
  -322,408
  -366,486
  -412,863
  -461,403
  -511,996
  -564,565
  -619,063
  -675,469
  -733,797
  -794,085
  -856,392
  -920,804
  -987,423
  -1,056,370
  -1,127,780
  -1,201,803
  -1,278,601
  -1,358,348
  -1,441,228
  -1,527,437
  -1,617,180
  -1,710,672
  -1,808,138
  -1,909,815
Free cash flow, $m
  -54,079
  -65,614
  -77,832
  -90,549
  -103,563
  -116,682
  -129,736
  -142,582
  -155,109
  -167,238
  -179,304
  -190,530
  -201,307
  -211,666
  -221,656
  -231,340
  -240,791
  -250,086
  -259,307
  -268,540
  -277,865
  -287,365
  -297,119
  -307,203
  -317,688
  -328,645
  -340,140
  -352,236
  -364,994
  -378,473
Issuance/(repayment) of debt, $m
  56,827
  67,911
  79,961
  92,600
  105,644
  118,921
  132,273
  145,570
  158,707
  171,611
  184,235
  196,563
  208,600
  220,372
  231,923
  243,309
  254,594
  265,852
  277,158
  288,589
  300,225
  312,144
  324,421
  337,130
  350,344
  364,132
  378,561
  393,698
  409,606
  426,347
Issuance/(repurchase) of shares, $m
  47,358
  57,325
  67,823
  78,737
  89,888
  101,112
  112,260
  123,208
  133,860
  144,147
  153,006
  162,473
  171,532
  180,211
  188,552
  196,611
  204,450
  212,138
  219,746
  227,347
  235,011
  242,810
  250,812
  259,081
  267,681
  276,670
  286,105
  296,040
  306,528
  317,617
Cash from financing (excl. dividends), $m  
  104,185
  125,236
  147,784
  171,337
  195,532
  220,033
  244,533
  268,778
  292,567
  315,758
  337,241
  359,036
  380,132
  400,583
  420,475
  439,920
  459,044
  477,990
  496,904
  515,936
  535,236
  554,954
  575,233
  596,211
  618,025
  640,802
  664,666
  689,738
  716,134
  743,964
Total cash flow (excl. dividends), $m
  50,105
  59,622
  69,953
  80,787
  91,969
  103,351
  114,797
  126,196
  137,458
  148,520
  157,938
  168,506
  178,824
  188,916
  198,819
  208,579
  218,254
  227,905
  237,596
  247,396
  257,372
  267,589
  278,113
  289,008
  300,336
  312,156
  324,526
  337,502
  351,139
  365,490
Retained Cash Flow (-), $m
  -55,675
  -66,833
  -78,692
  -91,130
  -103,967
  -117,033
  -130,174
  -143,259
  -156,188
  -168,887
  -181,311
  -193,443
  -205,289
  -216,874
  -228,242
  -239,447
  -250,553
  -261,632
  -272,758
  -284,009
  -295,460
  -307,189
  -319,271
  -331,779
  -344,783
  -358,352
  -372,552
  -387,449
  -403,104
  -419,579
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
  -5,570
  -7,211
  -8,740
  -10,343
  -11,998
  -13,682
  -15,376
  -17,063
  -18,730
  -20,367
  -23,373
  -24,937
  -26,464
  -27,958
  -29,423
  -30,868
  -32,299
  -33,728
  -35,162
  -36,612
  -38,088
  -39,600
  -41,158
  -42,770
  -44,447
  -46,196
  -48,027
  -49,947
  -51,965
  -54,089
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
  -5,340
  -6,601
  -7,606
  -8,516
  -9,300
  -9,930
  -10,388
  -10,665
  -10,759
  -10,678
  -11,100
  -10,642
  -10,062
  -9,386
  -8,638
  -7,844
  -7,028
  -6,211
  -5,414
  -4,652
  -3,940
  -3,286
  -2,698
  -2,178
  -1,729
  -1,348
  -1,031
  -773
  -567
  -407
Current shareholders' claim on cash, %
  72.7
  54.0
  40.9
  31.6
  24.8
  19.9
  16.1
  13.3
  11.1
  9.4
  8.0
  6.9
  6.0
  5.3
  4.7
  4.2
  3.8
  3.4
  3.1
  2.8
  2.6
  2.4
  2.2
  2.0
  1.9
  1.7
  1.6
  1.5
  1.4
  1.3

PetroChina Company Limited is a China-based company principally engaged in the production and distribution of oil and gas. The Company mainly operates through four business segments. The Exploration and Production segment is principally engaged in the exploration, development, production and sales of crude oil and natural gas. The Refining and Chemical Products segment is principally engaged in the refining of crude oil and petroleum products, as well as the production and sales of basic petrochemical products, derivative petrochemical products and other chemical products. The Sales segment is principally engaged in the sales of refined petroleum products. The Natural Gas and Pipeline segment is engaged in the transportation and sales of natural gas, crude oil and refined petroleum products.

FINANCIAL RATIOS  of  PetroChina ADR (PTR)

Valuation Ratios
P/E Ratio 11951.9
Price to Sales 58.1
Price to Book 79
Price to Tangible Book
Price to Cash Flow 354.2
Price to Free Cash Flow 1239.9
Growth Rates
Sales Growth Rate -6.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -15.4%
Cap. Spend. - 3 Yr. Gr. Rate -9.5%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 31.4%
Total Debt to Equity 43.4%
Interest Coverage 3
Management Effectiveness
Return On Assets 0.9%
Ret/ On Assets - 3 Yr. Avg. 2.7%
Return On Total Capital 0.5%
Ret/ On T. Cap. - 3 Yr. Avg. 3%
Return On Equity 0.7%
Return On Equity - 3 Yr. Avg. 4.3%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 39.8%
Gross Margin - 3 Yr. Avg. 37.4%
EBITDA Margin 17.5%
EBITDA Margin - 3 Yr. Avg. 16.5%
Operating Margin 3.7%
Oper. Margin - 3 Yr. Avg. 5.3%
Pre-Tax Margin 2.8%
Pre-Tax Margin - 3 Yr. Avg. 4.3%
Net Profit Margin 0.5%
Net Profit Margin - 3 Yr. Avg. 2.4%
Effective Tax Rate 34.9%
Eff/ Tax Rate - 3 Yr. Avg. 28.7%
Payout Ratio 107.5%

PTR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PTR stock intrinsic value calculation we used $304699.214027 million for the last fiscal year's total revenue generated by PetroChina ADR. The default revenue input number comes from 0001 income statement of PetroChina 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 PTR stock valuation model: a) initial revenue growth rate of 30.9% 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 PTR is calculated based on our internal credit rating of PetroChina 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 PetroChina 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 PTR stock the variable cost ratio is equal to 96.3%.

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 PTR 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 PetroChina ADR.

Corporate tax rate of 27% is the nominal tax rate for PetroChina 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 PTR 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 PTR are equal to 85.7%.

Life of production assets of 7.5 years is the average useful life of capital assets used in PetroChina 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 PTR is equal to -6.5%. 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 - $180399.032648 million for PetroChina 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 8.221 million for PetroChina 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 PetroChina ADR at the current share price and the inputted number of shares is $0.6 billion.

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COMPANY NEWS

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