Intrinsic value of Secoo Holding Limited - SECO

Previous Close

$7.30

  Intrinsic Value

$48.78

stock screener

  Rating & Target

str. buy

+568%

Previous close

$7.30

 
Intrinsic value

$48.78

 
Up/down potential

+568%

 
Rating

str. buy

We calculate the intrinsic value of SECO 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 0.4

 

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, %
  51.40
  46.76
  42.58
  38.83
  35.44
  32.40
  29.66
  27.19
  24.97
  22.98
  21.18
  19.56
  18.10
  16.79
  15.61
  14.55
  13.60
  12.74
  11.96
  11.27
  10.64
  10.08
  9.57
  9.11
  8.70
  8.33
  8.00
  7.70
  7.43
  7.19
Revenue, $m
  855
  1,255
  1,790
  2,485
  3,366
  4,456
  5,778
  7,349
  9,184
  11,295
  13,687
  16,364
  19,326
  22,572
  26,097
  29,895
  33,960
  38,286
  42,866
  47,696
  52,772
  58,090
  63,648
  69,448
  75,491
  81,780
  88,321
  95,120
  102,186
  109,529
Variable operating expenses, $m
  773
  1,135
  1,618
  2,246
  3,043
  4,028
  5,223
  6,643
  8,303
  10,210
  12,373
  14,793
  17,471
  20,405
  23,591
  27,025
  30,700
  34,610
  38,751
  43,118
  47,706
  52,513
  57,538
  62,781
  68,244
  73,929
  79,842
  85,989
  92,376
  99,014
Fixed operating expenses, $m
  42
  43
  44
  45
  46
  47
  48
  49
  50
  51
  52
  53
  54
  56
  57
  58
  59
  61
  62
  63
  65
  66
  68
  69
  71
  72
  74
  75
  77
  79
Total operating expenses, $m
  815
  1,178
  1,662
  2,291
  3,089
  4,075
  5,271
  6,692
  8,353
  10,261
  12,425
  14,846
  17,525
  20,461
  23,648
  27,083
  30,759
  34,671
  38,813
  43,181
  47,771
  52,579
  57,606
  62,850
  68,315
  74,001
  79,916
  86,064
  92,453
  99,093
Operating income, $m
  40
  78
  128
  194
  277
  381
  507
  657
  832
  1,033
  1,262
  1,518
  1,801
  2,111
  2,448
  2,812
  3,201
  3,615
  4,053
  4,515
  5,001
  5,510
  6,043
  6,598
  7,177
  7,779
  8,405
  9,056
  9,733
  10,436
EBITDA, $m
  42
  80
  132
  199
  284
  390
  518
  671
  850
  1,056
  1,289
  1,550
  1,840
  2,156
  2,501
  2,872
  3,269
  3,691
  4,139
  4,611
  5,107
  5,627
  6,170
  6,737
  7,327
  7,942
  8,582
  9,246
  9,937
  10,655
Interest expense (income), $m
  0
  1
  6
  12
  20
  31
  44
  61
  81
  105
  133
  165
  201
  242
  287
  337
  390
  448
  510
  576
  646
  719
  797
  878
  962
  1,051
  1,143
  1,238
  1,338
  1,442
  1,549
Earnings before tax, $m
  39
  72
  116
  174
  247
  337
  446
  576
  727
  901
  1,097
  1,316
  1,559
  1,824
  2,112
  2,421
  2,753
  3,105
  3,477
  3,870
  4,282
  4,714
  5,165
  5,636
  6,126
  6,636
  7,167
  7,718
  8,291
  8,887
Tax expense, $m
  10
  19
  31
  47
  67
  91
  120
  155
  196
  243
  296
  355
  421
  493
  570
  654
  743
  838
  939
  1,045
  1,156
  1,273
  1,395
  1,522
  1,654
  1,792
  1,935
  2,084
  2,239
  2,399
Net income, $m
  28
  52
  85
  127
  180
  246
  326
  420
  531
  657
  801
  961
  1,138
  1,332
  1,542
  1,768
  2,009
  2,266
  2,538
  2,825
  3,126
  3,441
  3,770
  4,114
  4,472
  4,844
  5,232
  5,634
  6,053
  6,487

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
  535
  785
  1,119
  1,554
  2,105
  2,787
  3,613
  4,596
  5,744
  7,063
  8,559
  10,234
  12,087
  14,116
  16,321
  18,696
  21,238
  23,943
  26,808
  29,829
  33,003
  36,329
  39,805
  43,432
  47,211
  51,145
  55,235
  59,487
  63,906
  68,498
Adjusted assets (=assets-cash), $m
  535
  785
  1,119
  1,554
  2,105
  2,787
  3,613
  4,596
  5,744
  7,063
  8,559
  10,234
  12,087
  14,116
  16,321
  18,696
  21,238
  23,943
  26,808
  29,829
  33,003
  36,329
  39,805
  43,432
  47,211
  51,145
  55,235
  59,487
  63,906
  68,498
Revenue / Adjusted assets
  1.598
  1.599
  1.600
  1.599
  1.599
  1.599
  1.599
  1.599
  1.599
  1.599
  1.599
  1.599
  1.599
  1.599
  1.599
  1.599
  1.599
  1.599
  1.599
  1.599
  1.599
  1.599
  1.599
  1.599
  1.599
  1.599
  1.599
  1.599
  1.599
  1.599
Average production assets, $m
  9
  13
  18
  25
  34
  45
  58
  73
  92
  113
  137
  164
  193
  226
  261
  299
  340
  383
  429
  477
  528
  581
  636
  694
  755
  818
  883
  951
  1,022
  1,095
Working capital, $m
  91
  133
  190
  263
  357
  472
  612
  779
  974
  1,197
  1,451
  1,735
  2,049
  2,393
  2,766
  3,169
  3,600
  4,058
  4,544
  5,056
  5,594
  6,158
  6,747
  7,362
  8,002
  8,669
  9,362
  10,083
  10,832
  11,610
Total debt, $m
  109
  221
  372
  568
  817
  1,124
  1,497
  1,940
  2,458
  3,053
  3,728
  4,483
  5,318
  6,234
  7,228
  8,299
  9,446
  10,666
  11,958
  13,320
  14,752
  16,252
  17,820
  19,455
  21,160
  22,934
  24,778
  26,696
  28,689
  30,760
Total liabilities, $m
  241
  354
  505
  701
  949
  1,257
  1,630
  2,073
  2,590
  3,186
  3,860
  4,615
  5,451
  6,366
  7,361
  8,432
  9,578
  10,798
  12,090
  13,453
  14,884
  16,384
  17,952
  19,588
  21,292
  23,066
  24,911
  26,829
  28,822
  30,893
Total equity, $m
  294
  431
  615
  853
  1,156
  1,530
  1,984
  2,523
  3,153
  3,878
  4,699
  5,618
  6,636
  7,750
  8,960
  10,264
  11,660
  13,145
  14,718
  16,376
  18,119
  19,944
  21,853
  23,844
  25,919
  28,078
  30,324
  32,659
  35,085
  37,606
Total liabilities and equity, $m
  535
  785
  1,120
  1,554
  2,105
  2,787
  3,614
  4,596
  5,743
  7,064
  8,559
  10,233
  12,087
  14,116
  16,321
  18,696
  21,238
  23,943
  26,808
  29,829
  33,003
  36,328
  39,805
  43,432
  47,211
  51,144
  55,235
  59,488
  63,907
  68,499
Debt-to-equity ratio
  0.370
  0.510
  0.610
  0.670
  0.710
  0.730
  0.750
  0.770
  0.780
  0.790
  0.790
  0.800
  0.800
  0.800
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.820
  0.820
  0.820
  0.820
  0.820
  0.820
  0.820
  0.820
Adjusted equity ratio
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  28
  52
  85
  127
  180
  246
  326
  420
  531
  657
  801
  961
  1,138
  1,332
  1,542
  1,768
  2,009
  2,266
  2,538
  2,825
  3,126
  3,441
  3,770
  4,114
  4,472
  4,844
  5,232
  5,634
  6,053
  6,487
Depreciation, amort., depletion, $m
  2
  3
  4
  5
  7
  9
  12
  15
  18
  23
  27
  33
  39
  45
  52
  60
  68
  77
  86
  95
  106
  116
  127
  139
  151
  164
  177
  190
  204
  219
Funds from operations, $m
  30
  55
  88
  132
  187
  255
  337
  435
  549
  680
  828
  994
  1,177
  1,377
  1,594
  1,827
  2,077
  2,343
  2,624
  2,920
  3,231
  3,557
  3,898
  4,253
  4,623
  5,008
  5,408
  5,824
  6,257
  6,706
Change in working capital, $m
  31
  42
  57
  74
  93
  116
  140
  167
  195
  224
  254
  284
  314
  344
  374
  403
  431
  459
  486
  512
  538
  564
  589
  615
  641
  667
  693
  721
  749
  778
Cash from operations, $m
  -1
  13
  32
  58
  93
  139
  197
  269
  355
  456
  575
  710
  863
  1,033
  1,220
  1,425
  1,646
  1,884
  2,139
  2,408
  2,693
  2,994
  3,309
  3,638
  3,982
  4,341
  4,715
  5,104
  5,508
  5,928
Maintenance CAPEX, $m
  -1
  -2
  -3
  -4
  -5
  -7
  -9
  -12
  -15
  -18
  -23
  -27
  -33
  -39
  -45
  -52
  -60
  -68
  -77
  -86
  -95
  -106
  -116
  -127
  -139
  -151
  -164
  -177
  -190
  -204
New CAPEX, $m
  -3
  -4
  -5
  -7
  -9
  -11
  -13
  -16
  -18
  -21
  -24
  -27
  -30
  -32
  -35
  -38
  -41
  -43
  -46
  -48
  -51
  -53
  -56
  -58
  -60
  -63
  -65
  -68
  -71
  -73
Cash from investing activities, $m
  -4
  -6
  -8
  -11
  -14
  -18
  -22
  -28
  -33
  -39
  -47
  -54
  -63
  -71
  -80
  -90
  -101
  -111
  -123
  -134
  -146
  -159
  -172
  -185
  -199
  -214
  -229
  -245
  -261
  -277
Free cash flow, $m
  -5
  7
  24
  48
  80
  122
  175
  241
  322
  417
  528
  656
  800
  962
  1,140
  1,335
  1,546
  1,773
  2,016
  2,274
  2,547
  2,835
  3,137
  3,453
  3,783
  4,127
  4,486
  4,859
  5,247
  5,650
Issuance/(repayment) of debt, $m
  82
  113
  151
  196
  248
  308
  373
  443
  518
  595
  675
  755
  836
  915
  994
  1,071
  1,147
  1,220
  1,292
  1,362
  1,432
  1,500
  1,568
  1,636
  1,704
  1,774
  1,845
  1,918
  1,993
  2,071
Issuance/(repurchase) of shares, $m
  71
  85
  99
  112
  122
  128
  128
  119
  99
  67
  21
  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  
  153
  198
  250
  308
  370
  436
  501
  562
  617
  662
  696
  755
  836
  915
  994
  1,071
  1,147
  1,220
  1,292
  1,362
  1,432
  1,500
  1,568
  1,636
  1,704
  1,774
  1,845
  1,918
  1,993
  2,071
Total cash flow (excl. dividends), $m
  148
  205
  273
  355
  450
  558
  676
  803
  939
  1,079
  1,223
  1,411
  1,636
  1,877
  2,134
  2,406
  2,693
  2,993
  3,308
  3,637
  3,979
  4,335
  4,705
  5,089
  5,487
  5,901
  6,331
  6,777
  7,240
  7,721
Retained Cash Flow (-), $m
  -100
  -137
  -184
  -239
  -302
  -374
  -454
  -539
  -630
  -725
  -821
  -919
  -1,017
  -1,114
  -1,210
  -1,304
  -1,396
  -1,485
  -1,573
  -1,658
  -1,743
  -1,826
  -1,909
  -1,991
  -2,075
  -2,159
  -2,246
  -2,334
  -2,426
  -2,521
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
  49
  67
  90
  117
  148
  183
  222
  264
  308
  355
  402
  492
  619
  763
  924
  1,102
  1,297
  1,508
  1,735
  1,978
  2,236
  2,509
  2,796
  3,097
  3,413
  3,742
  4,085
  4,442
  4,814
  5,200
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
  47
  62
  78
  96
  115
  133
  150
  165
  177
  186
  191
  210
  235
  256
  271
  280
  282
  278
  267
  251
  231
  208
  183
  158
  133
  109
  88
  69
  53
  39
Current shareholders' claim on cash, %
  83.7
  72.6
  64.8
  59.1
  54.9
  51.9
  49.7
  48.1
  47.2
  46.6
  46.5
  46.5
  46.5
  46.5
  46.5
  46.5
  46.5
  46.5
  46.5
  46.5
  46.5
  46.5
  46.5
  46.5
  46.5
  46.5
  46.5
  46.5
  46.5
  46.5

Secoo Holding Limited is an online integrated platform company. The Company offers an integrated online and offline shopping platform, which consists of its Secoo.com Website, mobile applications and offline experience centers. The Company offers a range of products including watches, bags, clothing, footwear, jewelry, accessories, menswear, children's wear, sportswear, cosmetics and skin care, automobile, home goods, lifestyle services, lifestyle services and high-end Chinese original products. The Company’s online platform facilitates easy product selection, order processing and convenient payment methods, such as Secoo Check, which allows customers to make payments for its merchandise products in installments on its online platform directly.

FINANCIAL RATIOS  of  Secoo Holding Limited (SECO)

Valuation Ratios
P/E Ratio -31.2
Price to Sales 0.5
Price to Book 4.4
Price to Tangible Book
Price to Cash Flow -5.2
Price to Free Cash Flow -4.9
Growth Rates
Sales Growth Rate 48.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 14.9%
Financial Strength
Quick Ratio 0
Current Ratio 0.2
LT Debt to Equity 0%
Total Debt to Equity 67.4%
Interest Coverage 0
Management Effectiveness
Return On Assets -4.1%
Ret/ On Assets - 3 Yr. Avg. -16%
Return On Total Capital -8.4%
Ret/ On T. Cap. - 3 Yr. Avg. -43%
Return On Equity -13.5%
Return On Equity - 3 Yr. Avg. -62.1%
Asset Turnover 2.6
Profitability Ratios
Gross Margin 15.5%
Gross Margin - 3 Yr. Avg. 12.3%
EBITDA Margin -1.1%
EBITDA Margin - 3 Yr. Avg. -7.8%
Operating Margin -1.1%
Oper. Margin - 3 Yr. Avg. -8.1%
Pre-Tax Margin -1.6%
Pre-Tax Margin - 3 Yr. Avg. -8.4%
Net Profit Margin -1.6%
Net Profit Margin - 3 Yr. Avg. -8.4%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

SECO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SECO stock intrinsic value calculation we used $565 million for the last fiscal year's total revenue generated by Secoo Holding Limited. The default revenue input number comes from 0001 income statement of Secoo Holding Limited. 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 SECO stock valuation model: a) initial revenue growth rate of 51.4% 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 SECO is calculated based on our internal credit rating of Secoo Holding Limited, 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 Secoo Holding Limited.
    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 SECO stock the variable cost ratio is equal to 90.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $41 million in the base year in the intrinsic value calculation for SECO 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 Secoo Holding Limited.

Corporate tax rate of 27% is the nominal tax rate for Secoo Holding Limited. 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 SECO 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 SECO are equal to 1%.

Life of production assets of 2.8 years is the average useful life of capital assets used in Secoo Holding Limited 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 SECO is equal to 10.6%. 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 - $193.932587666 million for Secoo Holding Limited - 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 50.245 million for Secoo Holding Limited 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 Secoo Holding Limited at the current share price and the inputted number of shares is $0.4 billion.

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