Intrinsic value of Fang Holdings Limited - SFUN

Previous Close

$1.19

  Intrinsic Value

$0.39

stock screener

  Rating & Target

str. sell

-67%

Previous close

$1.19

 
Intrinsic value

$0.39

 
Up/down potential

-67%

 
Rating

str. sell

Our model is not good at valuating stocks of financial companies, such as SFUN.

We calculate the intrinsic value of SFUN 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 0.5

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  453
  463
  475
  489
  503
  520
  537
  556
  577
  599
  623
  648
  675
  704
  734
  766
  800
  836
  874
  915
  957
  1,002
  1,049
  1,099
  1,151
  1,206
  1,264
  1,325
  1,389
  1,456
Variable operating expenses, $m
  528
  541
  554
  570
  587
  606
  626
  649
  672
  698
  722
  751
  782
  816
  851
  888
  928
  969
  1,013
  1,060
  1,109
  1,161
  1,215
  1,273
  1,334
  1,397
  1,465
  1,535
  1,610
  1,688
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
  528
  541
  554
  570
  587
  606
  626
  649
  672
  698
  722
  751
  782
  816
  851
  888
  928
  969
  1,013
  1,060
  1,109
  1,161
  1,215
  1,273
  1,334
  1,397
  1,465
  1,535
  1,610
  1,688
Operating income, $m
  -76
  -77
  -79
  -81
  -84
  -86
  -89
  -92
  -95
  -99
  -99
  -103
  -107
  -112
  -117
  -122
  -127
  -133
  -139
  -145
  -152
  -159
  -167
  -175
  -183
  -192
  -201
  -210
  -221
  -231
EBITDA, $m
  -44
  -45
  -46
  -47
  -49
  -50
  -52
  -54
  -56
  -58
  -61
  -63
  -66
  -68
  -71
  -74
  -78
  -81
  -85
  -89
  -93
  -97
  -102
  -107
  -112
  -117
  -123
  -129
  -135
  -141
Interest expense (income), $m
  19
  35
  36
  37
  39
  40
  42
  44
  47
  49
  51
  54
  57
  60
  64
  67
  71
  75
  79
  84
  88
  93
  98
  104
  110
  116
  122
  129
  136
  144
  152
Earnings before tax, $m
  -111
  -113
  -116
  -120
  -124
  -128
  -133
  -139
  -144
  -150
  -153
  -160
  -168
  -175
  -184
  -193
  -202
  -212
  -222
  -234
  -245
  -258
  -271
  -284
  -299
  -314
  -330
  -347
  -365
  -383
Tax expense, $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
Net income, $m
  -111
  -113
  -116
  -120
  -124
  -128
  -133
  -139
  -144
  -150
  -153
  -160
  -168
  -175
  -184
  -193
  -202
  -212
  -222
  -234
  -245
  -258
  -271
  -284
  -299
  -314
  -330
  -347
  -365
  -383

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
  1,735
  1,775
  1,821
  1,872
  1,929
  1,991
  2,059
  2,132
  2,211
  2,296
  2,387
  2,484
  2,587
  2,696
  2,813
  2,936
  3,067
  3,205
  3,350
  3,504
  3,667
  3,838
  4,019
  4,209
  4,409
  4,620
  4,842
  5,076
  5,322
  5,580
Adjusted assets (=assets-cash), $m
  1,735
  1,775
  1,821
  1,872
  1,929
  1,991
  2,059
  2,132
  2,211
  2,296
  2,387
  2,484
  2,587
  2,696
  2,813
  2,936
  3,067
  3,205
  3,350
  3,504
  3,667
  3,838
  4,019
  4,209
  4,409
  4,620
  4,842
  5,076
  5,322
  5,580
Revenue / Adjusted assets
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
  0.261
Average production assets, $m
  490
  501
  514
  528
  544
  562
  581
  602
  624
  648
  673
  701
  730
  761
  794
  828
  865
  904
  945
  989
  1,035
  1,083
  1,134
  1,187
  1,244
  1,304
  1,366
  1,432
  1,501
  1,574
Working capital, $m
  -232
  -237
  -243
  -250
  -258
  -266
  -275
  -285
  -295
  -307
  -319
  -332
  -346
  -360
  -376
  -392
  -410
  -428
  -448
  -468
  -490
  -513
  -537
  -562
  -589
  -617
  -647
  -678
  -711
  -746
Total debt, $m
  668
  692
  719
  750
  784
  821
  861
  905
  952
  1,003
  1,058
  1,115
  1,177
  1,243
  1,312
  1,386
  1,464
  1,546
  1,634
  1,726
  1,823
  1,925
  2,033
  2,147
  2,267
  2,393
  2,526
  2,666
  2,813
  2,967
Total liabilities, $m
  1,038
  1,061
  1,089
  1,119
  1,153
  1,191
  1,231
  1,275
  1,322
  1,373
  1,427
  1,485
  1,547
  1,612
  1,682
  1,756
  1,834
  1,916
  2,004
  2,096
  2,193
  2,295
  2,403
  2,517
  2,637
  2,763
  2,896
  3,035
  3,182
  3,337
Total equity, $m
  698
  714
  732
  753
  775
  800
  828
  857
  889
  923
  960
  998
  1,040
  1,084
  1,131
  1,180
  1,233
  1,288
  1,347
  1,409
  1,474
  1,543
  1,615
  1,692
  1,772
  1,857
  1,947
  2,040
  2,139
  2,243
Total liabilities and equity, $m
  1,736
  1,775
  1,821
  1,872
  1,928
  1,991
  2,059
  2,132
  2,211
  2,296
  2,387
  2,483
  2,587
  2,696
  2,813
  2,936
  3,067
  3,204
  3,351
  3,505
  3,667
  3,838
  4,018
  4,209
  4,409
  4,620
  4,843
  5,075
  5,321
  5,580
Debt-to-equity ratio
  0.960
  0.970
  0.980
  1.000
  1.010
  1.030
  1.040
  1.060
  1.070
  1.090
  1.100
  1.120
  1.130
  1.150
  1.160
  1.170
  1.190
  1.200
  1.210
  1.230
  1.240
  1.250
  1.260
  1.270
  1.280
  1.290
  1.300
  1.310
  1.310
  1.320
Adjusted equity ratio
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -111
  -113
  -116
  -120
  -124
  -128
  -133
  -139
  -144
  -150
  -153
  -160
  -168
  -175
  -184
  -193
  -202
  -212
  -222
  -234
  -245
  -258
  -271
  -284
  -299
  -314
  -330
  -347
  -365
  -383
Depreciation, amort., depletion, $m
  32
  32
  33
  34
  35
  36
  37
  38
  39
  41
  38
  40
  42
  43
  45
  47
  49
  52
  54
  56
  59
  62
  65
  68
  71
  74
  78
  82
  86
  90
Funds from operations, $m
  -79
  -81
  -84
  -86
  -89
  -93
  -97
  -101
  -105
  -110
  -115
  -120
  -126
  -132
  -138
  -145
  -153
  -160
  -168
  -177
  -186
  -196
  -206
  -216
  -228
  -240
  -252
  -265
  -279
  -293
Change in working capital, $m
  -5
  -5
  -6
  -7
  -8
  -8
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -30
  -31
  -33
  -35
Cash from operations, $m
  -74
  -76
  -77
  -79
  -82
  -84
  -87
  -91
  -94
  -98
  -103
  -107
  -112
  -117
  -123
  -129
  -135
  -142
  -149
  -156
  -164
  -173
  -182
  -191
  -201
  -211
  -222
  -234
  -246
  -259
Maintenance CAPEX, $m
  -27
  -28
  -29
  -29
  -30
  -31
  -32
  -33
  -34
  -36
  -37
  -38
  -40
  -42
  -43
  -45
  -47
  -49
  -52
  -54
  -56
  -59
  -62
  -65
  -68
  -71
  -74
  -78
  -82
  -86
New CAPEX, $m
  -10
  -11
  -13
  -14
  -16
  -18
  -19
  -21
  -22
  -24
  -26
  -27
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -46
  -48
  -51
  -54
  -57
  -60
  -63
  -66
  -69
  -73
Cash from investing activities, $m
  -37
  -39
  -42
  -43
  -46
  -49
  -51
  -54
  -56
  -60
  -63
  -65
  -69
  -73
  -76
  -80
  -84
  -88
  -93
  -97
  -102
  -107
  -113
  -119
  -125
  -131
  -137
  -144
  -151
  -159
Free cash flow, $m
  -111
  -115
  -119
  -123
  -128
  -133
  -139
  -145
  -151
  -158
  -165
  -173
  -181
  -190
  -199
  -209
  -219
  -230
  -242
  -254
  -267
  -280
  -295
  -310
  -325
  -342
  -359
  -378
  -397
  -418
Issuance/(repayment) of debt, $m
  20
  24
  27
  31
  34
  37
  41
  44
  47
  51
  54
  58
  62
  66
  70
  74
  78
  83
  87
  92
  97
  102
  108
  114
  120
  126
  133
  140
  147
  155
Issuance/(repurchase) of shares, $m
  123
  129
  135
  141
  147
  154
  161
  168
  176
  184
  190
  199
  209
  219
  231
  242
  254
  267
  281
  295
  311
  326
  343
  361
  379
  399
  419
  441
  463
  487
Cash from financing (excl. dividends), $m  
  143
  153
  162
  172
  181
  191
  202
  212
  223
  235
  244
  257
  271
  285
  301
  316
  332
  350
  368
  387
  408
  428
  451
  475
  499
  525
  552
  581
  610
  642
Total cash flow (excl. dividends), $m
  31
  38
  43
  48
  53
  58
  62
  67
  72
  77
  79
  84
  89
  95
  101
  107
  113
  120
  126
  134
  141
  149
  157
  165
  174
  183
  193
  203
  213
  224
Retained Cash Flow (-), $m
  -123
  -129
  -135
  -141
  -147
  -154
  -161
  -168
  -176
  -184
  -190
  -199
  -209
  -219
  -231
  -242
  -254
  -267
  -281
  -295
  -311
  -326
  -343
  -361
  -379
  -399
  -419
  -441
  -463
  -487
Prev. year cash balance distribution, $m
  55
  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
  -37
  -91
  -92
  -93
  -94
  -96
  -98
  -101
  -104
  -107
  -111
  -115
  -119
  -124
  -130
  -135
  -141
  -148
  -155
  -162
  -170
  -178
  -187
  -196
  -205
  -216
  -227
  -238
  -250
  -263
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
  -36
  -83
  -80
  -76
  -73
  -70
  -66
  -63
  -60
  -56
  -53
  -49
  -45
  -42
  -38
  -34
  -31
  -27
  -24
  -21
  -18
  -15
  -12
  -10
  -8
  -6
  -5
  -4
  -3
  -2
Current shareholders' claim on cash, %
  80.0
  63.6
  50.4
  39.7
  31.3
  24.5
  19.2
  14.9
  11.6
  9.0
  7.0
  5.4
  4.2
  3.3
  2.5
  1.9
  1.5
  1.1
  0.9
  0.7
  0.5
  0.4
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.0

Fang Holdings Limited, formerly SouFun Holdings Limited, operates as a real estate Internet portal in China. The Company's Websites and mobile applications support active online communities and networks of users seeking information on, and services for, the real estate and home-related sectors in China. The Company, through its Internet platform, is engaged in the development of transaction and financing platforms by offering direct sales services for new homes, online real estate brokerage services and financial services. The Company's service offerings include marketing services, E-commerce services, listing services, Financial services and other value-added services. The Company provides secured loans in the form of entrusted loans and mortgage loans and unsecured loans primarily to home buyers, real estate developers and other borrowers that meet its credit assessment requirements.

FINANCIAL RATIOS  of  Fang Holdings Limited (SFUN)

Valuation Ratios
P/E Ratio -0.6
Price to Sales 0.1
Price to Book 0.2
Price to Tangible Book
Price to Cash Flow 0.8
Price to Free Cash Flow 1
Growth Rates
Sales Growth Rate 3.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -44.4%
Cap. Spend. - 3 Yr. Gr. Rate 29%
Financial Strength
Quick Ratio 2
Current Ratio 0.3
LT Debt to Equity 73.9%
Total Debt to Equity 117.7%
Interest Coverage -7
Management Effectiveness
Return On Assets -7.6%
Ret/ On Assets - 3 Yr. Avg. 2.8%
Return On Total Capital -12.6%
Ret/ On T. Cap. - 3 Yr. Avg. 2.9%
Return On Equity -25.4%
Return On Equity - 3 Yr. Avg. 6.6%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 25%
Gross Margin - 3 Yr. Avg. 47.1%
EBITDA Margin -11%
EBITDA Margin - 3 Yr. Avg. 13.8%
Operating Margin -16.8%
Oper. Margin - 3 Yr. Avg. 7.4%
Pre-Tax Margin -15.8%
Pre-Tax Margin - 3 Yr. Avg. 9.8%
Net Profit Margin -18.6%
Net Profit Margin - 3 Yr. Avg. 5.2%
Effective Tax Rate -17.2%
Eff/ Tax Rate - 3 Yr. Avg. 11.9%
Payout Ratio 0%

SFUN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SFUN stock intrinsic value calculation we used $444 million for the last fiscal year's total revenue generated by Fang Holdings Limited. The default revenue input number comes from 0001 income statement of Fang Holdings 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 SFUN stock valuation model: a) initial revenue growth rate of 2% 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 SFUN is calculated based on our internal credit rating of Fang Holdings 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 Fang Holdings 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 SFUN stock the variable cost ratio is equal to 116.7%.

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 SFUN 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 Fang Holdings Limited.

Corporate tax rate of 27% is the nominal tax rate for Fang Holdings 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 SFUN 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 SFUN are equal to 108.1%.

Life of production assets of 17.5 years is the average useful life of capital assets used in Fang Holdings 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 SFUN is equal to -51.2%. 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 - $739.583 million for Fang Holdings 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 446.821 million for Fang Holdings 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 Fang Holdings Limited at the current share price and the inputted number of shares is $0.5 billion.

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