Intrinsic value of Sky Solar Holdings ADR - SKYS

Previous Close

$1.00

  Intrinsic Value

$0.48

stock screener

  Rating & Target

str. sell

-52%

Previous close

$1.00

 
Intrinsic value

$0.48

 
Up/down potential

-52%

 
Rating

str. sell

We calculate the intrinsic value of SKYS 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 0.1

 

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
  58
  59
  61
  62
  64
  66
  69
  71
  74
  77
  80
  83
  86
  90
  94
  98
  102
  107
  112
  117
  122
  128
  134
  140
  147
  154
  161
  169
  177
  186
Variable operating expenses, $m
  49
  50
  51
  53
  54
  56
  58
  60
  62
  64
  67
  70
  73
  76
  79
  82
  86
  90
  94
  98
  103
  108
  113
  118
  124
  130
  136
  142
  149
  157
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
  49
  50
  51
  53
  54
  56
  58
  60
  62
  64
  67
  70
  73
  76
  79
  82
  86
  90
  94
  98
  103
  108
  113
  118
  124
  130
  136
  142
  149
  157
Operating income, $m
  9
  9
  10
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  29
EBITDA, $m
  24
  25
  25
  26
  27
  28
  28
  30
  31
  32
  33
  34
  36
  37
  39
  41
  42
  44
  46
  49
  51
  53
  56
  58
  61
  64
  67
  70
  74
  77
Interest expense (income), $m
  6
  15
  15
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  28
  30
  32
  34
  36
  38
  40
  43
  45
  48
  51
  54
  57
  61
  64
  68
  72
  76
Earnings before tax, $m
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -14
  -16
  -17
  -18
  -20
  -21
  -23
  -24
  -26
  -28
  -30
  -32
  -34
  -36
  -39
  -41
  -44
  -46
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
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -14
  -16
  -17
  -18
  -20
  -21
  -23
  -24
  -26
  -28
  -30
  -32
  -34
  -36
  -39
  -41
  -44
  -46

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
  590
  604
  620
  637
  656
  678
  701
  726
  752
  781
  812
  845
  880
  918
  957
  999
  1,044
  1,091
  1,140
  1,193
  1,248
  1,306
  1,368
  1,432
  1,500
  1,572
  1,648
  1,727
  1,811
  1,899
Adjusted assets (=assets-cash), $m
  590
  604
  620
  637
  656
  678
  701
  726
  752
  781
  812
  845
  880
  918
  957
  999
  1,044
  1,091
  1,140
  1,193
  1,248
  1,306
  1,368
  1,432
  1,500
  1,572
  1,648
  1,727
  1,811
  1,899
Revenue / Adjusted assets
  0.098
  0.098
  0.098
  0.097
  0.098
  0.097
  0.098
  0.098
  0.098
  0.099
  0.099
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
Average production assets, $m
  340
  348
  357
  367
  378
  391
  404
  418
  434
  450
  468
  487
  507
  529
  552
  576
  602
  629
  657
  687
  719
  753
  788
  826
  865
  906
  950
  996
  1,044
  1,095
Working capital, $m
  -102
  -104
  -107
  -110
  -114
  -117
  -121
  -126
  -130
  -135
  -140
  -146
  -152
  -159
  -166
  -173
  -181
  -189
  -197
  -206
  -216
  -226
  -237
  -248
  -260
  -272
  -285
  -299
  -313
  -328
Total debt, $m
  257
  269
  282
  296
  312
  329
  348
  369
  391
  415
  441
  468
  497
  528
  560
  595
  632
  671
  711
  755
  800
  849
  899
  953
  1,009
  1,068
  1,131
  1,197
  1,266
  1,338
Total liabilities, $m
  488
  499
  512
  526
  542
  560
  579
  599
  622
  645
  671
  698
  727
  758
  791
  825
  862
  901
  942
  985
  1,031
  1,079
  1,130
  1,183
  1,239
  1,299
  1,361
  1,427
  1,496
  1,569
Total equity, $m
  103
  105
  108
  111
  114
  118
  122
  126
  131
  136
  141
  147
  153
  160
  167
  174
  182
  190
  198
  207
  217
  227
  238
  249
  261
  274
  287
  301
  315
  330
Total liabilities and equity, $m
  591
  604
  620
  637
  656
  678
  701
  725
  753
  781
  812
  845
  880
  918
  958
  999
  1,044
  1,091
  1,140
  1,192
  1,248
  1,306
  1,368
  1,432
  1,500
  1,573
  1,648
  1,728
  1,811
  1,899
Debt-to-equity ratio
  2.510
  2.560
  2.610
  2.670
  2.730
  2.790
  2.860
  2.920
  2.990
  3.050
  3.120
  3.180
  3.240
  3.310
  3.360
  3.420
  3.480
  3.530
  3.590
  3.640
  3.690
  3.730
  3.780
  3.820
  3.870
  3.910
  3.940
  3.980
  4.020
  4.050
Adjusted equity ratio
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174
  0.174

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -14
  -16
  -17
  -18
  -20
  -21
  -23
  -24
  -26
  -28
  -30
  -32
  -34
  -36
  -39
  -41
  -44
  -46
Depreciation, amort., depletion, $m
  15
  15
  16
  16
  17
  17
  18
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  33
  34
  36
  38
  40
  41
  43
  46
  48
Funds from operations, $m
  9
  9
  9
  9
  9
  9
  9
  9
  8
  8
  8
  8
  8
  8
  7
  7
  7
  6
  6
  6
  5
  5
  5
  4
  4
  3
  3
  2
  2
  1
Change in working capital, $m
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
Cash from operations, $m
  11
  11
  12
  12
  12
  13
  13
  13
  13
  13
  13
  14
  14
  14
  14
  14
  14
  15
  15
  15
  15
  15
  15
  16
  16
  16
  16
  16
  16
  17
Maintenance CAPEX, $m
  -15
  -15
  -15
  -16
  -16
  -17
  -17
  -18
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -31
  -33
  -34
  -36
  -38
  -40
  -41
  -43
  -46
New CAPEX, $m
  -5
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -16
  -17
  -18
  -19
  -20
  -22
  -23
  -24
  -26
  -27
  -29
  -30
  -32
  -34
  -35
  -37
  -39
  -41
  -44
  -46
  -48
  -51
Cash from investing activities, $m
  -20
  -23
  -24
  -26
  -27
  -29
  -30
  -32
  -34
  -36
  -38
  -39
  -41
  -44
  -46
  -48
  -51
  -53
  -56
  -59
  -62
  -65
  -68
  -71
  -75
  -79
  -84
  -87
  -91
  -97
Free cash flow, $m
  -9
  -11
  -12
  -14
  -15
  -16
  -18
  -19
  -21
  -22
  -24
  -26
  -28
  -30
  -32
  -34
  -36
  -39
  -41
  -44
  -47
  -50
  -53
  -56
  -60
  -63
  -67
  -71
  -75
  -80
Issuance/(repayment) of debt, $m
  8
  11
  13
  14
  16
  18
  19
  21
  22
  24
  26
  27
  29
  31
  33
  35
  37
  39
  41
  43
  46
  48
  51
  53
  56
  59
  62
  66
  69
  73
Issuance/(repurchase) of shares, $m
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  18
  19
  21
  22
  24
  25
  27
  29
  31
  33
  36
  38
  40
  43
  46
  49
  52
  55
  58
  62
Cash from financing (excl. dividends), $m  
  15
  19
  22
  24
  27
  30
  32
  35
  37
  40
  44
  46
  50
  53
  57
  60
  64
  68
  72
  76
  82
  86
  91
  96
  102
  108
  114
  121
  127
  135
Total cash flow (excl. dividends), $m
  6
  8
  10
  11
  12
  13
  14
  16
  17
  18
  19
  20
  22
  23
  25
  26
  28
  29
  31
  33
  34
  36
  38
  40
  42
  45
  47
  49
  52
  55
Retained Cash Flow (-), $m
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -18
  -19
  -21
  -22
  -24
  -25
  -27
  -29
  -31
  -33
  -36
  -38
  -40
  -43
  -46
  -49
  -52
  -55
  -58
  -62
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
  -1
  0
  0
  1
  1
  1
  1
  2
  2
  2
  2
  1
  1
  1
  1
  1
  0
  0
  0
  -1
  -1
  -2
  -2
  -3
  -3
  -4
  -5
  -5
  -6
  -7
Discount rate, %
  9.20
  9.66
  10.14
  10.65
  11.18
  11.74
  12.33
  12.95
  13.59
  14.27
  14.99
  15.74
  16.52
  17.35
  18.22
  19.13
  20.08
  21.09
  22.14
  23.25
  24.41
  25.63
  26.91
  28.26
  29.67
  31.15
  32.71
  34.35
  36.07
  37.87
PV of cash for distribution, $m
  -1
  0
  0
  1
  1
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  90.5
  80.9
  71.9
  63.5
  55.6
  48.4
  41.8
  35.9
  30.7
  26.0
  21.9
  18.4
  15.3
  12.7
  10.5
  8.6
  7.0
  5.7
  4.6
  3.7
  3.0
  2.4
  1.9
  1.5
  1.2
  1.0
  0.8
  0.6
  0.5
  0.4

Sky Solar Holdings, Ltd. is an investment holding company. The Company is an independent power producer (IPP) engaged in developing, owning and operating solar parks. The Company focuses on the downstream solar market and develops projects primarily in Asia, South America, Europe and North America. Its subsidiaries are engaged in activities, such as selling electricity generated from solar parks owned by the Company as IPP; pipeline (including obtaining permits required for solar power projects and sourcing of solar modules), and providing engineering, procurement and construction (EPC) services ; providing operating and maintenance (O&M) services for solar parks; sales of solar modules, and building and transferring of solar parks (BT). The Company has developed over 270 solar parks with an aggregate capacity of approximately 252.8 megawatts (MW). It has over 1.3 gigawatts (GW) of solar projects in various stages of development in countries, such as Chile, Uruguay, Japan and Canada.

FINANCIAL RATIOS  of  Sky Solar Holdings ADR (SKYS)

Valuation Ratios
P/E Ratio 104.9
Price to Sales 6.4
Price to Book 3.3
Price to Tangible Book
Price to Cash Flow -9.8
Price to Free Cash Flow -4.8
Growth Rates
Sales Growth Rate 40.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -56.4%
Cap. Spend. - 3 Yr. Gr. Rate 4.1%
Financial Strength
Quick Ratio 1
Current Ratio 1.2
LT Debt to Equity 103.1%
Total Debt to Equity 124.2%
Interest Coverage 2
Management Effectiveness
Return On Assets 1.8%
Ret/ On Assets - 3 Yr. Avg. -7.7%
Return On Total Capital 1.6%
Ret/ On T. Cap. - 3 Yr. Avg. -14.7%
Return On Equity 3.3%
Return On Equity - 3 Yr. Avg. -21.4%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 53%
Gross Margin - 3 Yr. Avg. 50.4%
EBITDA Margin 37.9%
EBITDA Margin - 3 Yr. Avg. -41.5%
Operating Margin 19.7%
Oper. Margin - 3 Yr. Avg. -54.6%
Pre-Tax Margin 7.6%
Pre-Tax Margin - 3 Yr. Avg. -72.6%
Net Profit Margin 6.1%
Net Profit Margin - 3 Yr. Avg. -73.4%
Effective Tax Rate 40%
Eff/ Tax Rate - 3 Yr. Avg. 12.9%
Payout Ratio 0%

SKYS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SKYS stock intrinsic value calculation we used $56.733 million for the last fiscal year's total revenue generated by Sky Solar Holdings ADR. The default revenue input number comes from 0001 income statement of Sky Solar Holdings 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 SKYS 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 9.2%, whose default value for SKYS is calculated based on our internal credit rating of Sky Solar Holdings 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 Sky Solar Holdings 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 SKYS stock the variable cost ratio is equal to 84.2%.

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 SKYS 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 6% for Sky Solar Holdings ADR.

Corporate tax rate of 27% is the nominal tax rate for Sky Solar Holdings 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 SKYS 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 SKYS are equal to 588.2%.

Life of production assets of 22.9 years is the average useful life of capital assets used in Sky Solar Holdings 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 SKYS is equal to -176.5%. 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 - $101.123 million for Sky Solar Holdings 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 52.443 million for Sky Solar Holdings 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 Sky Solar Holdings ADR at the current share price and the inputted number of shares is $0.1 billion.

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COMPANY NEWS

▶ Sky Solar to Defend Against Lawsuit   [Sep-10-18 04:15PM  GlobeNewswire]
▶ Sky Solar Announces New Chief Financial Officer   [Aug-31-18 09:15AM  GlobeNewswire]
▶ Why Sky Solar Holdings Ltd (NASDAQ:SKYS) Could Be A Buy   [Jun-08-18 04:04PM  Simply Wall St.]
▶ Sky Solar Files 2017 Annual Report on Form 20-F   [Apr-27-18 05:54PM  GlobeNewswire]
▶ Is Sky Solar Holdings Ltd (NASDAQ:SKYS) Undervalued?   [Mar-07-18 02:51PM  Simply Wall St.]
▶ Why Sky Solar Holdings Ltd (SKYS) Could Be A Buy   [Oct-30-17 08:21PM  Simply Wall St.]
▶ Sky Solar Announces New Principal Executive Office Location   [Aug-31-17 09:00AM  GlobeNewswire]

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