Intrinsic value of China Southern Airlines ADR - ZNH

Previous Close

$33.98

  Intrinsic Value

$940.87

stock screener

  Rating & Target

str. buy

+999%

Previous close

$33.98

 
Intrinsic value

$940.87

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of ZNH 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, %
  16.70
  15.53
  14.48
  13.53
  12.68
  11.91
  11.22
  10.60
  10.04
  9.53
  9.08
  8.67
  8.30
  7.97
  7.68
  7.41
  7.17
  6.95
  6.76
  6.58
  6.42
  6.28
  6.15
  6.04
  5.93
  5.84
  5.76
  5.68
  5.61
  5.55
Revenue, $m
  22,544
  26,045
  29,815
  33,849
  38,140
  42,682
  47,470
  52,500
  57,769
  63,276
  69,021
  75,006
  81,235
  87,713
  94,446
  101,444
  108,715
  116,272
  124,128
  132,296
  140,793
  149,635
  158,841
  168,430
  178,423
  188,843
  199,713
  211,057
  222,902
  235,276
Variable operating expenses, $m
  20,830
  24,064
  27,547
  31,274
  35,238
  39,434
  43,857
  48,504
  53,371
  58,459
  63,763
  69,292
  75,046
  81,031
  87,251
  93,715
  100,433
  107,414
  114,671
  122,217
  130,066
  138,235
  146,739
  155,598
  164,830
  174,456
  184,498
  194,978
  205,920
  217,351
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
  20,830
  24,064
  27,547
  31,274
  35,238
  39,434
  43,857
  48,504
  53,371
  58,459
  63,763
  69,292
  75,046
  81,031
  87,251
  93,715
  100,433
  107,414
  114,671
  122,217
  130,066
  138,235
  146,739
  155,598
  164,830
  174,456
  184,498
  194,978
  205,920
  217,351
Operating income, $m
  1,714
  1,981
  2,268
  2,575
  2,902
  3,248
  3,613
  3,996
  4,398
  4,817
  5,258
  5,714
  6,189
  6,682
  7,195
  7,729
  8,283
  8,858
  9,457
  10,079
  10,726
  11,400
  12,101
  12,832
  13,593
  14,387
  15,215
  16,079
  16,982
  17,925
EBITDA, $m
  8,007
  9,251
  10,590
  12,023
  13,547
  15,160
  16,861
  18,647
  20,519
  22,475
  24,515
  26,641
  28,854
  31,154
  33,546
  36,031
  38,614
  41,298
  44,088
  46,990
  50,008
  53,148
  56,418
  59,824
  63,373
  67,074
  70,935
  74,964
  79,172
  83,567
Interest expense (income), $m
  380
  949
  905
  857
  806
  752
  694
  632
  567
  499
  428
  353
  275
  194
  110
  22
  -69
  -164
  -262
  -364
  -471
  -581
  -696
  -816
  -941
  -1,071
  -1,206
  -1,347
  -1,494
  -1,648
  -1,808
Earnings before tax, $m
  765
  1,076
  1,410
  1,769
  2,150
  2,555
  2,981
  3,429
  3,898
  4,389
  4,905
  5,439
  5,995
  6,572
  7,173
  7,797
  8,446
  9,120
  9,821
  10,550
  11,308
  12,096
  12,918
  13,773
  14,664
  15,593
  16,562
  17,574
  18,630
  19,733
Tax expense, $m
  207
  290
  381
  478
  581
  690
  805
  926
  1,053
  1,185
  1,324
  1,469
  1,619
  1,775
  1,937
  2,105
  2,280
  2,462
  2,652
  2,848
  3,053
  3,266
  3,488
  3,719
  3,959
  4,210
  4,472
  4,745
  5,030
  5,328
Net income, $m
  559
  785
  1,030
  1,291
  1,570
  1,865
  2,176
  2,503
  2,846
  3,204
  3,581
  3,970
  4,376
  4,798
  5,236
  5,692
  6,166
  6,658
  7,169
  7,701
  8,255
  8,830
  9,430
  10,054
  10,705
  11,383
  12,090
  12,829
  13,600
  14,405

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
  3,155
  3,645
  4,172
  4,737
  5,337
  5,973
  6,643
  7,347
  8,084
  8,855
  9,659
  10,496
  11,368
  12,274
  13,217
  14,196
  15,213
  16,271
  17,370
  18,513
  19,702
  20,940
  22,228
  23,570
  24,968
  26,426
  27,947
  29,535
  31,193
  32,924
Adjusted assets (=assets-cash), $m
  3,155
  3,645
  4,172
  4,737
  5,337
  5,973
  6,643
  7,347
  8,084
  8,855
  9,659
  10,496
  11,368
  12,274
  13,217
  14,196
  15,213
  16,271
  17,370
  18,513
  19,702
  20,940
  22,228
  23,570
  24,968
  26,426
  27,947
  29,535
  31,193
  32,924
Revenue / Adjusted assets
  7.145
  7.145
  7.146
  7.146
  7.146
  7.146
  7.146
  7.146
  7.146
  7.146
  7.146
  7.146
  7.146
  7.146
  7.146
  7.146
  7.146
  7.146
  7.146
  7.146
  7.146
  7.146
  7.146
  7.146
  7.146
  7.146
  7.146
  7.146
  7.146
  7.146
Average production assets, $m
  31,449
  36,333
  41,592
  47,220
  53,205
  59,541
  66,221
  73,237
  80,588
  88,270
  96,285
  104,634
  113,323
  122,360
  131,753
  141,514
  151,658
  162,200
  173,158
  184,553
  196,406
  208,741
  221,583
  234,960
  248,900
  263,436
  278,599
  294,425
  310,949
  328,210
Working capital, $m
  -4,283
  -4,949
  -5,665
  -6,431
  -7,247
  -8,110
  -9,019
  -9,975
  -10,976
  -12,022
  -13,114
  -14,251
  -15,435
  -16,665
  -17,945
  -19,274
  -20,656
  -22,092
  -23,584
  -25,136
  -26,751
  -28,431
  -30,180
  -32,002
  -33,900
  -35,880
  -37,945
  -40,101
  -42,351
  -44,702
Total debt, $m
  16,756
  15,879
  14,933
  13,921
  12,845
  11,706
  10,506
  9,244
  7,923
  6,542
  5,101
  3,600
  2,038
  414
  -1,275
  -3,029
  -4,853
  -6,748
  -8,718
  -10,766
  -12,897
  -15,114
  -17,423
  -19,827
  -22,333
  -24,946
  -27,672
  -30,517
  -33,487
  -36,590
Total liabilities, $m
  -5,653
  -6,531
  -7,477
  -8,488
  -9,564
  -10,703
  -11,904
  -13,165
  -14,487
  -15,868
  -17,308
  -18,809
  -20,371
  -21,996
  -23,684
  -25,439
  -27,263
  -29,158
  -31,128
  -33,176
  -35,307
  -37,524
  -39,832
  -42,237
  -44,743
  -47,356
  -50,082
  -52,927
  -55,897
  -59,000
Total equity, $m
  8,808
  10,176
  11,649
  13,225
  14,902
  16,676
  18,547
  20,512
  22,571
  24,722
  26,967
  29,306
  31,739
  34,270
  36,901
  39,635
  42,476
  45,429
  48,498
  51,689
  55,009
  58,464
  62,060
  65,807
  69,711
  73,783
  78,029
  82,462
  87,090
  91,924
Total liabilities and equity, $m
  3,155
  3,645
  4,172
  4,737
  5,338
  5,973
  6,643
  7,347
  8,084
  8,854
  9,659
  10,497
  11,368
  12,274
  13,217
  14,196
  15,213
  16,271
  17,370
  18,513
  19,702
  20,940
  22,228
  23,570
  24,968
  26,427
  27,947
  29,535
  31,193
  32,924
Debt-to-equity ratio
  1.900
  1.560
  1.280
  1.050
  0.860
  0.700
  0.570
  0.450
  0.350
  0.260
  0.190
  0.120
  0.060
  0.010
  -0.030
  -0.080
  -0.110
  -0.150
  -0.180
  -0.210
  -0.230
  -0.260
  -0.280
  -0.300
  -0.320
  -0.340
  -0.350
  -0.370
  -0.380
  -0.400
Adjusted equity ratio
  2.792
  2.792
  2.792
  2.792
  2.792
  2.792
  2.792
  2.792
  2.792
  2.792
  2.792
  2.792
  2.792
  2.792
  2.792
  2.792
  2.792
  2.792
  2.792
  2.792
  2.792
  2.792
  2.792
  2.792
  2.792
  2.792
  2.792
  2.792
  2.792
  2.792

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  559
  785
  1,030
  1,291
  1,570
  1,865
  2,176
  2,503
  2,846
  3,204
  3,581
  3,970
  4,376
  4,798
  5,236
  5,692
  6,166
  6,658
  7,169
  7,701
  8,255
  8,830
  9,430
  10,054
  10,705
  11,383
  12,090
  12,829
  13,600
  14,405
Depreciation, amort., depletion, $m
  6,293
  7,270
  8,322
  9,447
  10,645
  11,912
  13,248
  14,651
  16,121
  17,658
  19,257
  20,927
  22,665
  24,472
  26,351
  28,303
  30,332
  32,440
  34,632
  36,911
  39,281
  41,748
  44,317
  46,992
  49,780
  52,687
  55,720
  58,885
  62,190
  65,642
Funds from operations, $m
  6,852
  8,055
  9,352
  10,739
  12,214
  13,777
  15,424
  17,154
  18,967
  20,862
  22,838
  24,897
  27,041
  29,270
  31,587
  33,995
  36,497
  39,098
  41,801
  44,612
  47,536
  50,579
  53,746
  57,046
  60,485
  64,070
  67,810
  71,714
  75,790
  80,047
Change in working capital, $m
  -613
  -665
  -716
  -766
  -815
  -863
  -910
  -956
  -1,001
  -1,046
  -1,092
  -1,137
  -1,183
  -1,231
  -1,279
  -1,330
  -1,382
  -1,436
  -1,493
  -1,552
  -1,614
  -1,680
  -1,749
  -1,822
  -1,899
  -1,980
  -2,065
  -2,155
  -2,251
  -2,351
Cash from operations, $m
  7,465
  8,721
  10,068
  11,505
  13,030
  14,640
  16,333
  18,110
  19,968
  21,908
  23,929
  26,034
  28,224
  30,501
  32,866
  35,324
  37,879
  40,534
  43,294
  46,164
  49,150
  52,259
  55,495
  58,868
  62,384
  66,050
  69,876
  73,869
  78,040
  82,398
Maintenance CAPEX, $m
  -5,391
  -6,290
  -7,267
  -8,318
  -9,444
  -10,641
  -11,908
  -13,244
  -14,647
  -16,118
  -17,654
  -19,257
  -20,927
  -22,665
  -24,472
  -26,351
  -28,303
  -30,332
  -32,440
  -34,632
  -36,911
  -39,281
  -41,748
  -44,317
  -46,992
  -49,780
  -52,687
  -55,720
  -58,885
  -62,190
New CAPEX, $m
  -4,491
  -4,884
  -5,260
  -5,627
  -5,986
  -6,336
  -6,679
  -7,017
  -7,350
  -7,682
  -8,015
  -8,349
  -8,689
  -9,036
  -9,393
  -9,761
  -10,144
  -10,542
  -10,958
  -11,395
  -11,853
  -12,335
  -12,842
  -13,377
  -13,941
  -14,536
  -15,163
  -15,825
  -16,524
  -17,261
Cash from investing activities, $m
  -9,882
  -11,174
  -12,527
  -13,945
  -15,430
  -16,977
  -18,587
  -20,261
  -21,997
  -23,800
  -25,669
  -27,606
  -29,616
  -31,701
  -33,865
  -36,112
  -38,447
  -40,874
  -43,398
  -46,027
  -48,764
  -51,616
  -54,590
  -57,694
  -60,933
  -64,316
  -67,850
  -71,545
  -75,409
  -79,451
Free cash flow, $m
  -2,418
  -2,453
  -2,458
  -2,440
  -2,400
  -2,338
  -2,254
  -2,151
  -2,030
  -1,892
  -1,739
  -1,572
  -1,392
  -1,201
  -999
  -788
  -568
  -340
  -105
  138
  387
  643
  905
  1,175
  1,451
  1,734
  2,025
  2,324
  2,631
  2,947
Issuance/(repayment) of debt, $m
  -809
  -878
  -946
  -1,012
  -1,076
  -1,139
  -1,201
  -1,261
  -1,321
  -1,381
  -1,441
  -1,501
  -1,562
  -1,624
  -1,689
  -1,755
  -1,823
  -1,895
  -1,970
  -2,048
  -2,131
  -2,217
  -2,309
  -2,405
  -2,506
  -2,613
  -2,726
  -2,845
  -2,970
  -3,103
Issuance/(repurchase) of shares, $m
  702
  583
  444
  285
  107
  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  
  -107
  -295
  -502
  -727
  -969
  -1,139
  -1,201
  -1,261
  -1,321
  -1,381
  -1,441
  -1,501
  -1,562
  -1,624
  -1,689
  -1,755
  -1,823
  -1,895
  -1,970
  -2,048
  -2,131
  -2,217
  -2,309
  -2,405
  -2,506
  -2,613
  -2,726
  -2,845
  -2,970
  -3,103
Total cash flow (excl. dividends), $m
  -2,525
  -2,748
  -2,960
  -3,167
  -3,369
  -3,476
  -3,455
  -3,412
  -3,351
  -3,273
  -3,180
  -3,073
  -2,954
  -2,825
  -2,687
  -2,542
  -2,391
  -2,235
  -2,075
  -1,911
  -1,744
  -1,575
  -1,403
  -1,230
  -1,055
  -879
  -701
  -521
  -339
  -156
Retained Cash Flow (-), $m
  -1,260
  -1,368
  -1,473
  -1,576
  -1,676
  -1,775
  -1,871
  -1,965
  -2,059
  -2,152
  -2,245
  -2,338
  -2,434
  -2,531
  -2,631
  -2,734
  -2,841
  -2,953
  -3,069
  -3,191
  -3,320
  -3,455
  -3,597
  -3,747
  -3,905
  -4,071
  -4,247
  -4,432
  -4,628
  -4,834
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
  -1,260
  -1,368
  -1,473
  -1,576
  -1,676
  -1,775
  -1,871
  -1,965
  -2,059
  -2,152
  -2,245
  -2,338
  -2,434
  -2,531
  -2,631
  -2,734
  -2,841
  -2,953
  -3,069
  -3,191
  -3,320
  -3,455
  -3,597
  -3,747
  -3,905
  -4,071
  -4,247
  -4,432
  -4,628
  -4,834
Discount rate, %
  9.50
  9.98
  10.47
  11.00
  11.55
  12.12
  12.73
  13.37
  14.04
  14.74
  15.47
  16.25
  17.06
  17.91
  18.81
  19.75
  20.74
  21.77
  22.86
  24.01
  25.21
  26.47
  27.79
  29.18
  30.64
  32.17
  33.78
  35.47
  37.24
  39.10
PV of cash for distribution, $m
  -1,151
  -1,131
  -1,093
  -1,038
  -971
  -893
  -809
  -720
  -631
  -544
  -461
  -384
  -314
  -252
  -198
  -153
  -115
  -85
  -61
  -43
  -30
  -20
  -13
  -8
  -5
  -3
  -2
  -1
  0
  0
Current shareholders' claim on cash, %
  88.3
  80.7
  75.9
  73.4
  72.5
  72.5
  72.5
  72.5
  72.5
  72.5
  72.5
  72.5
  72.5
  72.5
  72.5
  72.5
  72.5
  72.5
  72.5
  72.5
  72.5
  72.5
  72.5
  72.5
  72.5
  72.5
  72.5
  72.5
  72.5
  72.5

China Southern Airlines Company Limited is principally engaged in the operation of civil aviation, including the provision of passenger, cargo, mail delivery and other extended transportation services. The Company operates through two business segments, including Airline Transportation segment and Other segment. Airline Transportation segment consist of passenger and cargo and mail operations. Other segment includes hotel and tour operation, ground services, cargo handling and other miscellaneous services. . The Company also provides services of general aviation and aircraft maintenance. The Company acts as an agency of domestic and foreign airlines, and other aviation and related business, such as personal accident insurance and agency business.

FINANCIAL RATIOS  of  China Southern Airlines ADR (ZNH)

Valuation Ratios
P/E Ratio 457
Price to Sales 20.1
Price to Book 53.1
Price to Tangible Book
Price to Cash Flow 97
Price to Free Cash Flow 480.7
Growth Rates
Sales Growth Rate 3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 56.3%
Cap. Spend. - 3 Yr. Gr. Rate 9%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 166.3%
Total Debt to Equity 247.9%
Interest Coverage 4
Management Effectiveness
Return On Assets 3.7%
Ret/ On Assets - 3 Yr. Avg. 2.8%
Return On Total Capital 3.5%
Ret/ On T. Cap. - 3 Yr. Avg. 2.5%
Return On Equity 12.2%
Return On Equity - 3 Yr. Avg. 9.1%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 26%
Gross Margin - 3 Yr. Avg. 23.6%
EBITDA Margin 20%
EBITDA Margin - 3 Yr. Avg. 17.7%
Operating Margin 11%
Oper. Margin - 3 Yr. Avg. 9.2%
Pre-Tax Margin 6.7%
Pre-Tax Margin - 3 Yr. Avg. 5%
Net Profit Margin 4.4%
Net Profit Margin - 3 Yr. Avg. 3.1%
Effective Tax Rate 23%
Eff/ Tax Rate - 3 Yr. Avg. 22%
Payout Ratio 15.6%

ZNH stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ZNH stock intrinsic value calculation we used $19317.7146312 million for the last fiscal year's total revenue generated by China Southern Airlines ADR. The default revenue input number comes from 0001 income statement of China Southern Airlines 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 ZNH stock valuation model: a) initial revenue growth rate of 16.7% 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 9.5%, whose default value for ZNH is calculated based on our internal credit rating of China Southern Airlines 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 China Southern Airlines 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 ZNH stock the variable cost ratio is equal to 92.4%.

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 ZNH 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 China Southern Airlines ADR.

Corporate tax rate of 27% is the nominal tax rate for China Southern Airlines 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 ZNH 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 ZNH are equal to 139.5%.

Life of production assets of 0 years is the average useful life of capital assets used in China Southern Airlines 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 ZNH is equal to -19%. 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 - $7547.76299879 million for China Southern Airlines 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 1.996 million for China Southern Airlines 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 China Southern Airlines ADR at the current share price and the inputted number of shares is $0.1 billion.

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