Discounted Cash Flow Calculation for DB:4BQ using Excess Returns Model Model
The calculations below outline how an intrinsic value for Bank of Qingdao is arrived at using the Excess Return Model. This approach is used for finance firms where free cash flow is difficult to estimate.
In the Excess Return Model the value of a firm can be written as the sum of capital invested currently in the firm and the present value of excess returns that the firm expects to make in the future.
The model is sensitive to the Return on Equity of the company versus the Cost of Equity, how these are calculated is detailed below the main calculation.
The current share price of
Bank of Qingdao
is above its future cash flow value.
Often investors are willing to pay a
for a company that has a high dividend or the potential for future growth.
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
Bank of Qingdao's
is considered below, and whether this is a fair price.
Price based on past earnings
Bank of Qingdao's earnings available for a low price, and how does
this compare to other companies in the same industry?
Bank of Qingdao's earnings are expected to decrease over the next 1-3 years, this is not considered high growth.
Unable to determine if Bank of Qingdao is high growth as no revenue estimate data is available.
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
Bank of Qingdao's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
Bank of Qingdao
has a total score of
2/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
Mr. Wang Lin has been President and Executive Director of Bank of Qingdao Co., Ltd. since March 31, 2012 and September 16, 2011, respectively. Mr. Wang has over 30 years of experience in banking operations and management. He joined Bank of Qingdao in July 2011 as the Deputy Secretary of The Party Committee. Mr. Wang served as the General Manager of The Pension Finance Department and Supplementary Pension Management Center of the head office at China Merchants Bank from February 2010 to August 2010 and from August 2010 to July 2011, respectively. He also served as the Head and Secretary of The Party Committee of the Ningbo branch of China Merchants Bank from July 2005 to February 2010 and General Manager of The Corporate Banking Department of The Head Office at China Merchants Bank from June 2002 to July 2005. He also worked at the Nanjing branch of China Merchants Bank from December 1996 to June 2002 as Deputy Head and Head of Chengbei sub-branch, Head of Hunan Road sub-branch and Chengxi sub-branch, Assistant To The Head and Deputy Head of The Nanjing Branch. Prior to that, he worked with the Nanjing branch of Agricultural Bank of China from July 1984 to December 1996 as an accountant, staff member of the credit office, secretary of the office and senior staff member of Pukou sub-branch, assistant to the director and deputy director of the Chengbei office as well as deputy general manager of the international department of the Nanjing branch, where he was primarily responsible for the accounting, commercial and industrial credit business of the sub-branch and the office secretarial matters and business operation and management of the international department. Mr. Wang graduated from Nanjing University of Finance & Economics in Jiangsu Province, majoring in finance (continuing education), and obtained a bachelors degree in management in December 2000. He also holds an EMBA degree from Peking University in July 2006 and is a senior economist.
Lin's compensation has been consistent with company performance over the past year.
Lin's remuneration is lower than average for companies of similar size in Germany.
Management Team Tenure
Average tenure and age of the
Bank of Qingdao
management team in years:
The average tenure for the Bank of Qingdao management team is over 5 years, this suggests they are a seasoned and experienced team.
Executive Chairman of the Board
President & Executive Director
Secretary to the Board & Executive Director
VP & Executive Director
Head of the Planning & Finance Department
Wing Sze Yu
Joint Company Secretary
Board of Directors Tenure
Average tenure and age of the
Bank of Qingdao
board of directors in years:
The tenure for the Bank of Qingdao board of directors is about average.
Bank of Qingdao Co., Ltd. provides various banking products and services in the People’s Republic of China. The company operates through Corporate Banking, Retail Banking, and Financial Market Business segments. The company intakes deposits; provides short, mid, and long-term loans; conducts domestic and international settlements, as well as acceptance, discounting, and inter-bank discounting of notes; issues financial bonds; and operates as an agent in issuing, cashing-in, and underwriting government and financial bonds. It also trades in government bonds, notes of central banks, financial and corporate bonds, mid-term notes, short-term financing coupons, and other bonds issued and circulated in the national interbank bond market; participates in interbank lending and borrowing, and interbank deposit businesses; and performs foreign exchange trading as an agent. In addition, the company carry’s out the foreign exchange settlement and sales businesses; provides bank cards, and letter of credit and guarantee services; and performs receipt and payment, and insurance business as an agent, as well as other agency services, including funds and sales of precious metals. Further, it is involved in the bond settlement agency business and the fixed deposits business of commercial banks for cash management of central treasury; and provision of safe deposit box and wealth management services. As of December 31, 2017, the company operated 4 off-bank self-service banks; 97 in-bank self-service banks; and 482 self-service devices, including 102 self-service ATMs, 257 self-service cash recycling service machines, and 123 self-service terminals that provide services, such as withdrawals, deposits, transfers, account enquiries, and payments. The company was formerly known as Qingdao City Commercial Bank Co., Ltd. and changed its name to Bank of Qingdao Co., Ltd. in 2008. Bank of Qingdao Co., Ltd. was founded in 1996 and is headquartered in Qingdao, the People’s Republic of China.
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