DCF Studio

    0012.HK · HKG · Real Estate

    Henderson Land Development Company Limited

    Also onConsensus Drift

    Implied value per share

    HKD 2.25

    Market price

    HKD 25.96

    Implied upside

    -91.3%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Wrong toolThis model values the shares at 8.7% of the market price. A gap that size is a modelling failure rather than a view - most often an unusable beta, a currency or units mismatch, or a cashflow base that does not represent the business. Read the figures below as diagnostics, not as a call.
    AdjustedReported capital expenditure averages just 0.00% of revenue, which is too low to be the company's real investment - property trusts and similar structures invest through lines that are not reported as capex. Capex has been set to 1.94% of revenue so the forecast is not handed free growth. Override it if the reported figure is right.
    NoteRisk-free rate is an assumption: HKD assumption - no free live source available for this market.

    Current EV/EBITDA of 37.9x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    HKD 2.25-91.3%
    Exit multiple
    HKD 10.68-58.9%
    Market price
    HKD 25.96

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (HKD). Outflows negative.

    0bn3bn5bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayHKD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueHKD 25.8bnHKD 25.9bnHKD 25.9bnHKD 26.0bnHKD 26.1bn+0.2%
    EBITHKD 5.6bnHKD 5.6bnHKD 5.6bnHKD 5.6bnHKD 5.6bn+0.2%
    NOPATHKD 4.9bnHKD 4.9bnHKD 4.9bnHKD 5.0bnHKD 5.0bn+0.2%
    Add depreciation & amortisationHKD 505.4mHKD 506.7mHKD 507.9mHKD 509.2mHKD 510.4m+0.2%
    Less capital expenditureHKD -501.7mHKD -502.9mHKD -504.2mHKD -505.4mHKD -506.7m+0.2%
    Less increase in working capitalHKD 63.6mHKD 63.8mHKD 64.0mHKD 64.1mHKD 64.3m-0.2%
    Free cashflow to firmHKD 5.0bnHKD 5.0bnHKD 5.0bnHKD 5.0bnHKD 5.0bn+0.2%
    Discount factor0.96320.89360.82900.76900.7134-
    Present valueHKD 4.8bnHKD 4.5bnHKD 4.2bnHKD 3.9bnHKD 3.6bn-7.0%
    Present Value Of The ForecastHKD 20.9bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate3.20%HKD assumption - no free live source available for this market (assumption)
    Equity risk premium7.00%Market assumption
    Beta1.106Reported 1.158, pulled toward 1.0 (Blume)
    Cost of equity10.94%Risk-free + beta x equity risk premium
    Cost of debt3.20%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationHKD 125.7bn61.2% of capital
    Total debtHKD 79.7bn38.8% of capital, book value as a proxy
    Tax rate11.6%Effective, capped at statutory
    WACC7.79%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareHKD 2.25

    69% of EV

    Forecast FCFF, final year
    HKD 5.0bn
    Capex at depreciation, working capital in reinvestment
    HKD 5.0bn
    Less reinvestment at g/ROIC (32.1% of NOPAT)
    HKD -1.6bn
    Capitalised
    HKD 3.4bn
    ROIC (WACC floor)
    7.8%
    Terminal value, undiscounted
    HKD 65.4bn
    Terminal value, discounted
    HKD 46.6bn
    Enterprise value
    HKD 67.5bn
    Less net debt
    HKD 56.6bn
    Equity value
    HKD 10.9bn

    Exit at 20.0x EBITDA

    Value per shareHKD 10.68

    81% of EV

    Terminal value, undiscounted
    HKD 122.6bn
    Terminal value, discounted
    HKD 87.4bn
    Enterprise value
    HKD 108.3bn
    Less net debt
    HKD 56.6bn
    Equity value
    HKD 51.7bn

    Spread between methods: 130%.

    Sensitivity

    Value per share (HKD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.79%6.776.846.916.987.05
    6.79%4.124.184.244.294.35
    7.79%2.152.202.252.302.34
    8.79%0.630.670.710.750.79
    9.79%-0.58-0.54-0.51-0.47-0.44

    Outlined: this model. Green text: above today's price of 25.96. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year0.2%20.1%+19.9pp
    EBIT margin21.6%58.4%+36.8pp
    Discount rate7.8%2.8%-5.0pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.