DCF Studio

    0027.HK · HKG · Consumer Cyclical

    Galaxy Entertainment Group Limited

    Also onConsensus Drift

    Implied value per share

    HKD 63.51

    Market price

    HKD 32.62

    Implied upside

    +94.7%

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

    AdjustedCapital expenditure runs at 19.8% of revenue against depreciation of 10.5%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.
    NoteRisk-free rate is an assumption: HKD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    HKD 63.51+94.7%
    Exit multiple
    HKD 101.40+210.9%
    Market price
    HKD 32.62

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (HKD). Outflows negative.

    0m341m681mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayHKD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueHKD 73.9bnHKD 110.8bnHKD 166.2bnHKD 249.3bnHKD 373.9bn+50.0%
    EBITHKD 4.8bnHKD 7.2bnHKD 10.8bnHKD 16.2bnHKD 24.4bn+50.0%
    NOPATHKD 4.7bnHKD 7.1bnHKD 10.6bnHKD 16.0bnHKD 23.9bn+50.0%
    Add depreciation & amortisationHKD 7.8bnHKD 11.6bnHKD 17.5bnHKD 26.2bnHKD 39.3bn+50.0%
    Less capital expenditureHKD -14.7bnHKD -22.0bnHKD -33.0bnHKD -49.5bnHKD -74.2bn+50.0%
    Less increase in working capitalHKD 2.3bnHKD 3.4bnHKD 5.2bnHKD 7.8bnHKD 11.6bn-50.0%
    Free cashflow to firmHKD 134.6mHKD 201.9mHKD 302.9mHKD 454.3mHKD 681.5m+50.0%
    Discount factor0.96190.89000.82340.76190.7049-
    Present valueHKD 129.5mHKD 179.7mHKD 249.4mHKD 346.1mHKD 480.4m+38.8%
    Present Value Of The ForecastHKD 1.4bn

    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
    Beta0.705Reported 0.559, pulled toward 1.0 (Blume)
    Cost of equity8.13%Risk-free + beta x equity risk premium
    Cost of debt4.63%Interest expense / average total debt
    Market capitalisationHKD 142.9bn98.6% of capital
    Total debtHKD 2.0bn1.4% of capital, book value as a proxy
    Tax rate1.7%Effective, capped at statutory
    WACC8.08%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 63.51

    99% of EV

    Forecast FCFF, final year
    HKD 681.5m
    Capex at depreciation, working capital in reinvestment
    HKD 27.3bn
    Less reinvestment at g/ROIC (25.9% of NOPAT)
    HKD -7.1bn
    Capitalised
    HKD 20.2bn
    ROIC (reported)
    9.7%
    Terminal value, undiscounted
    HKD 371.7bn
    Terminal value, discounted
    HKD 262.0bn
    Enterprise value
    HKD 263.4bn
    Less net debt
    HKD -14.9bn
    Equity value
    HKD 278.2bn

    Exit at 9.5x EBITDA

    Value per shareHKD 101.40

    100% of EV

    Terminal value, undiscounted
    HKD 607.2bn
    Terminal value, discounted
    HKD 428.0bn
    Enterprise value
    HKD 429.4bn
    Less net debt
    HKD -14.9bn
    Equity value
    HKD 444.3bn

    Spread between methods: 46%.

    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%
    6.08%93.1698.42105.09113.83125.87
    7.08%74.0976.6479.6883.4188.12
    8.08%60.9562.1463.5165.1066.98
    9.08%51.3751.8452.3552.9153.53
    10.08%44.4344.6344.8345.0345.23

    Outlined: this model. Green text: above today's price of 32.62. 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 year50.0%30.7%-19.3pp
    EBIT margin6.5%3.3%-3.2pp
    Discount rate8.1%12.8%+4.7pp
    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.