DCF Studio

    0101.HK · HKG · Real Estate

    Hang Lung Properties Limited

    Also onConsensus Drift

    Implied value per share

    HKD 9.17

    Market price

    HKD 6.60

    Implied upside

    +39.0%

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

    AdjustedCapital expenditure runs at 7.8% of revenue against depreciation of 1.0%. 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 9.17+39.0%
    Exit multiple
    HKD 6.59-0.1%
    Market price
    HKD 6.60

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (HKD). Outflows negative.

    0bn2bn4bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayHKD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueHKD 9.8bnHKD 9.7bnHKD 9.6bnHKD 9.4bnHKD 9.3bn-1.3%
    EBITHKD 5.9bnHKD 5.8bnHKD 5.7bnHKD 5.7bnHKD 5.6bn-1.3%
    NOPATHKD 4.9bnHKD 4.9bnHKD 4.8bnHKD 4.7bnHKD 4.7bn-1.3%
    Add depreciation & amortisationHKD 102.0mHKD 100.7mHKD 99.4mHKD 98.1mHKD 96.8m-1.3%
    Less capital expenditureHKD -766.1mHKD -756.2mHKD -746.4mHKD -736.8mHKD -727.2m-1.3%
    Less increase in working capitalHKD 1.3mHKD 1.2mHKD 1.2mHKD 1.2mHKD 1.2m+1.3%
    Free cashflow to firmHKD 4.3bnHKD 4.2bnHKD 4.2bnHKD 4.1bnHKD 4.0bn-1.3%
    Discount factor0.97520.92750.88210.83890.7979-
    Present valueHKD 4.2bnHKD 3.9bnHKD 3.7bnHKD 3.4bnHKD 3.2bn-6.1%
    Present Value Of The ForecastHKD 18.4bn

    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
    Beta0.833Reported 0.750, pulled toward 1.0 (Blume)
    Cost of equity9.03%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 34.3bn38.9% of capital
    Total debtHKD 53.9bn61.1% of capital, book value as a proxy
    Tax rate16.5%Effective, capped at statutory
    WACC5.15%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 9.17

    80% of EV

    Forecast FCFF, final year
    HKD 4.0bn
    Capex at depreciation, working capital in reinvestment
    HKD 4.7bn
    Less reinvestment at g/ROIC (48.6% of NOPAT)
    HKD -2.3bn
    Capitalised
    HKD 2.4bn
    ROIC (WACC floor)
    5.1%
    Terminal value, undiscounted
    HKD 93.1bn
    Terminal value, discounted
    HKD 74.3bn
    Enterprise value
    HKD 92.7bn
    Less net debt
    HKD 47.5bn
    Equity value
    HKD 45.1bn

    Exit at 13.6x EBITDA

    Value per shareHKD 6.59

    77% of EV

    Terminal value, undiscounted
    HKD 77.2bn
    Terminal value, discounted
    HKD 61.6bn
    Enterprise value
    HKD 80.0bn
    Less net debt
    HKD 47.5bn
    Equity value
    HKD 32.4bn

    Spread between methods: 33%.

    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%
    3.15%20.9221.0521.1852.48—
    4.15%13.5313.6313.7313.8213.92
    5.15%9.039.109.179.259.32
    6.15%5.996.056.116.176.23
    7.15%3.803.853.903.954.00

    Outlined: this model. Green text: above today's price of 6.60. 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 year-1.3%-4.4%-3.1pp
    EBIT margin60.0%52.1%-8.0pp
    Discount rate5.1%6.0%+0.8pp
    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.