DCF Studio

    0267.HK · HKG · Industrials

    CITIC Limited

    Also onConsensus Drift

    Implied value per share

    HKD 118.77

    Market price

    HKD 13.04

    Implied upside

    +810.8%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · CNY model at 1.1708

    AdjustedReports in CNY, trades in HKD. Modelled in CNY, converted at the end.
    NoteRisk-free rate is an assumption: HKD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    HKD 118.77+810.8%
    Exit multiple
    HKD 40.95+214.0%
    Market price
    HKD 13.04

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CNY). Outflows negative.

    0bn24bn48bnFY25FY26FY27FY28FY29
    Nominal FCFFDiscounted to todayCNY
    LineFY25FY26FY27FY28FY29CAGR
    RevenueCNY 1022.0bnCNY 1108.0bnCNY 1201.2bnCNY 1302.3bnCNY 1411.8bn+8.4%
    EBITCNY 138.1bnCNY 149.7bnCNY 162.3bnCNY 176.0bnCNY 190.8bn+8.4%
    NOPATCNY 115.3bnCNY 125.0bnCNY 135.5bnCNY 146.9bnCNY 159.3bn+8.4%
    Add depreciation & amortisationCNY 26.3bnCNY 28.5bnCNY 30.9bnCNY 33.5bnCNY 36.3bn+8.4%
    Less capital expenditureCNY -27.8bnCNY -30.2bnCNY -32.7bnCNY -35.5bnCNY -38.5bn+8.4%
    Less increase in working capitalCNY -79.3bnCNY -86.0bnCNY -93.2bnCNY -101.1bnCNY -109.6bn+8.4%
    Free cashflow to firmCNY 34.4bnCNY 37.3bnCNY 40.4bnCNY 43.8bnCNY 47.5bn+8.4%
    Discount factor0.98260.94880.91610.88450.8541-
    Present valueCNY 33.8bnCNY 35.4bnCNY 37.1bnCNY 38.8bnCNY 40.6bn+4.7%
    Present Value Of The ForecastCNY 185.7bn

    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
    Beta0.915Reported 0.873, pulled toward 1.0 (Blume)
    Cost of equity9.60%Risk-free + beta x equity risk premium
    Cost of debt3.20%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationCNY 379.3bn12.9% of capital
    Total debtCNY 2558.0bn87.1% of capital, book value as a proxy
    Tax rate16.5%Effective, capped at statutory
    WACC3.57%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 shareCNY 101.44

    96% of EV

    Forecast FCFF, final year
    CNY 47.5bn
    Capex at depreciation, working capital in reinvestment
    CNY 164.0bn
    Less reinvestment at g/ROIC (70.1% of NOPAT)
    CNY -114.9bn
    Capitalised
    CNY 49.1bn
    ROIC (WACC floor)
    3.6%
    Terminal value, undiscounted
    CNY 4710.9bn
    Terminal value, discounted
    CNY 4023.5bn
    Enterprise value
    CNY 4209.1bn
    Less net debt
    CNY 1258.2bn
    Equity value
    CNY 2951.0bn

    Exit at 10.8x EBITDA

    Value per shareCNY 34.97

    92% of EV

    Terminal value, undiscounted
    CNY 2446.9bn
    Terminal value, discounted
    CNY 2089.9bn
    Enterprise value
    CNY 2275.5bn
    Less net debt
    CNY 1258.2bn
    Equity value
    CNY 1017.4bn

    Spread between methods: 97%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    1.57%4476.78————
    2.57%235.61348.402126.33——
    3.57%100.09100.77101.44102.12703.41
    4.57%65.4265.9366.4366.9467.44
    5.57%43.3543.7444.1444.5444.93

    Outlined: this model. Green text: above today's price of 11.14. 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 year8.4%-23.7%-32.1pp
    EBIT margin13.5%5.7%-7.8pp
    Discount rate3.6%8.3%+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.