DCF Studio

    0288.HK · HKG · Consumer Defensive

    WH Group Limited

    Also onConsensus Drift

    Implied value per share

    HKD 24.88

    Market price

    HKD 6.61

    Implied upside

    +276.6%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · USD model at 7.8441

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

    Current EV/EBITDA of 28.1x 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 24.88+276.6%
    Exit multiple
    HKD 34.06+415.6%
    Market price
    HKD 6.61

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 28.0bnUSD 28.0bnUSD 27.9bnUSD 27.9bnUSD 27.8bn-0.1%
    EBITUSD 2.4bnUSD 2.4bnUSD 2.4bnUSD 2.4bnUSD 2.4bn-0.1%
    NOPATUSD 2.0bnUSD 2.0bnUSD 2.0bnUSD 2.0bnUSD 2.0bn-0.1%
    Add depreciation & amortisationUSD 784.3mUSD 783.2mUSD 782.2mUSD 781.2mUSD 780.2m-0.1%
    Less capital expenditureUSD -802.8mUSD -801.8mUSD -800.7mUSD -799.7mUSD -798.6m-0.1%
    Less increase in working capitalUSD -3.0mUSD -3.0mUSD -3.0mUSD -3.0mUSD -3.0m-0.1%
    Free cashflow to firmUSD 2.0bnUSD 2.0bnUSD 2.0bnUSD 2.0bnUSD 2.0bn-0.1%
    Discount factor0.96940.91110.85630.80480.7564-
    Present valueUSD 1.9bnUSD 1.8bnUSD 1.7bnUSD 1.6bnUSD 1.5bn-6.1%
    Present Value Of The ForecastUSD 8.5bn

    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
    Beta0.481Reported 0.225, pulled toward 1.0 (Blume)
    Cost of equity6.57%Risk-free + beta x equity risk premium
    Cost of debt3.64%Interest expense / average total debt
    Market capitalisationUSD 84.7bn95.4% of capital
    Total debtUSD 4.1bn4.6% of capital, book value as a proxy
    Tax rate16.5%Effective, capped at statutory
    WACC6.40%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 shareUSD 3.17

    79% of EV

    Forecast FCFF, final year
    USD 2.0bn
    Capex at depreciation, working capital in reinvestment
    USD 2.0bn
    Less reinvestment at g/ROIC (17.4% of NOPAT)
    USD -346.6m
    Capitalised
    USD 1.6bn
    ROIC (reported)
    14.4%
    Terminal value, undiscounted
    USD 43.3bn
    Terminal value, discounted
    USD 32.8bn
    Enterprise value
    USD 41.2bn
    Less net debt
    USD 530.0m
    Equity value
    USD 40.7bn

    Exit at 20.0x EBITDA

    Value per shareUSD 4.34

    85% of EV

    Terminal value, undiscounted
    USD 63.2bn
    Terminal value, discounted
    USD 47.8bn
    Enterprise value
    USD 56.2bn
    Less net debt
    USD 530.0m
    Equity value
    USD 55.7bn

    Spread between methods: 31%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    4.40%4.665.336.358.1011.77
    5.40%3.493.804.224.805.69
    6.40%2.802.963.173.443.79
    7.40%2.342.442.552.692.87
    8.40%2.012.072.142.222.32

    Outlined: this model. Green text: above today's price of 0.84. 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-0.1%-23.5%-23.4pp
    EBIT margin8.5%2.3%-6.2pp
    Discount rate6.4%19.3%+12.9pp
    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.